Bitcoin mining company pays $1.42 million for violating PJM’s tariff in relation to its power plant operations.

On January 30, 2025, the Federal Energy Regulatory Commission (“FERC”) approved a settlement agreement (“Agreement”) between the Office of Enforcement (“Enforcement”) and a bitcoin mining company (“Stronghold”)¹ over whether its generation facility violated PJM Interconnection, LLC (“PJM”) tariff rules from June 2021 to May 2022 (the “Relevant Period”).  As is often the case for investigations into generators’ participation in PJM and other Regional Transmission Organization (“RTO”) markets, the matter began at FERC when the market monitor referred the conduct to Enforcement.

The Agreement requires Stronghold to: (a) disgorge to PJM $678,635 in capacity revenues received during the Relevant Period;  (b) pay a civil penalty of $741,365 to the United States Treasury; and (c) provide compliance training to relevant personnel and compliance monitoring reports to Enforcement.

This is the first FERC enforcement settlement involving power plant operations supporting  crypto mining operations, and it emphasizes that crypto miners (and other large-scale consumers of electric power (e.g. data centers)) with co-located or otherwise dedicated power facilities must carefully consider FERC regulations and the rules of the relevant RTO where they operate. 

I. Relevant Conduct

Stronghold is a vertically integrated crypto asset mining company focused on mining Bitcoin. Stronghold’s business model is to purchase power plants, install Bitcoin mining operations, and make a profit by selling power at wholesale or mining Bitcoin—whichever is more profitable based on market conditions. 

From 2018 to 2022, Stronghold’s plant was a capacity resource in PJM with a “must offer requirement” of approximately 85 MW.² Under the “must offer requirement,” the plant was required to: (1) offer its capacity³ into the PJM energy markets every day if not on outage or derated; and (2) be available for scheduling and dispatch unless the unit designates its offers as a “Maximum Emergency” offer. Under PJM’s rules, the plant’s offers must comply with various parameters, including Economic Maximum (“EcoMax”)⁴ and Emergency Maximum (“EmerMax”).⁵ When a unit is also a capacity resource, PJM’s tariff also requires the unit to meet an EmerMax parameter in the amount equal to its “must offer requirement” unless the unit is on outage or derated.⁶

During the Relevant Period, the plant routinely submitted energy offers into PJM’s 
energy markets with EcoMax and EmerMax values that were lower than its “must offer requirement.”  During this same period, the plant routinely produced more energy than it offered into PJM’s energy markets. The plant used portions of its generated energy—which it did not offer into PJM’s energy markets—to run its Bitcoin mining rigs.  The settlement also suggests the plant purchased a larger quantity of power from PJM than it needed to run plant operations (power usage called “Station Power”), further indicating that the plant was elevating Bitcoin mining operations over its capacity market obligations.

Also notable, in June 2022, Stronghold decided that the plant should not participate in the PJM capacity market given its Bitcoin mining load and operational characteristics. However, the plant must still submit capacity offers into PJM going forward, including for the 2025/2026 PJM Capacity Auction, unless an exception applies or the plant applies to be an energy-only resource.

II. Violations

Enforcement determined that Stronghold violated the PJM tariff⁷ when it: (1) offered the plant into PJM’s energy markets with EcoMax and EmerMax values that understated the amount of power the plant could produce and actually did produce; and (2) bought power from PJM at wholesale rates under the guise of Station Power but did not use the power for Station Power. According to the Agreement, Stronghold’s actions were inconsistent with the standards, requirements, and directions of PJM’s Office of Interconnection and hindered PJM from effectively performing its obligations.

Enforcement determined that Stronghold violated another tariff provision⁸ by not submitting offers for the plant’s available capacity. Enforcement determined that the offering behavior observed in the data was not the result of an outage or other operational issue. Rather, Enforcement determined that when prices were favorable, considering both PJM energy market prices and Bitcoin market prices, Stronghold directed the plant’s output towards its Bitcoin mining operations.

III. Lessons Learned

The subject matter and alleged violations in this settlement are not unusual in that FERC has focused heavily in the past several years on whether generators are meeting their energy and capacity market obligations in RTO markets. Crypto mining companies, hyperscalers, and other technology-driven large-load consumers with on-site generation are relatively new entrants in RTO markets, but this settlement shows FERC will give them the same scrutiny.  The energy arbitrage strategy at the heart of this settlement—maximizing profits depending on the relative value of bitcoin mining vs. energy sales—is central to  the business model for many cryptocurrency operations, and there is nothing in this settlement to suggest that this is itself a violation of any tariff, statute, or regulation. Rather, the problem arises when such arbitrage strategies are conducted without concern for compliance with the rules and regulations governing the operation of generating resources subject to FERC’s jurisdiction under the Federal Power Act. 

The compliance lesson here is simple: large-load consumers (e.g., crypto miners, data centers) that own/control their own generation must pay careful attention to the intricacies of RTO market rules and FERC regulations and statutes governing the operation of electric generation facilities and avoid market conduct that could give the appearance of attempting to impermissibly arbitrage those rules for financial gain. 

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¹Order Approving Stipulation and Consent Agreement, 190 FERC ¶ 61,059 (Jan. 30, 2025).
²PJM Tariff, Attachment K, Appendix, Section 1.10.1A(d).
³Specifically, under the “must offer requirement,” a Plant is required to offer its Installed Capacity equivalent of the Plant’s cleared Unforced Capacity (“UCAP”) into the PJM energy markets every day if not on outage or derated. UCAP is the ICAP of a resource, rated at summer conditions, that is not, on average, experiencing a forced outage or derating.  See PJM – PJM Glossary, “Unforced Capacity (UCAP),” https://www.pjm.com/Glossary#index_U.
⁴Under the PJM Tariff, EcoMax is “the highest incremental MW output level, submitted to PJM market systems by a Market Participant, that a unit can achieve while following economic dispatch.” PJM Tariff, § 1, Definitions - E – F.
⁵The EmerMax parameter represents the maximum output of energy the unit can produce and still maintain a stable level of operation. PJM – PJM Glossary, “Emergency Maximum Generation Limit,” https://www.pjm.com/Glossary#index_E.
⁶PJM Tariff, Attachment K, Appendix, § 1.10.1A(d).
⁷PJM Tariff, Attachment K, § 1.74(f). “Each Market Participant shall operate, or shall cause to be operated, any generating resources owned or controlled by such Market Participant that are within the PJM Region or otherwise supplying energy to or through the PJM Region in a manner that is consistent with the standards, requirements or directions of the Office of the Interconnection and that will permit the Office of the Interconnection to perform its obligations under this Agreement; provided, however, no Market Participant shall be required to take any action that is inconsistent with Good Utility Practice or applicable law.”
⁸PJM Tariff, Attachment K, Appendix, Section 1.10.1A(d). “Market Sellers owning or controlling the output of a Generation Capacity Resource that is committed as a Capacity Resource under Tariff, Attachment DD or RAA, Schedule 8.1, and that has not been rendered unavailable by a Generator Planned Outage, a Generator Maintenance Outage, or a Generator Forced Outage shall submit offers for the available capacity of such Generation Capacity Resource, including any portion that is self-scheduled by the Generating Market.”

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