Why Texas Could Become the Crypto Mining Capital of the World

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Last year, when China implemented its ban on crypto mining, many of the country’s miners headed to North America. Four months later, the U.S. was the world’s leading crypto mining nation. It turns out that Texas is the territory some of the world’s top bitcoin mining companies are fighting for.

Texas towns with crypto mining operations include Austin, the state’s capital, Dallas, Denton, Pyote, and Rockdale. 

Texas Governor Greg Abbott has embraced cryptocurrencies and blockchain technology in general and crypto mining specifically. Other prominent Texas politicians, such as congressmen Ted Cruz and Pete Sessions are also pro-crypto mining. But that’s only one reason Texas is attractive to miners. The state’s also well known for its low taxes—including no state income tax—and its business-friendly environment.

Mining companies setting up operations in Texas include Poolin, Riot Blockchain, Bitdeer, CoinTerra, Rhodium, Genesis Digital Assets, and Lynx Mining, to name a few.

The Impact of Crypto Mining on Texas’ Energy Grid

Of course, Texas crypto mining is not all roses and hot barbecue sauce. Bitcoin mining is well known for increasing local electricity bills when new operations are set up. That won’t be good news to Texas electricity consumers who enjoy low electric prices. Ironically, it’s the low cost of electricity that attracts crypto miners to locations like Texas.

This little political reality is complicated by the fact that Texas has its own power grid, a deregulated one.

Last February, when Texas experienced a record-breaking freeze, it put extra strain on the electric grid and some homes lost electricity for more than a week. More than 200 people lost their lives. Some environmentalists are worried that crypto mining will put further strain on the electric grid. If that happens, Texas could see bigger problems than they saw in February 2021. That’s why Abbott requested crypto mining firms, in February this year, to voluntarily shut down operations if the state experiences a power grid failure. Some of the state’s crypto mining firms obliged.

Proponents argue that crypto mining companies can sell excess energy back to the power grid, making it a net positive. Detractors, however, still point to proof-of-work’s carbon footprint as the big negative.

Meet the Crypto Mining Entrepreneurs, Millionaires, and Unlikely Heroes

One Texas town hit hard by last year’s winter freeze was Denton, a part of the Dallas-Fort Worth Metroplex. In response, the city went into debt to solve its crisis. One firm by the name of Core Scientific presented a solution to city leaders that caused a bit of a local controversy—they could help the city get out of debt with crypto mining.

In another part of the state, two 24-year-old entrepreneurs set up shop under the name of Giga Energy Solutions. Their gig? To use natural gas typically burned off in oil fields as the fuel for crypto mining. They’re now millionaires.

Rockdale is a small town in central Texas with 5,600 residents. It’s now home to two large crypto mining companies. Bitdeer is the U.S. spin-off from Bitmain, one of the largest manufacturers of crypto mining equipment in the world and which is headquartered in China. Riot Blockchain, operating as Whinstone, is a U.S.-based company that plays to its underdog status despite operating the largest crypto mine in Texas. Both companies operate out of property once occupied by Alcoa, the aluminum maker.

The city of Rockdale isn’t just a favored destination for crypto miners looking to move there. The mayor himself has a crypto mine of his own. His cryptocurrency of choice is chia and he earns less than $5 per day.

As of March 2022, electric companies are still fielding proposals for crypto mines. In West Texas, there are 75 to 100 currently on the table. In the panhandle and central plains areas, there are a couple of dozen mining companies looking for grid provider support. In Austin, proposals could increase energy output by 1,000 megawatts if all of them are accepted.  

 

It doesn’t look like the crypto mining stampede in Texas is going to end any time soon.

 

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