Highlights:

A recent article in The Economist suggests that bitcoin miners are:

- Being paid vast sums to participate in demand response schemes in Texas

- Running out of political goodwill with Republicans

The truth is that The Economist has:

- Over-reported what miners are paid in demand response

- Failed to provide any actual evidence that Republicans are “souring” on miners

- Skipped over the inconvenient truths around the value miners bring to the grid

- Failed to live up to their own stated value of having “a reverence for facts”

A recent article in The Economist titled: Why Texas Republicans are souring on crypto has unfortunately aligned itself with a diminishing yet persistent trend: the disingenuous misreporting of facts regarding Bitcoin mining. The publication of such an article that appears to have skipped the key task of fact-checking and serves as a reminder that misinformation has permeated discussions to the extent that many assume Bitcoin companies are bad actors without really testing to see if that's true. By doing so, The Economist has put its reputation and credibility on the line.

Where The Economist Went Wrong:

The article makes several unsubstantiated claims, the most notable being the misrepresentation of revenue earned by RIOT, a Bitcoin mining company. The piece incorrectly states that RIOT earned $32 million from "not mining Bitcoin." This claim is not only incorrect but grossly misleading. The article suggests that the Electric Reliability Council of Texas (ERCOT) paid this money to RIOT for their participation in ancillary grid service schemes, primarily "demand response," where large electricity users curtail their use during high demand periods. The article falsely claims that this $32 million sum is the fee paid by ERCOT for curtailing use.

In reality, RIOT's earnings break down as follows:

1. $7 million was earned from selling demand response services.

2. The remaining $24 million was not earned by "not mining Bitcoin" but by selling back energy that RIOT had already purchased but did not use.

Importantly, this energy wasn't sold to the public utility ERCOT, but to TXU Energy, RIOT's publicly listed energy supplier with a $12 billion market capitalization. Bundling both amounts together is as disingenuous as it is an accounting mistake.

This misrepresentation of facts and the failure to properly investigate and report on the complexities of Bitcoin mining's relationship with the energy sector demonstrates a concerning lack of journalistic rigor from a publication of The Economist's stature.

You can read and confirm this at the link below:

https://blog.yesenergy.com/yeblog/bitcoin-miners-diversify-revenue-streams

Understanding Demand Response

Demand response is a one of the key ways that grid operators like ERCOT can stabilise power grids. These services existed well before Bitcoin mining became a business – Grid operators have offered these schemes for more than 40 years and they have taken a number of different structures and forms. Demand response is the most desirable because of its myriad benefits:

  - Revenue maximisation – generators earn more from their energy, more of the time because grid utilisation is being managed on the demand side, rather than curtailing energy generation.

  - Increased grid resilience and reliability – by managing the balance of the grid from the demand side frequency and voltage control is improved without needing to curtail generation.

  - Allows for integration of renewables - a grid powered by wind and solar generation requires the kind of support demand response can bring to balance out the periods when the sun is not shining or wind levels are low.

   - Reduced reliance on fossil fuel power plants – power plants that run during peak hours tend to be higher emitters. Reducing peak demand also reduces the carbon intensity of the grid as a whole.

   - Energy saving – even after the “snapback effect” where demand increases after being curtailed grids use less energy overall when demand response is present.

Contrary to The Economist's suggestion, demand response is not designed to save power. It is a grid balancing scheme. Grid systems face significant challenges with both excess power and excessive demand, especially given the integration of intermittent renewable energy sources for which traditional grids were not designed. Demand response is not about reducing overall demand. Rather, it's an approach to frequency control and load balancing that operates from the demand side of the equation. This method is often more efficient than supply-side management for maintaining grid stability.

Globally, demand response has been described as a "runaway success". As more and more consumers of energy are moving on-grid through the process of electrification (for example: cars, factories, greenhouses, heating, hot water) the demand for electricity has increased. But adding more load to existing grids which rely on thermoelectric generation, and in particular thermal peaker plants is counterproductive. So demand response as a way of facilitating the deployment of more renewable energy capacity and managing their intermittency is an ideal means of using demand-side incentives to maximise the utilisation of the grid, the electricity on it, and the revenue that can be made by the generators and consumers of electricity. As large, very flexible customers Bitcoin mining is literally the best demand response participant you could ask for.

Because they're large and flexible Bitcoin miners like RIOT have entered the demand response market, competing with other suppliers for grid owners' demand response revenue. This competition has made the market more competitive, ultimately lowering the total cost of demand response payments made by grid owners. As Brad Jones, the former interim CEO of Texas' grid, has noted, the capability of Bitcoin miners to provide these services at scale means lower costs for all consumers in Texas. Moreover, Jones highlighted that Bitcoin mining can help balance the grid more efficiently due to the unique ability of miners to shut off quickly, something other industrial loads offering demand response services struggle with.

The Economist has not only failed to calculate the actual cost of demand response, but has also failed to understand how valuable these services are to the grid operator.

Political Upheaval. Or Perhaps Not.

The Economist's article on Bitcoin mining in Texas contains several problematic generalizations and misrepresentations. Beyond the specific misreporting on RIOT's revenue, the article makes sweeping claims about the political stance towards Bitcoin mining in Texas. It quotes only one out of 31 Texas state senators, Donna Campbell, who merely asks, "If they don't come with their own trough full of food, can we just say no?" This ambiguous statement, rather than being derisive, simply questions whether it's reasonable to ask businesses to generate some of their own electricity. Notably, the article provides no concrete evidence to support its claim that Republicans are "souring" on Bitcoin mining. In reality, Bitcoin mining remains a topic of interest and debate across the political spectrum in the United States. While the article suggests growing Republican opposition to Bitcoin, a closer examination reveals a more nuanced picture. Many Republicans continue to support Bitcoin, viewing it as a catalyst for economic growth and innovation. Interestingly, a recent report from the Nakamoto Project suggests that individuals who are particularly left-leaning are the most likely to own Bitcoin, further complicating the political landscape surrounding this technology. This discrepancy between The Economist's portrayal and the more complex reality underscores the importance of critical analysis when consuming media reports on Bitcoin and its political implications.

The assertion that Republicans are universally "souring on crypto" is not only inaccurate but also overlooks the broader trend of bipartisan interest in digital assets. A cursory examination of recent political discourse and media coverage would reveal this complexity, contradicting the oversimplified narrative presented in the article. The Economist's brief piece manages to pack in a surprising amount of inaccurate, cherry-picked, and ambiguous information. It is disconcerting that such dismissive and superficial work can be distributed in a publication of The Economist's stature. They have evidently failed to uphold their own stated philosophical values:

  - Objectivity - They clearly have an anti-bitcoin bias,

  - Integrity – they appear to have made little effort to "uncover the truth or check facts",

  - Excellence – they have clearly not been ambitious or inquisitive enough to understand the issues and facts at the core of this reportage.

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