A bitcoin mine is now being built in the midst of rural Texas.
Hundreds of machines with more processing power than the typical computer will soon be housed at this 320-acre mining facility in Dickens County, where they will work 24 hours a day, 7 days a week to solve a complex set of algorithms. If you succeed, you’ll be rewarded with newly created bitcoins, which are currently worth over $44,000 apiece.
All the machines require a place to sit and a lot of electricity to thrive.
When Argo Blockchain, a Canadian bitcoin mining firm, approached Kevin Brendle, Dickens County’s top elected official, with the notion of constructing a plant in the region, he accepted it. Dickens County, with a population of 2,300 people, is “mostly improved pasture and grassland,” according to Brendle.
He described the area as “wide-open range terrain, cow country with a little farming.” “We haven’t had much economic development.”
A mine might help to boost the economy by providing employment and increasing the revenue base of the country. In exchange, the mine will be supplied with some of the world’s cheapest electricity.
To be lucrative, bitcoin mining needs a large amount of low-cost electricity. Because of its inexpensive energy, China was once the world’s mining hub, with over half of the world’s mining taking place there. Local governments in China, however, began shutting down bitcoin mining early this summer as the country tries to establish its own, more tightly controlled digital currency. After the crackdown, the bitcoin hashrate (the amount of computing power needed to create bitcoin) was cut in half.
Since then, miners have been searching the world for cheap power, with many settling on Texas as their destination.
Texas’ electricity infrastructure is deregulated, which means customers may select from a variety of power suppliers, which incentivizes companies to provide affordable prices.
According to Jason Les, CEO of Riot Blockchain, a cryptocurrency mining firm located in the United States, mining operations may set up long-term contracts with power providers that allow them to purchase electricity at a fixed price for several years.
Riot Blockchain has paid $80 million for Whinstone US, the largest bitcoin mining operation in the United States, located in Rockdale, Texas. Whinstone claims that their plant can create 500 bitcoins each month, which would be worth $22 million at today’s price.
When electricity demand rises, particularly during the summer months, Texas power providers will pay mining operations to reduce their energy consumption.
“If you’re a miner with a long-term power purchase deal, you own power at a certain price… “You’re committing to buying electricity for years regardless of what happens,” Les said.
“As a bitcoin miner, you effectively own that electricity, allowing you to function as a virtual power plant. You can sell the electricity you committed to acquire at a predetermined lower price back to the grid. ”
Texas officials have been outspoken in recent months about their support for bitcoin mining in their state.
Governor Greg Abbott signed a bill putting bitcoin under commercial law into law in June, making it simpler for cryptocurrency firms to operate in the state. After the Texas supermarket company H-E-B announced that it would be installing bitcoin kiosks in certain of its shops, Abbott tweeted, “Texas will be the cryptocurrency leader!” in the same month.
Texas is also appealing to miners because it gets 20% of its energy from wind power, making it a cleaner option than mining in China, which gets around two-thirds of its electricity from coal. Elon Musk, the CEO of Tesla, has stopped accepting bitcoin payments, citing the “rapidly rising use of fossil fuels for bitcoin mining and transactions, notably coal, which has the highest emissions of any fuel.” Tesla will start taking bitcoin after it is confirmed that roughly half of the energy needed by miners will come from renewable sources, according to Musk.
While states like Kentucky and Louisiana have inexpensive electricity and states like Wyoming – which just made it simpler for cryptocurrency firms to form LLCs – have cryptocurrency-friendly lawmakers, Texas appears to be the only state that offers miners the best of both worlds.
“We’ve seen a nice mix of political will and the realities of the power market there that has prompted businesses to start constructing in Texas,” said Josh Goodbody, CEO of Qredo, a digital asset management firm. “A growing number of people are seeing Texas as a good area to start a crypto business.”
BIT Mining, a Chinese mining firm, has spent $25 million on a mine in Texas, in addition to the Argo and Whinstone operations.
However, an increase in interest from bitcoin firms is not without risk. Bitmain, a Chinese firm, said in 2018 that it would invest $500 million in Rockdale to develop a massive mining complex, providing jobs for a region that has lost thousands of jobs since a coal factory closed in 2008. The business withdrew from the project after the price of bitcoin plummeted to just over $3,000 in the fall.
Dickens’ Brendle expressed caution in his hope. He believes that bitcoin mining will help to boost his country’s economy and provide secure jobs for some of its citizens, but he emphasizes the need for long-term viability.