Mining Hub - Texas

When it comes to the adoption of Bitcoin in the United States at the state level, Texas has made no secret of its open attitude towards the rapid expansion of mining that has taken place within its borders. Although Bitcoin in general has received a lot of attention on various fronts recently, news from Texas in particular has been attracting more and more attention. In fact, a flurry of recent activity across the mining sector has directly or indirectly affected the state, with major new developments appearing to emerge weekly, even daily.

At Bitcoin 2022 last month, blockchain leader Blockstream announced a partnership with Block and Tesla to develop a 100% renewable, solar- and battery-powered off-grid pilot mine in West Texas. A few weeks later, Fort Worth, Texas, declared its intention to begin mining Bitcoin on-site at City Hall, becoming the first U.S. city government to do so. Just one day later, mining giant Riot Blockchain unveiled its plans to develop 1 GW of new mining capacity in Texas by 2024. The following week, Argo Blockchain announced the completion of its new 200 MW West Texas facility, which will begin mining this month. Meanwhile, just last week, Mawson Infrastructure released its goal to develop a new 120 MW plant in partnership with JAI Energy and Texas Pacific Land (one of the state's largest private landowners), which it expects to begin mining later this year. Despite all this activity, the state's ongoing crypto romance shows no signs of cooling down anytime soon.

Power is money

Texas offers a hospitable environment for crypto mining for many of the same reasons that it has long proven desirable for other industries: cheap electricity, free space, and loose regulation. But the state has taken a particular interest in Bitcoin, with some of its most powerful and visible elected officials, including Governor Greg Abbott and Senator Ted Cruz, openly advocating for the currency as a whole, along with the potential for mining to revive the Texas economy with new jobs, tax revenues, and energy needs.

Of course, just last year, Texas didn't create a shortage of notoriety when a winter storm caused a catastrophic power outage that crippled the state's power infrastructure for weeks and resulted in a death toll of 246. For some, a crypto mining takeover sounds like the perfect recipe for even more disaster, but the arguments for mining expansion argue that this is exactly why Texas needs mining, and that mining operations will actually prove crucial to stabilizing the grid, curbing energy containment, and even lower electricity prices (as proof of these claims, the Texas Blockchain Council revealed last week that much of the mining industry had voluntarily downstream in response to a maintenance notice from the Electric Reliability Council of Texas [ERCOT] the day before).

In any case, it seems that Texas is in the process of figuring it out. A recent forecast by ERCOT predicts increased demand of 5-6 GW within the next 12-15 months alone, outpacing the total residential electricity demand of Houston, its largest and most populous city (and the fourth most populous in the U.S.). In total, over 17 GW of mining operations have been actively inquiring about the purchase to the state (starting in March of this year, ERCOT began requiring approval for all new large electrical loads), which, if implemented immediately, would increase even Texas' peak demand by about 20% this year. In total, ERCOT is preparing for up to 25 GW of new demand from mining over the next ten years.

The bigger picture

Texas has always cultivated outsized economic and cultural influence, which is saying a lot considering how geographically large the state is. If everything is really bigger in Texas, it would be unusual to expect a little less from the mining industry there. Texas will not only attract an influx of independent miners, but also many large industrial operations (the state is already home to the largest single bitcoin mining facility in the U.S. at Riot's Whinstone mine in Rockdale, which has a total capacity of 750 MW, with 400 MW currently in use), and thus a massive slice of the global hashrat pie Texas is already on track in the next two years, to outperform all other nations as well as the rest of the U.S. combined in hashrate share.

Of course, hashrate concentration can also pose its own risks, both for miners individually and for the network as a whole, as the impact of China's crackdown last year clearly demonstrates. However, a similar kind of abrupt and sweeping regulatory overhaul remains legislatively unlikely in a country like the U.S. (with its rights of its permanent states) and culturally unlikely in a state like Texas. In addition, Texas is the only state in the continental U.S. with an independent and isolated power grid, which mostly allows it to avoid federal regulations. Texas thus offers Bitcoin not only immense power capacity for mining, but also a politically stable source for future network security.

Will Bitcoin and mining soon enough be as synonymous with Texas as oil and cowboy boots? This seems quite possible, although it is still too early to say what the club would mean. Should the mining industry in Texas continue to flourish, it will strengthen not only the network but also the entire Bitcoin brand and help drive further adoption elsewhere. In the next few years, Texas could serve as a model for other states or as an example of mistakes to avoid. For now, however, Texas seems to have enough room for a few more bulls.

Open for business

This much seems to be guaranteed: the mining situation in Texas will continue to escalate from here. In fact, this is almost certainly just the beginning, with countless more developments to come as ERCOT's projected 25 GW demand flows steadily into the state over the next decade. Perhaps the broader significance of Texas' bitcoin mining trajectory will ultimately be as a test case in the U.S. for what happens when an entire state (and the country's second-largest by area and population) collectively awards itself orange pills. Regardless, Texas is in for heady times ahead for the Bitcoin mining space.