Power Generation Capacity: 300 MW
Non-Carbon Energy Mix: 35%
Energy Sources: Natural Gas, Wind
Despite abundant wind resources in west Texas, we believe RIOT Blockchain's Whinstone facility in Rockdale, TX is primarily powered by carbon-emitting sources like coal and natural gas.
In May 2020, Whinstone entered into a 10-year power supply agreement with TXU Energy to "provide the delivery of a fixed amount of electricity by TXU to Whinstone (via the transmission facility owned by Oncor". The long term supply contract remains in place following RIOT's acquisition of Whinstone in April 2021.
In the company's investor presentation, RIOT Blockchain boasts an overly-specific 88% zero-carbon energy mix for its hosted operations at Coinmint's Massena, NY facility. However, RIOT does not reveal any specific (or generic) information about the primary source of electricity for its Whinstone facility in Rockdale, TX.
Instead, RIOT randomly shares its opinion that the "ERCOT grid is a model environment for renewable generation sources" and renewable cost reductions "combined with West Texas being an ideal environment for solar and wind generation, is driving a substantial year over year increase in renewable generation interconnection". ERCOT is the electricity reliability council of Texas and its load zones cover the majority of the state. While we agree with RIOT's views on the economic attractiveness of renewable energy in West Texas, these comments don't seem relevant with regards to RIOT's specific mining operations in central/eastern Texas. A map showing the location of Whinstone and its proximity to carbon-emitting power plants like coal and natural gas vs non-carbon sources like wind and solar is shown below.
Furthermore, average renewable power generation for the entire ERCOT region was just under 40% for 2021. The vast majority of renewable power in Texas is generated from large wind farms in west Texas and the northern panhandle region. While some of this west Texas wind power likely makes its way to central and eastern Texas (where Whinstone is located), most of this power is likely consumed at higher demand centers in more metropolitan areas west of Rockdale. It is highly unlikely that RIOT's Whinstone facility captures the ERCOT-wide average of 40%.
This is especially true given the power supply agreement with TXU energy and which is connected to the coal-fired Oak Grove facility, located roughly 50 miles northeast of the Whinstone facility.
However, given the lack of hard data points to prove these assumptions, we generously assume Whinstone's non-carbon mix is 35%, just below the ERCOT 2021 annual average.
For full transparency, ERCOT release a fuel mix report where we generated the graph above. ERCOT doesn't report "carbon-free" resources but we include biomass, wind, solar, hydroelectric and nuclear. We excluded coal, natural gas and other from "carbon-free".
According to a RIOT release, "Whinstone’s site has a total power capacity of 750 MW, with 300 MW currently developed. Whinstone’s facility is believed to be the largest single facility, as measured by developed capacity, in North America for Bitcoin mining."
We're curious to get your take on our assumptions. Let us know what you think and 'contact us'.