Get ready for HBO’s “Electric Money”—Bitcoin’s secrets will be exposed tonight.

Apparently.

Just in case it doesn’t live up to the hype…

Allow me to tell you a story that probably WON’T make it to the documentary.

It’s the real reason Warren Buffett hates Bitcoin.

Credit where it’s due: I learned this story last week while talking to a digital wildcatter at the Amplify 2024 summit.

Bitcoin Ate His Lunch 

The story goes like this…

In 2021, following Winter Storm Uri, Berkshire Hathaway proposed dropping $10 billion to build gas-powered peaker plants across Texas.

What’s a peaker plant, you ask? In short, they’re backup plants that charge a HUGE premium to run.

Despite their inefficiencies, peaker plants have historically been used to stabilize the grid in emergencies or high-demand periods.

Of course, Buffett is no fool. Peaker plants are cash cows. The margins are ginormous.

While an average megawatt hour costs $40, peaker plants can cost up to $5,000 per megawatt hour.

Peaker plants only kick in when there’s no other option, which means they have a captive market willing to pay a premium. It’s a business model built on scarcity, and as long as they’re needed, people have to foot the bill.

(While some blamed Bitcoin miners for the high costs of electricity during Texas’ peak demand, it was really the peaker plants who set the price.)

AND, the kicker: they often make money no matter what.

Some markets provide capacity payments to peaker plants simply for being available as a backup, regardless of whether they are actually called to operate.

Buffett wanted to fund ten of these cash-spewing factories in Texas. But then something happened that most people didn’t expect:

China Banned Bitcoin Mining

As you probably know, ERCOT, or the Electric Reliability Council of Texas, manages Texas’s electric grid, ensuring power supply meets demand.

After Uri, ERCOT’s leadership was overhauled, with a new CEO brought in to help prevent similar disasters in the future.

His name was Brad Jones.

Brad came in at an interesting time. Texas was watching massive amounts of Bitcoin miners moving their rigs from China and setting up shop.

And, with a little nudge from the industry, Brad had a lightbulb moment: Screw the peaker plants.

Instead of signing on for expensive plants that would mostly sit idle, Jones doubled down on this fresh Bitcoin mining wave as part of a demand response strategy.

And… it worked.

Even as weather events got worse, Texas stayed lit up. No blackouts, no emergency spending.

In fact, Jones publicly credited Bitcoin miners for stabilizing the grid and giving renewables a place to thrive.

His big revelation was that Bitcoin mining could act as a flexible, controllable load on the grid.

Unlike peaker plants…

Bitcoin miners can quickly adjust their power usage based on grid demand. They can consume excess energy during off-peak times, helping to balance supply, and then shut down instantly when demand spikes, freeing up electricity for other users.

This ability meant that Bitcoin miners could stabilize the grid without the massive costs associated with peaker plants.

In other words…

Bitcoin mining offered a smarter, more adaptable alternative, which led him to pivot ERCOT’s strategy away from expensive peaker plants.

(Sorry, Buffett!)

Tomorrow, we’re going to talk about one Bitcoin mining company I discovered last week at the conference.

It’s public. It’s lesser-known. And, by many accounts, it’s undervalued.

Stay tuned.