In a recent revelation, Texas has emerged as the dominant force in the Bitcoin BTC 0.69% mining sector, boasting a staggering 28.5% of the total US hashrate as of July 2023.
This significant growth in the state’s mining capacity can be attributed to its favorable policies and competitive energy prices, which have attracted numerous mining operations.
Data from Foundry, North America’s largest mining pool and the fifth largest globally, underscores Texas’s newfound status as the “crypto capital” of the US. The state’s share in the collective Bitcoin hashrate has seen a remarkable increase, jumping from 8.43% at the end of 2021 to its current 28.5% as of July 27, 2023. This rapid growth has been further emphasized by CNBC reports, which highlight the state’s meteoric rise in the mining sector.
Interestingly, the actual hashrate percentage from Texas might be even higher than the reported figures, as pointed out by Kevin Zhang, Senior Vice President of Mining Strategy at Foundry. This assertion suggests that Texas could be contributing even more significantly to the Bitcoin network than previously estimated.
While Texas has been basking in its mining success, other states have seen a decline in their contributions. For instance, Georgia, once considered a miner-friendly state due to its competitive electricity rates and renewable energy sources like solar power, has seen its share in the US hashrate plummet from 34.17% to a mere 9.64%.
This decline is largely attributed to the rapid expansion of mining operations in Texas. Similarly, New York’s hashrate contribution has also taken a hit, dropping from 9.53% in 2021 to 8.75%. In contrast, states like New Hampshire and Pennsylvania have witnessed a significant surge in their hashrate contributions.
Another noteworthy trend highlighted in the report is the rise in negative pricing over the past decade. Researchers have pointed out that in 2022, the national wholesale market saw negative pricing rates exceed 6% during operational hours. Texas, with its potential for increased negative pricing, stands out as an ideal destination for Bitcoin miners.
Recent developments in the crypto mining sector further underscore Texas’s dominance. Riot Platforms, a prominent Bitcoin mining and data center, dubbed August 2023 as a “milestone month” due to the benefits realized from its unique power strategy. Jason Les, CEO of Riot, stated that the company set a new monthly record in August, with power and demand response credits totaling $31.7 million, surpassing the entire amount received in 2022. These credits have significantly reduced Riot’s Bitcoin mining costs, positioning it as one of the industry’s lowest-cost Bitcoin producers.
Despite the bearish market conditions, major players like Riot continue to expand their Bitcoin mining operations in Texas and other states. Riot’s 2022 expansion plan included land acquisition, site preparation, substation development, power transmission construction, and the construction of ancillary buildings. Cipher Mining also made significant investments in the state, purchasing 11,000 new mining rigs for its Texas facility in May.
Texas’s appeal to Bitcoin miners has been further bolstered since China’s 2021 ban on mining. This ban led to a massive exodus of cryptocurrency miners, many of whom chose Texas as their new base.
The state’s electric grid, known as ERCOT (Electric Reliability Council of Texas), offers incentives to companies that can generate additional revenue beyond rewards from Bitcoin transaction verification. This incentive structure has attracted major Bitcoin mining giants like Riot, Core Scientific, Genesis Digital Assets, and Marathon Digital to set up operations in the state.
