The End of the Bitcoin Mining Expansion in TexasAugust 30, 2022
Not long ago texts were seen as one of the most promising and business-friendly states for the crypto mining industry. It offered clear and stable regulations, while it also provided almost endless amounts of affordable energy. That was more than enough to attract that range of cryptocurrency companies that quickly began their mining operations in The Lone Star state. This happened even though the United States as a whole is not precisely the most crypto-friendly regulatory domain in the world.
However, Texas did come with that huge promise, especially for the mining companies and their derivative industries. But, the time when this United States territory was the promised land for crypto mining is well and truly over in 2022. Instead, the operators of crypto mines and mining pools are beginning to slowly move out and look for greener pastures. Furthermore, the story of the fall of the bitcoin mining expansion in the same US state could herald very similar decisions not just in other parts of the United States, but across the globe as well.
Moving Miners off the Grid
The state of change for the bitcoin mining industry in Texas began with its official state grid operator. That is the Electric Reliability Council of Texas, or Ercot for short. It gradually began giving out fewer and fewer permits for the new mining facilities to get on the grid. That news camera from the Texas Blockchain Council, which is an industry association. It said that Ercot was trying intensively to balance the demand and supply of the state when it comes to electric power.
But, the mining operators had even bigger issues on their plate. In the state, a pipeline that provided ample amounts of readily available electric power slowly began to run dry years ago. In response, the operators that are already working in the state have to go to greater pains for things like power lines, and their in-house generators, all of which are essential for the mining rigs to function properly. Without their company-built infrastructure, many of these mining companies would simply not have the basis for functioning at the present level of crypto mining.
Representatives of the Texas Blockchain Council said that the need to build infrastructure is nothing new. According to their representatives, there are few or no sites where crypto mining ventures can set up shop immediately. Places, where crypto mining rigs can be installed and plugged in, do not exist. That goes for even smaller facilities that produce less hash rate.
These are crypto mines that consume about 10 megawatts (MW) or less. Previously, a lot of ventures were looking for precisely that. But, presently, nothing like this remains in Texas. So, anything and everything that turns into a crypto mining operation in the same US state needs an extensive building operation that will either expand and enforce the existing grid access or build a new one altogether.
The problems with the Texas power grid are not issues that came about all of a sudden. Instead, they accumulated over the years and resulted in the devastating rolling blackouts that took place two winters prior. Back then a sudden and unexpected vicious winter gripped the southern US state, where many inhabitants have no form of heating apart from impromptu electrical devices and AC systems. All of them quickly put the Ercot grid in a state of deep stress, which turned into a necessity for rolling blackouts. Otherwise, the entire grid would have gone out of action because of the demand. At the same time, the power supply came under threat due to ice layers gripping power plants that were not designed to compensate for those meteorological conditions. So, the problems related to bitcoin production and the power demand for that are just the tip of the iceberg.
Because of that, many fear that ordinary users of the grid, no matter if they are playing esports or watching the local TV channels, could end up without electricity this winter if another big cold spell appears. In that type of environment and with a lot of media pressure, it is no wonder that Ercot is trying whatever it can to spare electricity and also make sure another big calamity like the previous winter does not take place. With several hundred lives lost during that energy crisis and a cost of nearly 200 billion USD, the same 2021 energy crisis is the most expensive one in the history of Texas.
Renewable Energy Sources
The situation in Texas shows yet again that the core issue and the core solution lie in higher energy production from renewable sources. That is what the crypto industry needs just as much as any other industry in the world, but also the state of Texas itself. Right now, because of the ongoing global climate change issues, it is clear that the need for energy will just continue to rise. The crypto industry might seem energy-intensive in its operations, but all other industries can get labeled in the same way just as easily. The problem that the entire world is facing is that with the rising demand for energy new supplies have to be found as well.
The nuclear option is still off the table for many and the fossil fuel alternative is clearly only exacerbating the problems of climate change. That is why the obvious answer is the use of renewable sources and the higher presence of wind turbines, solar farms, and similar facilities. Because of that, crypto miners in Texas, just like everywhere else, are increasingly focusing on creating their own capacity for generating power and doing it behind the power meter. In other words, they are building capacity to generate energy independent from the state’s electrical grid. At the same time, the industry should be aware that the initial offering from Texas, which included a lot of cheap energy and friendly regulation will not be seen anywhere in the world anytime soon. Instead, the miners in Texas have to go fully decentralized, just like the actual network producing the BTC tokens they are mining.