Some Industrial Bitcoin Miners are Moving to Cheap-Energy Texas

North America's largest crypto mine is six miles outside Rockdale, Texas, "a four-square-mile town that hosts a Walmart, one other grocery store, a handful of Mexican restaurants and a couple of pizza places," reports the Washington Post. The miners took over an old Alcoa aluminum facility, creating a "fenced-off crypto compound" with more than 100,000 servers, stacked 20 feet high. "When the expansion is completed by the end of 2022, that number will have more than doubled," the Post reports, citing the company's CEO Chad Harris. Texas has some of Ameria's cheapest energy prices. But what's really interesting is what happened last month when 94-degree temperatures strained the state's energy grid: Thanks to the way Texas power companies deal with large electricity customers like Whinstone, Harris's bitcoin mine...didn't suffer. Instead, the state's electricity operator, the Electric Reliability Council of Texas (ERCOT), began to pay Whinstone — for having agreed to quit buying power amid heightened demand. That sort of arrangement has helped make the state one of the go-to locations for expanding crypto entrepreneurs the world over, despite its continued agonizing over power shortages. Indeed, Whinstone's new owners are undertaking a major expansion of its facility outside Rockdale, with the intention of doubling its capacity. When fully developed, the crypto mine here is expected to require 750 megawatts of power — enough to power more than 150,000 Texas homes during peak demand. And it's not just Whinstone. More crypto farms want to move into the area as China, believed to be the nation with the most crypto miners, moves to restrict local bitcoin mining and trading by, among other limitations, ordering power companies not to sell them power. Shenzhen-based BIT Mining said in May that it plans to invest more than $25 million in a Texas data center, while Beijing-based server firm Bitmain is already modernizing the old aluminum plant across the street from Whinstone's Rockdale-area facility. Rockdale's mayor, a bitcoin miner himself with a rack of computers in his home, says he's met with at least one other firm interested in locating here. Whinstone, which leases shelving on its campus to other crypto miners' servers, has been contacted by "several," the company's CEO said. It's not just happening near Rockdale. Peter Thiel-backed crypto mining firm Layer1 Technologies last year opened a plant near Pyote in West Texas (population 138 in the 2020 census). In February, Canada's Argo Blockchain announced plans to buy 320 acres of land in the same West Texas area within a year... "One good thing about crypto mining is it's adding flexibility to the system," said Peter Cramton, a former board member of ERCOT, the nonprofit that's charged with managing the state's wholesale energy market. "But the problem is it's consuming real resources, doing a function that has no value...." Bitcoin mines of Whinstone's size may be capable of creating roughly 500 bitcoin per month, the company says. At today's bitcoin value of approximately $34,000, that's $17 million, helping to explain why Riot Blockchain, a publicly traded company, paid $80 million in May to acquire Whinstone.

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