Basically they can do this because the miners signed fixed-rate power contracts with the utility a few years back. So the contract says they only have to pay, I don’t know, 10 cents per kilowatt-hour. If it’s a high demand day and power goes to 50c/kwh, the utility doesn’t want to be selling its scarce capacity at 10c/kwh so will bribe the miners with money, say, 20c/kwh multiplied by their usual daily kwh consumption. That lets the utility sell the electricity they would have sold to the miners at an effective rate (for the utility) of 30c/kwh to the public, who pays 50c/kwh.
An even more ridiculous thing the miners can do is just buy all the power they can at 10c/kwh and redirect it back onto the grid where they can sell it at 50c/kwh to the public (usually through a utility intermediary).
It isn’t all upside for the miners, theoretically, since there’s a risk that power could decrease in cost below their fixed rate contract sometimes. But given how shitty Texas’ electricity grid is and how the state has no ability to actually incentivize building more capacity that probably won’t happen. (actually these miners themselves were envisioned to be this incentive, love to set up a rube goldberg mechanism instead of just being like “build more power capacity”).
Basically they can do this because the miners signed fixed-rate power contracts with the utility a few years back. So the contract says they only have to pay, I don’t know, 10 cents per kilowatt-hour. If it’s a high demand day and power goes to 50c/kwh, the utility doesn’t want to be selling its scarce capacity at 10c/kwh so will bribe the miners with money, say, 20c/kwh multiplied by their usual daily kwh consumption. That lets the utility sell the electricity they would have sold to the miners at an effective rate (for the utility) of 30c/kwh to the public, who pays 50c/kwh.
An even more ridiculous thing the miners can do is just buy all the power they can at 10c/kwh and redirect it back onto the grid where they can sell it at 50c/kwh to the public (usually through a utility intermediary).
It isn’t all upside for the miners, theoretically, since there’s a risk that power could decrease in cost below their fixed rate contract sometimes. But given how shitty Texas’ electricity grid is and how the state has no ability to actually incentivize building more capacity that probably won’t happen. (actually these miners themselves were envisioned to be this incentive, love to set up a rube goldberg mechanism instead of just being like “build more power capacity”).