Bitcoin miners are harnessing Texas’ business-friendly environment and robust energy grid to better position the industry for significant growth in the future.
Texas is already home to several crypto-mining companies, including but not limited to London-based Argo Blockchain and Colorado-based Riot Blockchain, the latter of which is one of the largest crypto-mining companies in the country.
The process of mining bitcoin is extremely costly and requires a large amount of electricity, which pushed New York to ban the practice statewide. That is not the case in rural parts of Texas, where electricity is significantly cheaper and open land lies in abundance.
“Bitcoin mining is a very energy-intensive business, which is why we tend to find places like West Texas to be full of bitcoin miners,” said Matt Prusak, chief commercial officer at U.S. Bitcoin Corp., a bitcoin mining firm based in Miami that maintains a mining facility at a 280-megawatt wind farm in Texas, Reuters reported.
Despite the growing number of companies requesting permission to connect to the state’s power grid, Texas has remained accommodating and supportive of the industry. Still, the growing share of electricity consumed by this part of the crypto industry is becoming more apparent to industry leaders, advocates, and even the state power grid operator.
Bitcoin miners consumed roughly 2,100 megawatts of electricity in Texas in 2022, a 75% increase from 2021 and a more than 200% increase from the year prior, according to Lee Bratcher, president of the Texas Blockchain Council.
In a recent report, the Electric Reliability Council of Texas (ERCOT) forecast that energy use from bitcoin mining will be a small portion of the state’s estimated peak load in 2023. Still, at the industry’s current growth rate, Texas will need to ensure that it has the optimal infrastructure capacity to support future energy requirements.
“There are a lot of Bitcoin mines that are trying to connect to the system,” said Joshua Rhodes, a research scientist at the University of Texas at Austin, per Reuters.
“If all of them were to connect in the timelines that they are looking to connect, then it probably would present an issue to the grid because that load would be growing way faster than it ever has before,” he claimed.
A regulatory framework was proposed to address various issues facing the industry following the cascade of bankruptcies during 2022’s so-called crypto winter.
For now, the crypto winter seems to be over, with excitement for bitcoin returning, even as broader fears over bank runs and the possibility of a financial collapse continue.