Cryptocurrency Downturn Sparks Texas Bitcoin Mine's Interest in Battery Solutions

Because the value of cryptocurrencies is going down, a crypto mine developer wants to build a battery storage center in Corpus Christi, Texas. Bootstrap Energy, based in Dallas, has been planning a crypto-mining facility that will be built in two stages on a 114-acre plot of land in the city’s industrial area. Each one would have held about 150 containers full of rack-mounted computers that mined bitcoin, a digital currency. Bootstrap, on the other hand, wants to replace the second part with a large-scale battery energy storage system (BESS) facility.

The developer got permission from the zoning board to build a crypto mine on the land in the middle of 2022, but only if it could also think of and make plans for other industry uses. At a meeting last week (10 October), the City Council of Corpus Christi approved its “change of focus” and new deadlines for getting things done.

Bootstrap said that its BESS would be linked to the ERCOT power grid and start working “not later than the end of the calendar year 2025.” It is working with Navitas Energy, a battery storage company backed by Leyline Renewable Energy.

According to a statement sent to the council in August by Bootstrap Energy chief operating officer Matthew Held, the company has been “working hard” to get ready for its alternative plan. For example, it has filed an interconnection request with ERCOT.

The developers think that AEP, the utility company that owns the substation that the BESS would link to, will finish the full interconnection study next month. Navitas got a 50.1% stake in the BESS part of the project in February and is now planning for it to have a 300MW battery storage system.

Crypto Winter Price Collapse

Bootstrap Energy is still going ahead with the first 300MW of cryptocurrency mining, but they said that a big drop in demand for mining was due to things like the public fall of the FTX cryptocurrency market. The collapse of FTX and the following jailing of CEO Sam Bankman-Fried happened during what was already known as a “crypto winter.” This is a time when the prices of cryptocurrencies drop sharply, making it hard to invest in infrastructure in the sector.

At a meeting with the Corpus Christi council, Bootstrap said that the price of bitcoin (BTC) had dropped from US$44,000 when it signed an offtake deal in February 2022 for the first part to US$18,000. At that time, off-taker Computer North filed for Chapter 11 bankruptcy. Four months later, FTX went bankrupt, which dropped the price of Bitcoin to just $15,000 USD.

The Phase 2 customer then pulled out of the project “just days before expected closing,” the company said. The good news is that energy storage is seen as a new chance. In fact, “numerous energy storage developers” approached Bootstrap Energy before they negotiated the deal with Navitas Energy and became co-developers of the project.

70% of all large-scale BESS deployments in the US were made through ERCOT in the first quarter of 2023. There were about 3.3GW of batteries linked to the grid this summer. By the end of 2024, it is expected that 9.5GW will be connected.

Both companies are interested in Texas’s rapidly expanding market and are planning to build many more BESS sites as well as gas plants. All of these projects are expected to be funded and completed between 2024 and 2026. Bootstrap said that Phase 2 development would cost about $100 million. They also said that because BESS depreciates more slowly than crypto, capital equipment will need to be replaced every 10 years instead of every five years as was first suggested to the city.

It also mentioned that the “massive” investment tax credit (ITC) benefits for energy storage projects were made available when the federal Inflation Reduction Act (IRA) was passed in August of last year. As a Bitcoin mine, Phase 1 will still go ahead. As for the payments to Corpus Christi’s general fund, Bootstrap said that each step will be worth about the same amount, or about US$1.6 million a year.

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