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One of America’s Most Conservative Politicians Is a Crypto Skeptic Now

Don’t mess with Texas’ power demand.

Dan Patrick.
Heatmap Illustration/Getty Images

Load growth is becoming controversial in Texas, where its isolated, uniquely free market electricity system makes a sometimes awkward fit with the state’s distinctive right-wing politics. They crashed together Wednesday, when the state’s conservative Lieutenant Governor Dan Patrick, who a few weeks ago was attending Donald Trump’s criminal trialin New York City, expressed skepticism of the state’s bitcoin mining industry and the prospect of more data centers coming to Texas.

Responding to “shocking” testimony from the head of ERCOT, which manages about 90% of Texas’s electricity grid, Patrick wrote on X, “We need to take a close look at those two industries [crypto and AI]. They produce very few jobs compared to the incredible demands they place on our grid. Crypto mining may actually make more money selling electricity back to the grid than from their crypto mining operations."

Texas has become a center of the crypto mining industry precisely because of how flexible and market-oriented the state’s grid is. Crypto miners in Texas can take advantage of ERCOT’s “demand response” programs, which pay large users of electricity to be willing to shut down when power is scarce and expensive on the grid, and have a relatively easy time getting onto the grid.

The U.S. Energy Information Administration has estimated that crypto mining makes up about 2% of the country’s electricity demand, and the industry’s power usage has come under scrutiny from politicians before, but typically from Democrats.

Riot Networks, a crypto miner based in Texas, has at times made dramatically more money from its interactions with the grid than by actually generating Bitcoin. Last August, when Texas was setting records for electricity demand, the company made $31.6 million from selling power back to the grid that it had previously bought for a prearranged price, or from incentive payments for being willing to power down in moments of peak demand, compared to $8.6 million from crypto mining. The result, the company’s chief executive said in a statement, “was a landmark month for Riot in showcasing the benefits of our unique power strategy.”

The miners have also been blamed for raising pricesfor Texas residents and businesses who can’t be as flexible with their power demand, as well as for the greenhouse gas emissions generated by their activity.

Patrick, oddly enough and almost certainly inadvertently, echoed an extensive 2013 New York Timesstory when he said that “Texans will ultimately pay the price” for high power demand from this crypto and data operations. “I’m more interested in building the grid to service customers in their homes, apartments, and normal businesses and keeping costs as low as possible for them instead of for very niche industries that have massive power demands and produce few jobs. We want data centers, but it can’t be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off,” Patrick wrote.

(The New York Times: “Other major energy users, like factories and hospitals, cannot reduce their power use as routinely or dramatically without severe consequences,” and “other industries, including metals and plastics manufacturing, also require large amounts of electricity, causing pollution and raising power prices. But Bitcoin mines bring significantly fewer jobs.”)

At the same time, Trump has been making a concerted play for the crypto community, including miners. He has promised to commute the sentence of Ross Ulbricht, who operated The Silk Road, an online marketplace (for, among other things, illegal drugs) that used crypto. (He’s serving a life sentencefor narcotics distribution and a host of conspiracy charges.) On Wednesday, Trump posted to Truth Social, “Bitcoin mining may be our last line of defense against a CBDC,” a.k.a. a central bank digital currency. “Biden’s hatred of Bitcoin only helps China, Russia, and the Radical Communist Left. We want all the remaining Bitcoin to be MADE IN THE USA!!! It will help us be ENERGY DOMINANT!!!”

Trump in the past has sounded the Bitcoin skeptic, having tweeted in 2019, “I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity....,” but has since seemed to have, for now, come around.

While Trump is making a concerted play to win over new constituencies for his election bid, Patrick was responding to testimony from the head of ERCOT that Texas’s power demand will grow faster than previously estimated, and that electricity supply may need to almost double in the next 10 years at the latest.

That will require substantial new supply. While Texas is leading the nationin installation of utility-scale solar and is the number one state for wind thanks to a combination of its large size, growing population and electricity demand, large sunny and windy areas,and a more light-touch approachto regulation and hooking up to the grid, it is also embracing state planning for its fossil energy sector. Texas has established a $5 billion fund to provide low-cost financing to developers of dispatchable power generatorsthat can be turned on and off at any time — largely natural gas.

Patrick had said earlier in a statement, “We must bring new dispatchablegeneration (primarily new natural gas plants) to Texas to ensure we maintain reliable power under any circumstance.”

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Sparks

The Country’s Largest Power Markets Are Getting More Gas

Three companies are joining forces to add at least a gigawatt of new generation by 2029. The question is whether they can actually do it.

Natural gas pipelines.
Heatmap Illustration/Getty Images

Two of the biggest electricity markets in the country — the 13-state PJM Interconnection, which spans the Mid-Atlantic and the Midwest, and ERCOT, which covers nearly all of Texas — want more natural gas. Both are projecting immense increases in electricity demand thanks to data centers and electrification. And both have had bouts of market weirdness and dysfunction, with ERCOT experiencing spiky prices and even blackouts during extreme weather and PJM making enormous payouts largely to gas and coal operators to lock in their “capacity,” i.e. their ability to provide power when most needed.

Now a trio of companies, including the independent power producer NRG, the turbine manufacturer GE Vernova, and a subsidiary of the construction firm Kiewit Corporation, are teaming up with a plan to bring gas-powered plants to PJM and ERCOT, the companies announced today.

The three companies said that the new joint venture “will work to advance four projects totaling over 5 gigawatts” of natural gas combined cycle plants to the two power markets, with over a gigawatt coming by 2029. The companies said that they could eventually build 10 to 15 gigawatts “and expand to other areas across the U.S.”

So far, PJM and Texas’ call for new gas has been more widely heard than answered. The power producer Calpine said last year that it would look into developing more gas in PJM, but actual investment announcements have been scarce, although at least one gas plant scheduled to close has said it would stay open.

So far, across the country, planned new additions to the grid are still overwhelmingly solar and battery storage, according to the Energy Information Administration, whose data shows some 63 gigawatts of planned capacity scheduled to be added this year, with more than half being solar and over 80% being storage.

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Featuring China, fossil fuels, and data centers.

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As Republicans in Congress go hunting for ways to slash spending to carry out President Trump’s agenda, more than 100 energy businesses, trade groups, and advocacy organizations sent a letter to key House and Senate leaders on Tuesday requesting that one particular line item be spared: the hydrogen tax credit.

The tax credit “will serve as a catalyst to propel the United States to global energy dominance,” the letter argues, “while advancing American competitiveness in energy technologies that our adversaries are actively pursuing.” The Fuel Cell and Hydrogen Energy Association organized the letter, which features signatures from the American Petroleum Institute, the U.S. Chamber of Commerce, the Clean Energy Buyers Association, and numerous hydrogen, industrial gas, and chemical companies, among many others. Three out of the seven regional clean hydrogen hubs — the Mid-Atlantic, Heartland, and Pacific Northwest hubs — are also listed.

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Core inflation is up, meaning that interest rates are unlikely to go down anytime soon.

Wind turbines being built.
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The Fed on Wednesday issued a report showing substantial increases in the price of eggs, used cars, and auto insurance — data that could spell bad news for the renewables economy.

Though some of those factors had already been widely reported on, the overall rise in prices exceeded analysts’ expectations. With overall inflation still elevated — reaching an annual rate of 3%, while “core” inflation, stripping out food and energy, rose to 3.3%, after an unexpectedly sharp 0.4% jump in January alone — any prospect of substantial interest rate cuts from the Federal Reserve has dwindled even further.

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