Crackdown on Bitcoin mining in China is a boon for Texas Bank & Insurance By Jacky Last updated Aug 3, 2021 Share John King knew his small town of Rockdale, Texas, had landed on the global crypto map when three Chinese bitcoin miners showed up unannounced at City Hall this summer. Then the calls came to the city’s Chamber of Commerce, from investors inquiring about power hookups, to hook up mining equipment they wanted to ship from China. No one had ever set foot in the western Texas rural community, which has a population of about 5,600. “I hadn’t the faintest idea” [about what was happening in China] until my first call,” King said. “But there are a lot of smaller miners working together and trying to get here now.” The interest, sparked by a crypto mining crackdown in China, is poised to give Rockdale a significant boost as miners scour the world for new opportunities and spark an exodus dubbed “the great bitcoin mining migration.” From neighboring Kazakhstan to Canada and the United States, Chinese players are scrambling for real estate to rehome their data servers, shifting the dynamics of crypto power from a country that has long been home to more than half of the world’s bitcoin miners. “The demand is much greater than the supply because all our capacities are now exhausted. We are building another data center that will be deployed in October and it is already booked,” said Didar Bekbauov, founder of Xive, which helps miners move to Kazakhstan. “I think every extra kilowatt in Kazakhstan is already fully booked. At present, many Chinese are reaching us like every day for abilities. It’s a bit of a crazy market.” ROCKDALE, TX – JUNE 23: David Schatz, Vice President of Operations for Whinstone, a cryptocurrency mining company recently acquired by Riot Blockchain, explains how miners work at a Riot Blockchain facility in Rockdale, TX, on June 23, 2021. Riot Blockchain, a Bitcoin mining company that hosts Bitcoin mining equipment for customers, houses the largest Bitcoin mining facility in the US in Rockdale, TX. Main drivers for mining migration Cheap electricity has become a major driver of the migration, largely because the crypto mining process of putting new coins into circulation consumes huge amounts of energy. The Cambridge Center for Alternative Finance (CCAF) estimates energy consumption at a total of about 110 terawatt hours per year, roughly equivalent to the annual energy consumption of small countries like Sweden or Malaysia. Story continues The state of Texas offers an attractive alternative with some of the world’s cheapest energy prices, in part because the state’s deregulated electrical grid allows suppliers to choose between providers. The cost of electricity is about a quarter of where it is elsewhere in the country, according to Riot Blockchain CEO Jason Les, who recently acquired Whinstone US just outside Rockdale, the owner and operator of the largest bitcoin mining and hosting facility in North America. America . Try Yahoo Finance Plus now. Les said the structure of the Texas grid allows bitcoin miners to “act like a virtual power plant” by entering into long-term power purchase agreements in advance, with the flexibility to feed some of that power back. to sell off the grid when the market price of energy becomes very high during peak demand. “It’s a kind of economic calculation for miners. They see, ‘oh wow, the price of energy is going up’, so not only does it make no sense for me to mine bitcoin anymore, but it actually makes sense for me to take the power I own and sell it back to the grate,” Les said. “If you have intermittent generation sources like wind and solar, taxes like Bitcoin mining help provide that reliable demand.” That increasing abundance of renewable energy has also contributed to the boon, as miners come under scrutiny over their carbon footprint. About 20% of Texas’s energy is generated by wind energy, although natural gas from fossil fuels makes up almost half of the energy mix. “It really depends on the company itself. If a company comes into Texas and starts mining bitcoin, they can choose to buy all of their power from renewables if they want to,” said Josh Rhodes, a research associate at the University of Texas at the Austin Energy Institute. going by what’s on the market… about half of their power will come from fossil fuels.” Responding to the exodus Shenzhen-based BIT Mining has already $26 million invested in a 57 megawatt data center in Texas, according to Nikkei Asia, while Beijing-based Bitmain plans to expand the capacity of its Rockdale facility with an additional 20,000 servers, King said. Whinstone wants to capitalize on the mining rush by adding an additional 400 megawatts to its facility, or 200,000 servers in total, to potentially host other miners as they enter the market. “We’ve talked to a few people and we’re seeing what the hosting market looks like,” Les said. “What we’re focusing on is building capacity on that site, to give ourselves a little freedom of choice there.” Lawmakers have acted aggressively to also profit from the exodus. Earlier this year, Texas Governor Greg Abbott . said signed a law to establish a legal framework for cyptocurrency investment in the state. In a subsequent tweet, Abbott stated that “blockchain is a booming industry that Texas should be involved in.” Grid Viability Despite all the excitement surrounding the bitcoin boom in Texas, there are concerns about the impact associated energy consumption is likely to have on the state’s infrastructure, which had major power outages during peak use this winter. Conducting a study on the power grid’s ability to withstand demand through 2035, Rhodes said many of the viability issues depend largely on the miners’ ability to remain flexible and shut down operations during peak demand. According to Rhodes, this flexibility can also lead to a lower carbon footprint. “If they’re not flexible and just run 24-7, they increase CO2 emissions on the grid because we use more energy, and some of the energy produced in Texas is made from coal and natural gas,” he said. . said. “If they’re willing to be flexible, if they’re willing to cut their consumption by about 20% over the course of the year at key moments, that can actually reduce net negative carbon emissions. Because the grid builds a lot of wind and solar power to handle the energy these data centers or mining facilities would like to consume.” Back in Rockdale, King said the city is struggling to keep up with demand. The city cannot build power plants fast enough to distribute the electricity as miners continue to take property in its city. “All the exchanges are occupied. There is no place to immediately connect to the power lines without building a substation and that is where the heist will be,” King said. “It’s nobody’s fault. It’s because it wasn’t foreseen that this would come.” Still, King is betting Rockdale’s future on the success of crypto mining, in part because he said there is no real alternative. The city built its fortune on aluminum for decades, home to Alcoa’s largest smelter. It’s hard to find a replacement as production was discontinued seven years ago. “We don’t have an industry here anymore,” said King, who recently enrolled in an online MIT course to learn more about the blockchain. “We welcome the opportunity of any kind of industry here, but I think, based on what’s going on, technology is where we’re ultimately going to be.” Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita Follow Yahoo Finance on Twitter, facebook, Instagram, flip board, LinkedIn, YouTube, and reddit window._taboola = window._taboola || []; _taboola.push({mode:'thumbnails-a', container:'taboola-below-article', placement:'below-article', target_type: 'mix'}); Share