Texas Climbs to the Forefront of US Bitcoin Mining

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Texas has surged ahead in the U.S. Bitcoin mining sector, now laying claim to a massive 28.5% of the country’s hash rate, making it the top player. This insight has been shared by Foundry, the leading global Bitcoin mining pool, based on their collected user data. A year ago, Foundry’s data pointed to Texas’s share at a mere 8.4%.

Other states, namely New York with a 9.5% share and Georgia leading at 34.2%, previously overshadowed Texas in 2021. Now, their stakes have diminished to 8.8% and 9.6%, respectively. A significant reason for Georgia’s decline is due to a major miner from the 2021 data not featuring in the 2023 study, alongside Texas’s growing prominence. Concurrently, New York’s progression in mining has remained flat, especially since the implementation of a memorandum opposing fossil fuel-dependent miners.

Several states, including Nebraska, North Carolina, Kentucky, Oklahoma, and Washington, have also witnessed substantial reductions in their mining contributions.

Governmental initiatives have played a pivotal role in Texas’s ascendancy in the cryptocurrency mining domain. Miners have been incentivized to aid in maintaining the electricity grid’s equilibrium. During times when the grid undergoes stress, particularly during harsh summers and winters, the Electric Reliability Council of Texas (ERCOT) implores miners to halt their operations. This ensures that households receive sufficient power. Companies that adhere to this request are later compensated by the state.

Despite early concerns that mining would affect the state’s energy needs, Senator Ted Cruz voiced his firm belief that Bitcoin mining can actually improve the state’s energy grid’s resilience. He claimed that “Machines can swiftly shut down during crises, serving as emergency power reserves.”

How State Incentives Have Led to a Mining Growth Wave in the State

In June, Texas legislators began to show support for the mining industry by two bills, SB 1929 and HB 591, which came into effect on September 1. SB 1929 focuses on miners with energy capacity exceeding 75 megawatts (MW) and requires them to register as large load operators with the Public Utilities Commission (PUC) of Texas. Meanwhile, HB 591 is a bill that seeks to provide tax exemptions for companies that make efficient use of previously squandered gas resources, including data centers.

Elaborating on the cost benefits of these initiatives, Riot CEO Jason Les, in a recent press statement, highlighted how the power credits from the state have significantly slashed Riot’s Bitcoin mining expenses. This has triggered major expansion drives by Riot in regions like Navarro and Milam counties. This growth wave was preceded by Cipher Mining’s acquisition of 11,000 mining machines for its Texas-based unit in May.

Adding to the state’s mining clout, Foundry has boosted its presence in Texas by procuring mining locations from the bankruptcy assets of Compute North, a mining entity that succumbed to bear market forces the previous year.

However, Foundry has indicated that the data, which was recorded in July during a major slowdown phase for local miners, could potentially underestimate Texas’s actual stake, suggesting their 28.5% claim might be on the conservative side.

Texas’s rising prominence isn’t unexpected

The University of Cambridge, which regularly releases data on the Bitcoin hash rate and power usage, last updated their mining map in January 2022, indicating Texas’s share at 11.2%. Discussing the potential updates, Alexander Neumueller, Cambridge’s Digital Assets Climate Impact Research Head, stated that they aim to refresh their mining data sometime in the upcoming year. Emphasizing accuracy, he said, “Our priority when updating is to ensure a comprehensive sample size and avoid one single pool dominating the sample.” Cambridge has now incorporated ANTPOOL, the second major pool after Foundry, into its collaborating list.

Neumueller also conveyed his personal views on the growth trend in Texas, citing, “Given my discussions with key industry representatives, Texas’s rising prominence isn’t unexpected. The current mining scenario might be distinctly different from our January 2022 data, especially considering shifts in regions like China and Kazakhstan.”