It was probably inevitable that cryptocurrency mining would eventually find a natural home in the United States, but that outcome has been accelerated as of late by a range of ongoing international factors. The United States, along with other western countries like Canada, is currently among the fastest-growing destinations for Bitcoin mining operations large and small. As it stands, the US is poised to become the world’s new mining powerhouse, with all signs indicating that the recent influx of mining operations to the US is only the beginning.
Cryptocurrency mining employs computer processing power to solve complex cryptographic puzzles in order to verify the transactions on a given blockchain, thus recording a new block on the network and continuing the chain. In addition to helping verify and secure the network, miners are of course incentivized by and rewarded with cryptocurrency. The protocol of Bitcoin in particular is structured around a continually increasing difficulty of the puzzles, and thus the processing power necessary to solve them, as well as an incrementally decreasing reward (a process called “halving”) for mining new blocks.
Indeed, one of the most critical variables in the mining process is the cost and supply of the electricity required for the processing power that is needed to compete with other miners — which has long made mining an ever-changing industry. The financial viability of mining can vary widely from one country (and even one part of one country) to the next, depending on an array of local and regional factors. In addition, these factors, such as electricity cost and supply, or political and economic conditions, are themselves subject to continual change, which makes mining not only a quickly developing industry, but also a highly mobile one.
Mining Moves Westward
China dominated in global Bitcoin mining hashrate share for a number of years, due in large part to the country’s abundant supply of cheap coal-powered electricity. As recently as early 2021, China was still responsible for upwards of 50% of the world’s total hashrate, but a government crackdown enacted in May 2021 quickly changed that, abruptly shutting down large mining operations across the country and dropping Chinese mining capacity to effectively zero within about a month. This caused a flood of miners and mining companies alike to instantly migrate to other areas of the world in order to continue their operations.
A host of other countries, including Kazakhstan and Russia, appeared ready and able to provide promising new relocation opportunities and to thus absorb the Chinese exodus, but some presented short- and long-term political and economic challenges just as China had. Kazakhstan, for example, saw an almost immediate inflow of mining operations following the China ban, but almost just as quickly experienced major infrastructure issues and power shortages (and political turmoil as a result) before regulating electricity for mining just three months later, in September 2021. Russia, although a promising hosting location for its relatively cheap supply of petrol-fueled electricity, has also become a far riskier prospect as of late due to the political uncertainty and economic instability brought on by the recent invasion of Ukraine.
Coming to America
The United States has become a natural mining destination in large part because of its abundant power supply (second only to China, globally) and also because of its relative political and economic stability, in addition to robust property laws. The total Bitcoin mining hashrate share for the US has already risen from around 16% in early 2020 to more than 35% by late 2021 and continues to grow steadily. This ongoing migration has been born not only out of necessity, as a result of the China ban and ensuing Kazakhstan shutdown, but also because of the broad potential for new capital investment in mining technologies and operations in the US. Additionally, mining in some areas can even use preexisting energy capacity and fill a usage vacuum left by decades of outsourced US manufacturing.
Mining conditions in the United States present their own set of challenges, however, and can also prove to be highly localized, varying greatly from state to state. Electricity prices alone can run from as much as 19 cents per kWh in states like Connecticut and California, to as low as 8 cents in states like Washington and Texas (with most states falling on the mid-to-low end, and a national average of 10.66 cents). When considering the various political and legislative factors involved, the US as a whole ultimately comprises a wide spectrum of challenges and incentives when it comes to mining. While some states appear to entail unique situations and obstacles, others seem to offer almost ideal circumstances for miners and mining companies.
Hot Spots and Lone Stars
Washington state, for example, benefits from an abundance of renewable hydroelectric power that underpins its favorable electricity costs, while Texas enjoys the nation’s largest supply of renewable wind power. Politically, though, Texas projects a more mining-friendly stance than Washington. Texas governor Greg Abbott, for instance, has made Bitcoin mining collaboration a notable part of his reelection campaign, while senator Ted Cruz has voiced his support for embracing the industry, both in Texas and in general (and also disclosed his own recent Bitcoin purchases). Such high-profile endorsements, of course, can cut both ways: they help validate and increase visibility of the mining sector, while also politicizing public perception of it.
Some mining proponents (including Abbott and Cruz) even claim that large mining operations can help smooth the grid’s supply shocks in places like Texas, where a catastrophic power crisis crippled the state’s electricity infrastructure for several weeks in February 2021. In theory, the excess supply created for mining can be distributed to other areas of the grid as needed, with mining perhaps offering a catalyst for incentivizing the further development of renewable energy sources. Others remain more skeptical as to what the effects of a crypto mining boom will actually mean for Texas’s grid and its overall energy consumption, and also wonder how long a fundamentally mobile industry will stay in Texas (or anywhere).
As with any other state, this makes for varying degrees of acceptance of and resistance to mining at the state, local, and individual levels - although, in this respect, Texas stands apart from the rest of the US as the state with likely the most appealing conditions for crypto mining, along with perhaps the most vocal government support of it. In fact, according to some, Texas stands to become the new Bitcoin mining capital of the world within the next two years. The power supply in Texas itself “could power the entire Bitcoin network alone, with a combination of mainly natural gas and renewable energy,” which is why Wattum is committed to providing colocation services and sites in the state, in addition to existing and incoming US mining facilities as our operations expand.
Keeping Up With The Digital Gold Rush
The acceleration of the ongoing Bitcoin mining migration to the United States has left many scrambling to determine, both figuratively and literally, where the industry presently stands and where it is headed. States and localities, as mentioned, are still trying to decide how best to embrace or regulate mining expansion within their borders. Meanwhile, mining companies are seeking to strategize where to invest and expand their operations, in both the short- and long-term. Individual miners and investors, of course, are all wondering how and where to become involved as well, before they find themselves left behind.
At Wattum, we can help you understand and navigate this quickly changing landscape. A US-based company consisting of a growing team of mining experts located all around the world, we are the largest Bitcoin mining equipment distributor in the US, with 9 hosting locations and facilities worldwide (including two in the US). We offer a wide selection of the latest-gen mining equipment, as well as an array of hosting, pooling, buildout, and payment plan services. We are continually expanding our hosting operations within the US (including our upcoming new mining facilities in New York, Pennsylvania, and Georgia), and our energy department specializes in sourcing and negotiating the best locations for setting up your containers or building your own facility. We also sell mobile mining containers, so you can follow the mining trends wherever the market may take them.
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