In Texas idling rigs make more than mining crypto

[NoahA]

Keep in mind the reason that RIOT makes money when they are down is because they lose money whe they are operating.
As a customer I would want guaranteed service. If the power company suddenly shut the power off without warning or compensation I can see lots of lawsuits. Better to have a method of managing the consumption.
Also at less than peak you have a customer, that's also wworth paying for.

Exactly right. Destriero is suggesting that Riot increase the contracts simply to extract more money, but the truth is, Riot wants to be mining. They clearly don't have 4 times the machines, so no way could they expand their operation 4x and hence collect 4x the rebate. They just want to be able to mine, and if they can't, they want compensation.

On a side note deaddog, you're finally getting something about crypto!! I know you still have trouble seeing where the value is, but understanding the operation of the crypto miners is a huge first step!

 

[newwurldmn]

Thank-you.


I haven't studied this enough, nor do I know the details of the contract. I'm sure both sides have done a cost/benefit analysis. At some point on a curve, I'm sure a shutdown is advantageous to both sides.

I look at this as no different than a trading strategy. At some point, you might suffer a 20% drawdown, but if in between these periods you made 50%, and that drawdown isn't expected to happen for a long enough time frame you don't expect back to back drawdowns, its likely a good strategy.

The idea as MW is suggesting, to require the utility to have max power available at all times is simply crazy. Its like requiring the US military to have an aircraft carrier group parked outside of every hostile country just in case something happens. Of course the military would love this, but imagine the bill.

Perhaps the numbers are outrageous right now for what the miners are getting, but I believe much of this is because of reliance on wind and solar, which is proving to be more intermittent than initially thought perhaps. So perhaps the payments are higher than expected, but the fact that the grid hasn't gone down is evidence of a policy that is somewhat working.

I don't know enough of the details but the numbers are staggering and shows a problem with the texas grid. These payouts shouldn't happen and don't in other parts of the country.

 

[NoahA]

I don't know enough of the details but the numbers are staggering and shows a problem with the texas grid. These payouts shouldn't happen and don't in other parts of the country.

When you see the power spike over 10x though, wouldn't you think the price is the price? I mean its like complaining GME or AMC isn't worth what it is while the price skyrockets. You never argue with the price!

I figure if the price spikes up 10x for power, and someone is willing to use it and pay, then the miners can collect this 10x premium and the customer gets this power. I see it as simply a buyer and seller being matched up.

Of course I don't know the true numbers, but it makes sense to me. Its just like a last minute international airline ticket. What could be $500 is now $4000. Someone is willing to pay to book the last seat if its a case of a family death or something like this. (I know, horrible example) But if another ticket was necessary and they announce in the lounge, who is willing to give up their seat for $4k because this is the going price, someone will stand up. So you match the buyer and seller and both are happy to do the transaction.

 

[NoahA]

These payouts shouldn't happen and don't in other parts of the country.

Regarding this point, you're not wrong, but I'm sure its the green energy problem. Their power generation isn't consistent while usage can spike greatly given the weather.

So yes, perhaps the fault lies with the power companies and lack of infrastructure, but its not the miner being greedy, they are simply providing a service. They are almost like the money maker facilitating transactions.

 

[SunTrader]

Thank-you.


I haven't studied this enough, nor do I know the details of the contract. I'm sure both sides have done a cost/benefit analysis. At some point on a curve, I'm sure a shutdown is advantageous to both sides.

I look at this as no different than a trading strategy. At some point, you might suffer a 20% drawdown, but if in between these periods you made 50%, and that drawdown isn't expected to happen for a long enough time frame you don't expect back to back drawdowns, its likely a good strategy.

The idea as MW is suggesting, to require the utility to have max power available at all times is simply crazy. Its like requiring the US military to have an aircraft carrier group parked outside of every hostile country just in case something happens. Of course the military would love this, but imagine the bill.

Perhaps the numbers are outrageous right now for what the miners are getting, but I believe much of this is because of reliance on wind and solar, which is proving to be more intermittent than initially thought perhaps. So perhaps the payments are higher than expected, but the fact that the grid hasn't gone down is evidence of a policy that is somewhat working.

Wind and Solar energy generated has been increasing year after year in Texas. It is now 2nd to only oil/natty gas surpassing electricity generated by coal and other sources.

So therefore it is likely demand outstripping supply, during the hottest/coldest weather spikes. Not some of the overall supply being intermittent.

 

[newwurldmn]

Regarding this point, you're not wrong, but I'm sure its the green energy problem. Their power generation isn't consistent while usage can spike greatly given the weather.

So yes, perhaps the fault lies with the power companies and lack of infrastructure, but it’s not the miner being greedy, they are simply providing a service. They are almost like the money maker facilitating transactions.

there’s no fault with the miner. It’s funny that they earned more shutting down than operating their core business. That says something about: their core business, their industry, or the power situation in Texas.

I don’t think the power issue is a clean energy issue. Like I said this type of issue doesn’t happen anywhere else. It’s governmental policies (like disconnecting from neighboring states, etc) that allow these types of fees run rampant.

In the end, homeowners (read tax paying voters) pay for it.

MW just likes to argue. He argued that dividends are immoral. She’s a troll.

 

[NoahA]

It’s governmental policies (like disconnecting from neighboring states, etc)

This is interesting and I can see how this is a huge part of the problem.

In the end, homeowners (read tax paying voters) pay for it.

Agreed. If I had a house and was wealthy enough, I would for sure invest in a battery backup system. When prices spike up 10x, it perhaps gets cost effective to use your own electricity storage vs. using the grid. I like the idea of being self-sufficient in whatever way possible.

MW just likes to argue. He argued that dividends are immoral. She’s a troll.

Good to know!

 

[deaddog]

On a side note deaddog, you're finally getting something about crypto!! I know you still have trouble seeing where the value is, but understanding the operation of the crypto miners is a huge first step!

I don't really understand anything about crypto miners.
My understanding is they try and sovle a riddle and if they succeed they get rewarded in tokens.
If they are anything like conventional miners they burn thru cash like it's going out of style. Doesn't mean you can't make money trading them, they're just a poor investment.

 

[newwurldmn]

I don't really understand anything about crypto miners.
My understanding is they try and sovle a riddle and if they succeed they get rewarded in tokens.
If they are anything like conventional miners they burn thru cash like it's going out of style. Doesn't mean you can't make money trading them, they're just a poor investment.

It’s an arbitrage on power costs (like outsourcing to Asia is an arbitrage on labor costs).

 

[The_Krakenite]

If they are anything like conventional miners they burn thru cash like it's going out of style.

This is exactly how the automotive industry works. Very high expenditures, lots of debt, and lots of time spent in down-cycles.

And golden parachutes for their CEOs.