Lots of businesses today, both online and retail, have embraced the use of Bitcoin as currency. For example, you can use bitcoin on the best online casino websites, digital services platforms like the Microsoft X-Box Store, and even sports teams’ arenas like the Dallas Mavericks and Miami Dolphins. As the demand for cryptocurrency increases, more bitcoins are brought into circulation through a mining process that verifies new network transactions. However, as you may already know, the mining process is so energy-intensive that it sometimes causes sustainability concerns.

As of 2019, 65% to 78% of all bitcoin mining operations were facilitated by mining corporations located in China. But then, after a failure to meet its climate targets, the country’s leaders met and proposed an immediate crackdown and eventual ban on bitcoin mining and transactions in the country. The blanket ban forced 50% of miners to cease operations overnight and the remaining investors to leave the country, searching for the most effective locations to relocate their Bitcoin mining farms. Moreover, analysts have also reported that another potential reason for the ban on cryptocurrencies in China is that they threaten the nation’s own sovereign digital Yuan.

The Hunt for a Mining Safe Haven

The immediate options for the miners after the Chinese exit were neighbouring Kazakhstan. However, the Kazakhstan venture was short-lived as protesters in Almaty took to the streets in early January to rally against increased LPG prices, among other grievances. The Kazakhstan turmoil led to a government-ordered internet shutdown that took 15% of Bitcoin miners offline. This disruption and plans by the Kazakh government to place restrictions on miners have no doubt led to the mining farms reconsidering setting up shop elsewhere.

Other countries like Iran have also banned bitcoin mining in response to a series of blackouts attributed to the high energy consumption of mining operations. The ban is set to be lifted in March 2022, but it’s obvious that farms require a stable supply of power to operate profitably. As a result, many countries have either banned or imposed strict measures to control any possible strain on their power grids.

Why Texas?

For the past 6 months, bitcoin mining companies have been moving their equipment from the Far East, specifically China and some of its neighbours, to the US. This ‘great mining migration’ has been facilitated by a series of events in Eastern countries, but most importantly, one state is rapidly becoming the focus of bitcoin investors.

In just 2 months after the June 2021 Chinese ban, the US had already leapt from the fifth to second position in global bitcoin mining activities. It currently holds the first position as the worldwide epicentre of bitcoin mining. This is thanks to favourable physical and political conditions, particularly in the Lone Star State. The main factor that has influenced the exodus to Texas is the low-cost energy from wind and solar.

• Balancing Out Bitcoin Mining & Power Needs for Local Populations

While sceptics have argued that the high energy demand by bitcoin farms will aggravate the situation of the volatile Texas power grid, proponents of mining in the area have a different take on it. They have defended their stance, saying that the mining companies agreed to be powering down when the demand is high and resume their activities when demand subsides.

The said approach will ensure no inconveniences are caused and surplus electricity (or ‘stranded power’) is fully utilised. In addition, some miners have also begun attempts to harness the excess natural gas emitted from oil drilling sites to supplement the energy required for the process.

• Electricity Operators are Working Hand-in-Hand with Bitcoin Mining Companies

Electricity operators are also collaborating with mining companies to maintain a balance in consumption. The electricity operators are offering to pay mining companies or reduce their power costs if they agree to shut down when the need arises in case the power grid is unstable.

One incident that saw such collaborative efforts at work was in the summer of 2021 when temperatures were soaring, and the grid was under major strain to power the citizens’ air conditioning. ERCOT simply asked Whinstone Inc., the biggest crypto mine in North America, to shut down the tens of thousands of computers running on their Rockdale farm to ease the strain and restore the much-needed power. This was done instantly, and Whinstone Inc. was compensated for the temporary inconvenience.

• Strong Political Support

Politicians like the state’s Governor Greg Abbott and Senators Ted Cruz and John Cornyn have constantly expressed support for mining initiatives in Texas, saying that the industry will create jobs for Texans and up the revenue stream for the state. Their vision is to turn Texas into the crypto leader of the world.

During the 2022 Texas Bitcoin Summit, Senator Cruz declared that the beauty of Bitcoin is that it could challenge companies to ramp up the production of wind and solar energy. Senator Cruz has previously revealed that he bought $50,000 worth of bitcoins. Abbott’s contender in the coming elections, Don Huffles, has also added crypto mining to his election agenda. Huffles promises to exploit all opportunities presented by bitcoin and make it ‘tender,’ should he be elected.

Will Texas indeed outleap all other bitcoin mining locations to become the world capital of bitcoin mining? With the recent developments, the world is now watching with bated breath to see how things will fare.