Why Bitcoin Entrepreneurs Are Flocking To Rural Texas Bitcoin

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In the middle of rural Texas, a cryptocurrency mine is currently under construction.

Hundreds of machines bigger than the average computer will soon be housed in this 320-acre mining facility in Dickens County, where they will work day and night to solve a complex series of algorithms. If successful, the reward will be a new bitcoin, currently worth around $ 44,000 each.

All machines need to thrive, they are seating areas and plenty of electricity.

Kevin Brendle, Dickens County’s top elected official, embraced the idea of ​​the mine when Argo Blockchain, a Canadian cryptocurrency mining company, first approached him with the idea of ​​building a facility. In the region. Dickens County, with a population of 2,300, is mostly made up of improved pastures and meadows, Brendle said.

Its vast rangelands, its cattle country with some agriculture, he said. We don’t have a lot of economic development.

A mine could help stimulate the economy, create jobs and improve the county tax base. And in return, the mine will be powered by one of the cheapest electricity in the world.

To be profitable, cryptocurrency mining requires a lot of cheap energy. China was once the major mining hub, with more than half of the world’s mining in the country, precisely because its electricity is cheap. But earlier this summer, Chinese local governments began shutting down bitcoin mines as the country struggles to develop its own more controlled digital currency. Bitcoin halved the processing power used to produce bitcoin after the crackdown.

Since then, miners have scoured the world for places where electricity is cheap, and many have settled in Texas as their destinations.

Texas’ power grid is deregulated, which means that customers can choose between different electricity providers, and providers are incentivized to offer low tariffs.

Mining facilities can enter into long-term contracts with electricity providers that allow them to purchase electricity at a fixed price for many years, says Jason Les, CEO of Riot Blockchain, a crypto mining company. currency based in the United States.

Riot Blockchain recently acquired Whinstone US, the largest bitcoin mining facility in the United States based in Rockdale, Texas, for $ 80 million. Whinstone says his facility can produce 500 bitcoins per month worth a total of $ 22 million at the current value of bitcoins.

When demand for electricity increases, especially during the summer months, Texas power companies will actually pay for mining facilities to reduce their energy use.

If you were a miner who has a long term power purchase contract then you own power at a fixed price, you agree to buy power for years no matter what , Les said.

As a bitcoin miner, you essentially have this power, and it allows you to work as a virtual powerhouse. You can take the electricity that you agreed to buy at a lower fixed price, and then you can sell it back to the grid.

In recent months, Texas leaders have expressed support for cryptocurrency mining in their state.

In June, Governor Greg Abbott enacted a bill that places cryptocurrency under commercial law, making it easier to operate cryptocurrency businesses in the state. The same month, Abbott tweeted: Texas will be the leader in cryptocurrencies! after Texas grocery chain HEB announced it would be installing cryptocurrency kiosks in some of its stores.

What also makes the state attractive to miners is that 20% of its energy comes from wind power, making mining in Texas a much greener alternative to mining in China, where about two-thirds of electricity comes from coal. Tesla CEO Elon Musk has ended his company’s acceptance of bitcoin transactions, citing the increasing use of fossil fuels for mining and transactions of bitcoin, especially coal, which has the worst emissions of all fuels. Musk said Tesla will resume accepting bitcoin once it is confirmed that about half of the energy used by miners will come from clean energy.

While states like Kentucky and Louisiana also have cheap electricity, and others like Wyoming, which recently made it easier for cryptocurrency companies to become LLCs, have crypto-friendly politicians. Currency, Texas is the only state that seems to offer miners the best of both worlds.

We have seen a good combination of political will and the reality of the electricity market that has led people to start building in Texas, said Josh Goodbody, COO of Qredo, a digital asset management company. More and more people are seeing Texas as a friendly place to start crypto businesses.

In addition to the Argo and Whinstone facilities, BIT Mining, a Chinese mining company, has invested $ 25 million to build a mine in Texas.

However, an influx of interest from cryptocurrency companies is not without risk. Bitmain, a China-based company, said in 2018 it would invest $ 500 million to build a massive mining facility in Rockdale, creating jobs in a community that saw huge job losses after it closed. a coal-fired power plant in 2008. But after Bitcoin’s price fell to just over $ 3,000 in the fall, the company pulled out of the project.

Brendle, of Dickens, said his optimism was cautious. He hopes cryptocurrency mining will be able to strengthen his county’s economy and provide some of its residents with stable jobs, but he notes that long-term sustainability is important.

We’re seeing movement now, we’re seeing a lot of interest. We understand why this interest is there. But we just don’t know what the future of bitcoin mining is, Brendle said. I think the biggest concern right now is how long, how well the industry will hold up.

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