Why Bitcoin Entrepreneurs Flock to the Texas Countryside | Bitcoin

A cryptocurrency mine is currently under construction in the middle of the Texas countryside.

This 320-acre mining facility in Dickens County will soon house hundreds of machines that are more powerful than the average computer and will work day and night to solve a complex set of algorithms. If successful, the reward is a newly created Bitcoin, each currently worth about $ 44,000.

All the machines needed to thrive are sitting space and electricity – it’s a lot.

Kevin Brendle, the highest-elected official in Dickens County, was in the mine when Canadian crypto mining company Argo Blockchain first proposed to him the idea of ​​building a facility in the area. I accepted the idea. Dickens County, with a population of 2,300, “mainly improves pastures and grasslands,” Brendle said.

“It’s a vast rangeland, a country of cattle with a little agriculture,” he said. “There is not much economic development.”

Mines can help stimulate the economy, create jobs and improve the county’s tax base. And in return, mines are powered by some of the cheapest electricity in the world.

To be profitable, cryptocurrency mining requires a lot of cheap energy. China was once a major hub for mining, with more than half of the world’s mining taking place in China simply because of its low electricity prices. However, earlier this summer, Chinese local governments began closing Bitcoin mines as the country worked to develop its own, better-managed digital currency. The Bitcoin hash rate (the processing power used to generate Bitcoin) has been halved after the crackdown.

Since then, miners have been hunting around the world for cheap electricity, and many have settled in Texas as their destination.

Texas’ power grid is deregulated. This means that customers can choose from a variety of power providers, and providers are encouraged to offer lower rates.

Jason Les, CEO of Riot Blockchain, a US-based cryptocurrency mining company, allows mining facilities to enter into long-term contracts with electricity providers, allowing them to buy electricity at a fixed price for many years.

Riot Blockchain recently acquired Whinstone US, the largest Bitcoin mining facility in the United States based in Rockdale, Texas, for $ 80 million. According to Whinstone, the facility can produce 500 Bitcoins a month. This is the present value of Bitcoin and is worth a total of $ 22 million.

When electricity demand increases, especially in the summer, Texas utilities actually pay mining facilities to reduce energy usage.

“If you’re a miner with a long-term power purchase agreement, you own electricity at a fixed price … you promise to buy energy for years no matter what. “Less said.

“As a Bitcoin miner, you essentially own that power, which allows you to work like a virtual power plant. Utilizing the power you have agreed to buy at a fixed low price, You can sell it back to the grid. “

In recent months, Texas leaders have spoken out about supporting cryptocurrency mining coming to their states.

In June, Governor Greg Abbott signed a bill that would put cryptocurrencies under commercial law and make crypto businesses easier to operate in the state. In the same month, Abbott, Tweet: “Texas will be the leader in cryptocurrencies!” After Texas grocery chain HEB announced that it would set up cryptocurrency kiosks in some stores.

Also what makes the state attractive to miners is that 20% of its energy comes from wind power, and Texas mining is more attractive than Chinese mining, where about two-thirds of its electricity comes from coal. It is a much more environmentally friendly alternative. Tesla CEO Elon Musk said, “The use of fossil fuels for Bitcoin mining and trading, especially coal, which emits the least fuel, is rapidly increasing,” and stopped accepting Bitcoin trading. Did. Mr Musk said Tesla would resume accepting Bitcoin once it was confirmed that about half of the energy used by miners came from clean energy.

States like Kentucky and Louisiana also have cheap electricity, and other states like Wyoming, which recently made it easier for the crypto business to become an LLC, have crypto-friendly politicians, but Texas The world is the only state that appears to offer miners the best of both worlds.

Josh Goodbody, Chief Operating Officer of Digital Asset Management Company Qredo, said: “More and more people are seeing Texas as a friendly place to build a crypto business.”

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

However, there are risks associated with the influx of interest from the cryptocurrency business. Bitmain, a China-based company, invested $ 500 million in 2018 to build a huge mining facility in Rockdale and experienced huge unemployment after the closure of a coal-fired power plant in 2008. He said he would bring employment to the community. Bitcoin fell to just over $ 3,000 in the fall and the company withdrew from the project.

Dickens’ Brendle said his optimism was cautious. He hopes that cryptocurrency mining can strengthen the economy of his county and give some of his residents a stable job, but long-term sustainability is important. It states that there is.

“We’re seeing the move now and have a lot of interest. We understand why that interest is there, but we don’t know what the future holds for Bitcoin mining,” Brendle said. Stated. “I think the biggest concern right now is how long the industry can last and how well it can be maintained.”