The Rise of Texas as a Crypto Mining Hub
You may be surprised to learn that the state of Texas has emerged as a major hotspot for cryptocurrency mining. In fact, as of July 2023, Texas accounts for a staggering 28.50% of the total hashrate in the United States.
According to data from Foundry, the largest mining pool in North America and the fifth-largest globally, Texas has established itself as the “crypto capital” of the U.S. This means that Texas leads the country in terms of its share of the collective hashrate of the Bitcoin network.
While Texas made up only 8.43% of the U.S. hashrate at the end of 2021, this percentage has skyrocketed to 28.50% as of July 27, 2023. It’s important to note that these figures are aggregated and the actual percentage of hashrate in Texas may be even higher than reported.
The Decline of Other Miner-Friendly States
Interestingly, other states that have historically been miner-friendly, such as Georgia, have seen a decline in their share of the U.S. hashrate over the past two years. Georgia’s share dropped from 34.17% to 9.64%. Despite offering competitive electricity pricing and renewable power sources like solar, Georgia was unable to compete with the rapid growth of mining operations in Texas.
New York also experienced a decrease in its hashrate, falling from 9.53% in 2021 to 8.75%. On the other hand, New Hampshire and Pennsylvania saw a significant increase in their shares of the U.S. hashrate.
Negative Pricing Spike and Ideal Conditions for Miners
A notable trend highlighted in the report is the increase in negative pricing, which refers to instances when electricity prices drop below zero. Researchers found that negative pricing accounted for over 6% of all hours in 2022 across wholesale markets in the U.S. Texas, in particular, offers ideal conditions for Bitcoin miners due to its potential for an increase in negative priced power.
Bitcoin mining engineer Brandon Arvanaghi describes this situation as a “win-win” because miners can be paid slightly more than what they would have earned from mining Bitcoin during those hours.
Key Players Expanding in Texas
Despite the bear market, key players like Riot Platforms are expanding their Bitcoin mining operations in Texas and other states. Riot achieved record-breaking monthly figures for Power and Demand Response Credits, which significantly lower their cost of mining Bitcoin.
Riot’s expansion plans include land acquisition, site preparation, substation development, transmission construction, and the construction of ancillary buildings. Similarly, Cipher Mining purchased 11,000 new mining rigs for its facility in Texas.
Texas: A Welcoming State for Miners
Since China banned mining in 2021, Texas has become a welcoming state for Bitcoin miners. Many miners have relocated their operations to Texas, attracted by the state’s favorable conditions and incentives. The Texas power grid, known as ERCOT (Electric Reliability Council of Texas), offers credits to companies that generate additional revenue on top of their Bitcoin rewards from transaction verifications. This has enticed major mining companies like Riot, Core Scientific, Genesis Digital Assets, and Marathon Digital to set up operations in the state.
Hot Take: The Crypto Capital of America
With its significant share of the U.S. hashrate and favorable conditions for miners, it’s no surprise that Texas has earned the title of the “crypto capital” of the country. The state’s rise as a crypto mining hub showcases the growing prominence and influence of the cryptocurrency industry in the United States.
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