With support from State leadership and a favorable environment and policies, the biggest supplies of Bitcoin are expected to come from Texas.
Before the covid pandemic, China was managing 65% of the Bitcoin hashrate, eight times higher than the US at 8%. But from the look of things, Texas is ready to conquer the industry.
Ban on Mining Activities in China
The miners used legal loopholes to their advantage but received condemnation from leaders due to interference with climate. A crackdown on mining activities in 2018, pushed the crypto miners out of the country. The Chinese state council proceeded to ban crypto mining on June 21.
Miners had to look for new operation grounds and Iran and Kazakhstan seemed ideal. However, their power demand overstretched the grid, causing blackouts causing protests in Tehran. Iran banned Bitcoin mining, and other countries, such as India, joined.
Many countries were not ready to accommodate the miners at the risk of insufficient power to light homes and produce semiconductors and cars. The firms were booted, and the world was shrinking right under their nose. After scouring many places around the globe, they settled in Texas.
The Chinese economic and hydropower incentives that made it suitable for minting Bitcoin were blanketed by the regulatory crackdown. The companies relocated to the US to join local companies such as Riot Blockchain.
Miners Find a Home in Texas
Texas has welcomed the mining companies with open hands. It is one of the fastest-growing mining states with giant data centers minting virtual currencies dwarfing facilities in other regions. Texas is likely to emerge as the leading Bitcoin producer if it capitalizes on this exodus. The economic development in this part of the country is relatively low, as locals use the vast open range grassland to keep cattle rearing and farming.
Geosyn Opens Its Door in Texas
Geosyn Mining opened a new facility in Texas at the beginning of this year. According to Caleb Ward, the mining facility cofounder, they plan to run over 500 mining machines in the 2000-feet premises and use the revenue for solar energy generation.
But Geosyn is only one of the companies. Texas Blockchain Council shows there are over 25 miners.
- Poolin is planning to expand its mining capacity fourfold. As per the company’s CEO, Kevin Pan, Texas will be the Bitcoin global mining capital by 2023. But this will only happen if they boost the use of renewable energy sources such as solar and wind for mining operations.
- Riot Blockchain amalgamated Whinstone US, the country’s biggest mining firm with a capacity to churn out 500 units monthly. If a new coin is going for $44 000 at current prices you can calculate the gross income. Whinstone is upgrading its operations. After completion, it will consume 750 MW, equal to 1500 households’ power consumption in peak demand.
- BIT Mining which has roots in China has invested $25 to build a facility in area. There is optimism for job creation after the closure of the coal mining company in 2008.
Support from State Leaders
The promise of new jobs and taxes appeals to State politicians. The pro-mining strategy has received support from governor Greg Abbott. The Texas governor held a conference to woo the miners to his state. The governor is courting bitcoin miners in his bid for reelection.
Republican gubernatorial aspirant, a once fierce critic of mining operations, Don Huffines, says that they will even pursue a more pro-bitcoin approach than Abbott’s government. They will go the extra mile and make bitcoin a legal tender.
Many leaders running for elective posts are also hyping bitcoin mining including advocating fro plants to incorporate bitcoin mining in the energy infrastructure. Ted Cruz, a Republican Senator, said the mining activities will boost the energy infrastructure.
But opposers in congress such as Frank Pallone, the energy and commerce committee chairman, have questioned the power demands and climate implications of the proof of work consensus mechanism. However, companies executives and state parliamentarians are meeting to disabuse the concerns of harmful effects of mining activities to the environment.
The energy demand question has created two factions with supporters arguing that the mining will help regulate energy demand, while the critics say consumption will outstrip production levels.
Mining consultants are also playing a vital role in increasing miners coming to texas. For instance, the founder of ProofofWork.Energy, de la Torre, is among the players introducing Chinese miners to Texas.
Subsidies and Incentives
Texas is offering subsidies to renewable energy users to reduce power costs. For instance, it is lowering the reputational risks of environmental effects caused by miners.
The power grid is also deregulated. Users can opt to sign contracts with energy providers to pay a fixed rate. This incentivizes producers to produce at low rates. The miners can sell power back to the grid when demand increases.
Wind power comprises up to 20% of Texas energy. It is a better alternative in environmental conservation unlike in China the operations rely on coal. Some players like the Energy Funders are shifting from on-grid power to natural gas for mining operations.
Recently, the governor signed a law that allows Crypto to operate under commercial law, easing virtual tokens transactions.
Texas Set to Become the Capital of Bitcoin Mining
Every miner is looking for stable, affordable power and little political interference where the government won’t just reign in and close the facilities. Texas might just provide that. Of course, with cowboy hats and range shooting as a bonus.
Energy prices in Texas are among the lowest globally. Bitmain had set aside $500 million to construct a mining base in Alcoa. BitDeer later occupied the vacant property after the plans failed. The state plans to annex land to get a 150 MW station up and running.
But there are several hurdles. For instance, the infrastructure bill mandates the miners to report crypto transactions like brokerage firms.
Another problem is a power failure, especially during peak demands. The Texas power grid has been hit with multiple failures including the famous February incident.
The installations strain the grid, and are sometimes counterproductive. To put this into perspective, the power operator compensates the premises for switching off their machine during high demand.
When China was leading in the mining business, it was the major market for Bitcoin-minting equipment which was optimized for local use. The goal is to help miners rake in more revenue. The manufacturers are designing equipment to conform to the Texas environment.
Riot Blockchain is building mining hardware that will help them rival Poolin. Similarly, smaller establishments in Texas can also become competitive by investing in clean energy.
Many mining premises have made up their mind to settle in Texas. Fear, uncertainty, and doubt have settled. While Rockdale seems like the center of attraction, the miners also inquire about other places like Almaty. With support from State leadership and a favorable environment and policies, the biggest supplies of the pioneer Satoshi token will come from Texas.
Michael is a cryptocurrency trader and blockchain enthusiast and the founder of CryptoPredictions.com, a website that provides daily, weekly and yearly cryptocurrency price forecasts. Michael is also a regulator contributor at popular finance magazines that include BitcoinMagazine, FX Empire, Equities, DailyForex and TalkMarkets. If he doesn't trade or investigate practical use cases of cryptos, he goes for a run or swim.