When it comes to Bitcoin adoption in the United States at the state level, Texas has made no secret of its open stance toward the rapid expansion of mining that has been occurring within its borders. Though Bitcoin in general has seen a lot of exposure lately on a variety of fronts, news from Texas in particular has been generating more and more attention. Indeed, a flurry of recent activity across the mining sector has directly or indirectly involved the state, with major new developments seeming 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 US city government to do so. Only a day after that, mining giant Riot Blockchain revealed its plans to develop 1GW of new mining capacity in Texas by 2024. The following week, Argo Blockchain announced the completion of its new 200MW West Texas facility, which will begin mining this month. Meanwhile, just last week, Mawson Infrastructure publicized its goal, in collaboration with JAI Energy and Texas Pacific Land (one of the largest private landowners in the state), to develop a new 120MW facility that it expects will begin mining later this year. Despite all this activity, the state’s ongoing crypto romance shows no signs of cooling off any time soon.
Power is Money
Texas offers a hospitable setting for crypto mining for many of the same reasons that it has long proven desirable to other industries: cheap power, open space, and loose regulation. But the state has become particularly interested 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 help revitalize Texas’s economy with new jobs, tax revenue, and energy demand.
Of course, Texas generated no shortage of notoriety just last year when a winter storm caused a catastrophic power outage that crippled the state’s electricity infrastructure for weeks, resulting in a death toll of 246. For some, a crypto mining takeover sounds like the perfect recipe for even more disaster, but the case for mining expansion argues that this is precisely why Texas needs mining, and that mining operations will actually prove instrumental in helping stabilize the grid, curtail energy curtailment, and even lower electricity prices (as evidence of these claims, the Texas Blockchain Council revealed last week that much of the mining industry had voluntarily powered down in response to a conservation notice issued by the Electric Reliability Council of Texas
In any case, it seems that Texas is in the process of finding out. A recent forecast from ERCOT predicts 5–6GW of increased demand within the next 12–15 months alone, which surpasses the entire residential power demand of Houston, its largest and most populous city (and the fourth most populous in the US). In total, over 17GW of mining operations have actively inquired about plugging into the state (starting in March of this year, ERCOT began requiring approval for all new large electrical loads), which, if implemented immediately, would itself increase Texas’s peak demand by around 20% this year. In all, ERCOT is preparing for as much as 25GW of new demand from mining over the next ten years.
The Bigger Picture
Texas has always cultivated an outsized economic and cultural influence, which says a lot considering how geographically vast the state is. If everything really is bigger in Texas, it would be unusual to expect anything less from the mining industry there. Texas stands to attract not only an influx of independent miners, but many large industrial operations as well (the state is already home to the largest single Bitcoin mining facility in the US in Riot’s Whinstone mine in Rockdale, which has a total power capacity of 750MW, with 400MW currently utilized), and in turn a massive slice of the global hashrate pie. Texas is already on track, within the next two years, to surpass both all other nations and the rest of the US combined in hashrate share.
Hashrate concentration can, of course, present its own set of risks as well, both to miners individually and the network at large, as the fallout from last year’s China crackdown clearly illustrated. However, a similar sort of abrupt and sweeping regulatory overhaul remains legislatively unlikely in a country like the US (with its durable states’ rights), and culturally unlikely in a state like Texas. In addition, Texas is the only state in the continental US with an independent and isolated power grid, which mostly enables it to avoid federal regulation. Texas thus provides Bitcoin with not only an immense power capacity for mining, but a politically-stable source of network security moving forward.
Will Bitcoin and mining soon enough be as synonymous with Texas as oil and cowboy boots? This seems entirely possible, though it’s still too early to tell what the association would amount to. Should the mining industry continue to flourish in Texas, it will boost not only the network but the entire Bitcoin brand, and help fuel further adoption elsewhere. Within the next few years, Texas might stand as a model for other states to follow, or as an example of mistakes to avoid. For now, though, Texas appears to have room enough 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 of predicted demand steadily pours into the state over the next decade. Perhaps the wider significance of Texas’s Bitcoin mining trajectory will ultimately be as a test case of sorts in the US for what happens when an entire state (and the second largest in the country by both area and population, to boot) collectively orange-pills itself. Regardless, heady times are ahead in Texas for the Bitcoin mining space.
Wattum remains optimistic on the mining outlook in Texas, and its overall implications for miners, investors, and the Bitcoin ecosystem. Our operations have been steadily expanding in Texas for some time, and our energy department can help miners locate, build, power, and manage a new site within the state. We will also be exhibiting at Consensus 2022 from June 9–12 in Austin. Tickets are still available here, and we hope to see you there! In the meantime, get in touch with a sales representative to learn more about our growing presence in Texas, as well as your options for getting involved.