As of July 2023, Texas has emerged as a significant hub for cryptocurrency mining, accounting for 28.50% of the U.S. hashrate.
Foundry, the premier mining pool in North America and ranked fifth worldwide, indicates that Texas is establishing itself as the leading “crypto nexus” in the U.S. This distinction is based on its dominant contribution to the Bitcoin (BTC) network’s overall hashrate.
From a 2021 figure of 8.43%, Texas has seen a substantial increase, holding 28.50% of the U.S. hashrate by July 27, 2023, as cited in a CNBC article.
Kevin Zhang, the Senior Vice President of Mining Strategy at Foundry, highlights that the actual hashrate percentage in Texas may be even greater than the reported figures since the data presented is consolidated.
Interestingly, even in states favorable to miners like Georgia, there has been a dip in its contribution to the U.S. hashrate, falling from 34.17% to 9.64% over a span of two years. This decline comes despite Georgia’s attractive electricity rates and its commitment to renewable energy sources such as solar. The surge of mining activities in Texas plays a pivotal role in this shift, as indicated in the report.
While New York’s share in the U.S. hashrate decreased marginally from 9.53% in 2021 to 8.75%, both New Hampshire and Pennsylvania have experienced a remarkable surge in their contributions.
Negative Pricing Spike
The study emphasized a notable rise in negative pricing across the past ten years. According to the research, over 6% of all hours in 2022 witnessed negative pricing across the nation’s wholesale markets. This trend of negative-priced power could potentially intensify in Texas, making it an even more favorable environment for Bitcoin miners.
Brandon Arvanaghi, a Bitcoin mining engineer, views this as a mutually beneficial scenario. He states, “All you have to do is pay the miners a tad more than their potential Bitcoin mining earnings for that particular hour.”
In a recent announcement, Riot Platforms, renowned for Bitcoin mining and data center operations, dubbed August 2023 as a “milestone month,” shedding light on the advantages of its distinct power approach.
Jason Les, Riot’s CEO, stated, “In August, Riot set a fresh monthly record by garnering Power and Demand Response Credits amounting to $31.7 million. This figure eclipses the total credits earned throughout 2022.” He further emphasized that such credits substantially reduce Riot’s Bitcoin mining expenses, positioning the company as one of the most cost-effective Bitcoin producers in the sector.
Prominent entities such as Riot are intensifying their Bitcoin mining ventures in Texas and beyond, undeterred by the bearish market trends. In 2022, Riot unveiled its ambitious expansion roadmap, encompassing land purchases, site groundwork, development of substations, and the erection of transmission structures, not to mention the building of additional facilities.
In a similar expansion vein, Cipher Mining integrated a staggering 11,000 new mining machines into its Texas-based facility this past May.
The hospitable environment Texas offers to Bitcoin miners has only become more appealing, particularly following China’s 2021 mining prohibition. This led to a significant migration of cryptocurrency miners, with many choosing Texas, often referred to as the Lone Star State, as their new operational hub.
Moreover, the Texas power grid, known as “ERCOT” (Electric Reliability Council of Texas), provides credits to businesses, allowing them to earn supplemental income beyond their rewards from verifying Bitcoin transactions.
It’s precisely this incentive structure by ERCOT that has attracted major Bitcoin mining giants such as Riot, Core Scientific, Genesis Digital Assets, and Marathon Digital to set up shop in the state.