Please be patient, I have cold ASICs

Jan 20, 2024

The Arctic blast most US residents are now familiar with has a digital impact, too.

Per Mempool.space, Bitcoin’s difficulty is likely to drop nearly 2% four days from now due to a cold snap increasing power prices in Texas’ de-regulated energy market. Difficulty–a measurement of how hard or easy it is to mine Bitcoin blocks–adjusts based on the perceived speed of Bitcoin miner’s finding blocks. Finding blocks faster or slower than ten minutes over a two weeks period leads to a change in the network difficulty.

Typically, difficulty adjusts as miners add more hashrate to the network. But when Bitcoin miners are highly concentrated, such as in Texas or previously in China, local weather events can also alter mining conditions.

As of Monday morning, the Bitcoin network lost over 50 EH/s worth of workers, when comparing the real time hashrate versus 30 day rolling average on Coin Metrics. (Real time hashrate is typically not a good measurement because of the volatility within that metric. However, we can see real time pool reports from MiningPoolStats showing us a precipitous drop-off in mining pool share submissions during the same period).


Why are miners dropping off the network? Money. The Energy Reliability Council of Texas (ERCOT) works directly with large Bitcoin miners, which they classify as Large Flexible Loads (LFL). Per ERCOT, LFLs are incentivized to turn off their mining operations at a certain strike price where they make more money not mining Bitcoin than mining Bitcoin. That strike price is currently quoted around $87 per Megawatt Hour. So if your mining operation costs over $87/MWh because of energy, you’re turning off and returning energy to the Texas grid.

If enough Bitcoin miners turn off, then the entire Bitcoin network will also slow down, meaning less blocks processed over the next period. Expect more of the same as Texas bares the brunt of the storm Tuesday.

For an excellent thread on the subject, click here.

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