Mining Hub - Texas

When it comes to state-level adoption of Bitcoin in the United States, Texas has made no secret of its open stance on the rapid mining expansion that has occurred within its borders. Although bitcoin in general has received a lot of attention on various fronts lately, news from Texas in particular has garnered more and more attention. Indeed, a flurry of recent activity across the mining sector has directly or indirectly affected the state, with major new developments appearing to be springing up 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 start mining bitcoin locally at City Hall, becoming the first U.S. city government to do so. Just a 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 announced its goal of developing a new 120 MW facility in partnership with JAI Energy and Texas Pacific Land (one of the state's largest private landowners), which it expects to complete later this year year mining will begin. Despite all this activity, the state's ongoing cryptoromanticism 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 have long proven desirable for other industries: cheap electricity, freedom, 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 championing the currency as a whole, along with the potential for mining to power the Texas economy with new jobs, tax revenues and energy needs.

Of course, Texas generated no lack of notoriety just last year 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. To some, a crypto mining takeover sounds like the perfect recipe for even more disasters, but the arguments for mining expansion argues that this is precisely why Texas needs mining and that mining operations are actually proving to be critical to stabilizing the grid, curbing energy curbs and even lower electricity prices (as evidence for these claims, the Texas Blockchain Council revealed last week that much of the mining industry has voluntarily volunteered in response to a preservation notice from the Electric Reliability Council of Texas [ERCOT] the previous day had connected downstream).

In any case, it seems Texas is about to find out. A recent forecast by ERCOT predicts increased demand of 5-6 GW over the next 12-15 months alone, exceeding the total residential electricity needs of Houston, its largest and most populous city (and fourth most populous in the US). In all, over 17 GW miners have been actively inquiring about purchasing from the state (as of March this year, ERCOT began requiring permits for all new large electrical loads) which, if implemented immediately, would satisfy even the peak demand of Texas this year year would increase by about 20%. Overall, ERCOT is preparing for up to 25 GW of new mining demand 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 really is bigger in Texas, it would be unusual to expect anything less from the mining industry there. As well as attracting an influx of independent miners, Texas will also attract many large industrial operations (the state already hosts the largest single Bitcoin mining facility in the US at Riot's Whinstone mine in Rockdale, which has a total capacity of 750 MW, with 400 currently operating MW), and thus a massive slice of the global hashrate pie. Texas is on track to surpass all other nations as well as the rest of the US combined in hashrate share within the next two years.

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 over the past year clearly shows. However, a similar sort of abrupt and sweeping regulatory overhaul remains legislatively unlikely in a country like the US (with its permanent states rights) and culturally unlikely in a state like Texas. Additionally, Texas is the only state in the continental US with an independent and isolated power grid, which allows it to avoid federal regulation most of the time. Texas thus not only offers bitcoin immense power capacity for mining, but also a politically stable source for future network security.

Will bitcoin and mining soon be as synonymous with Texas as oil and cowboy boots? That seems entirely possible, although it's still too early to say what the club would mean. Should the mining industry continue to thrive in Texas, it will not only strengthen the network but also the entire Bitcoin brand and help drive further adoption elsewhere. In the years to come, Texas could stand 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 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 25GW projected demand pours steadily into the state over the next decade. Perhaps the broader meaning of Texas' bitcoin mining trajectory will ultimately be as a US test case for what happens when an entire state (and the country's second-largest by area and population) collectively gives itself orange pills. Regardless, heady times lie ahead for the Bitcoin mining space in Texas.

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