In one city in Texas, the two most prominent names in bitcoin mining are fighting for cheap electricity and market share. The population is 5,600 people. It is worth noting that rivals are neighbors along with everything else.
Bitdeer is a subsidiary of Chinese mining giant Bitmain, located about four-tenths a mile from Riot Blockchain. It is one of the largest public trade mining companies in America. These two companies have nothing in common except that they are both tenants of property that aluminum producer Alcoa once occupied.
A transparent team runs Riot’s Whinstone Mine. It opens its doors to the media daily. As for Bitdeer, it is a mysterious company and is not happy for visitors.
According to Chain Harris, CEO of Whinstone, everyone in this industry likes to have complete confidentiality and ownership of the information that you do not have. You take the cable, connect the machine someone else created, turn it on, add the pool, and process the bitcoin.
Rockdale is a Choice
Rockdale looks like a typical rural America. Walmart is the primary driver of sales tax, the main revenue stream of the city’s annual budget. Rockdale offers all the promise of a Bitcoin miner dream home: crypto-friendly, large land area, previously abandoned industrial infrastructure ready for redevelopment, and most importantly, the ability to connect to the Texas grid.
The Texas Electrical Reliability Council, ERCOT, is a nonprofit that manages the Texas network. The network is deregulated. This means that the customer can choose between the providers themselves.
Because large-scale miners compete in the low-margin industry, where energy is their principal variable value, they have reason to switch to the cheapest energy sources. Competition between electricity suppliers in Texas is good for miners because it usually means lower rates.
Rockdale was once the largest aluminum plant in the world, run by Alcoa. The president of Texas, he said, has been shutting down its operations since 2008, which means energy capacity was wasted. Unlike an aluminum plant or any other business, miners can handle the shutdown without causing significant financial damage.
This resilience is essential for a state that has recently struggled with the reliability of an energy system separate from the rest of the country.
ERCOT sometimes asks consumers to save energy against the backdrop of heat waves. The state suffered an infamous extinction after a strong winter storm earlier this year.
The current agreement between the miners and ERCOT is quite simple and mutually beneficial. Not only do miners use electricity, but they also function as a “disconnected load,” meaning they can shut down all vehicles with a few seconds’ notice when the grid is down. Miners do this voluntarily, out of financial incentives.
The miners are going to buy a certain amount of energy. What they are doing is selling it back at market value and making a profit. They have a contract for two or three cents and can sell it for $9 per kilowatt-hour.
According to Texas Sen. Ted Cruz, a winter storm in early 2021 devastated much of the state. Many things went wrong. However, Bitcoin has the potential to address many aspects of this. Cruz’s views on bitcoin and the mining industry proved prophetic.
A place for China’s Miners
According to James Gibson, director of economic development at Rockdale, the city has 160 acres ready.
King has already made up to 40 requests from mining companies wishing to open a store there. Too many of them are Chinese miners. In the early spring, Beijing raided the domestic crypto mining industry. The US, which has recently become the planet’s leading mining destination, especially for displaced miners.
At the main entrance to Bitdeer’s Rockdale mine is a tin curtain enclosed by a friendly guard. However, there are no gates or sidewalks to stop unwanted vehicles. Given how secretive Bitdeer is, getting into ownership seems relatively straightforward.
However, the company is still relatively closed. CNBC even requested a tour where they said that before they assessed the meeting, the person in charge had been traveling for several weeks. It was difficult to determine the schedule. The mayor, whose son received a full-time stake in Bitdeer this year, shared little about the operation.
Unlike Riot’s Whinstone mine, which was once built on a forested site, Bitdeer has taken over Alcoa’s closed plant, which was still conveniently connected to major power lines. King said most of the football-length buildings that Bitdeer now occupies were built in the 1950s and needed to be rebuilt. Bitdeer is expanding as fast as possible. On the specifics of how Bitdeer bitcoin mining operation works, the company remains silent.
According to the CEO of Whinstone, the main benefit of the company is its ability to send money to suppliers as quickly as possible.
The price of Bitcoin has risen over the past year. Hence this strategy has repeatedly paid off for the company.
Harris said the company started the mine when Bitcoin was $6,100. By mid-October, the coin had reached a new record high of almost $67,000. The company did not even have power lines in the beginning. In June 2020, Winston began mining. According to Harris, on the first day, they had 300% more power than Bitdeer. The company has publicly recorded the entire Winston construction process, posting videos from the facility on YouTube. They share footage of the aircraft to let stakeholders know how it is expanding.
America’s Largest Bitcoin Mine
About 6.25 new bitcoins are created every ten minutes. The Global Fund of Miners competes over who will unlock the first batch of the first bitcoin to arrange new tokens. The more machines Miner has online, the greater his share of the network hashish and the greater his chances of winning Bitcoin.
Winston has several buildings on the ground, each 20 feet high, with rows of computer hardware designed specifically for this purpose. Harris estimates the company generates more than 500 bitcoins a month, which at today’s prices is about $30.7 million, or $368 million a year. The firm says it has about 100,000 cars on the ground.
Riot bought Winston Mine earlier this year for $80 million and is now the largest in North America. The company is expanding again. As soon as they finish the construction of 100 hectares of land, the total capacity of the crypto mine should be 750 MW. Whinstone is in parallel with the latest technology testing business.