Fighting is raging across the state to attract bitcoin miners, and new data shows that most of them are heading to New York, Kentucky, Georgia and Texas.
In the United States, 19.9% of Bitcoin’s hashrate – the collective calculating power of mining – is in New York, 18.7% in Kentucky, 17.3% in Georgia and 14% in Texas, according to Foundry USA, the largest mining pool in North America and the fifth largest mining pool worldwide.
A mining pool allows a single mine to combine its hashing power with thousands of other mines around the world, and there are dozens of them to choose from.
Nick Carter, co-founder of Castle, said: “This is the first time we’ve got state-level insights into miners, unless you want to go through all the public filings on the bond and try to get it out that way.” Island Ventures, who presented the foundry’s information at the Texas Blockchain Summit in Austin on Friday. “It’s a more effective way to find out where mining happens in America.”
But as Carter noted, the foundry dataset does not account for all U.S. mine hashrates, as not all U.S.-based mining farms list the services of this pool. The riot blockchain, for example, is one of the largest public-traded mining companies in America with a huge presence in Texas. They do not use foundries, so their hashtags are not calculated in this dataset – which is part of the reason for the low presence of mining in Texas.
Although the dataset occupies a portion of the country’s internal mining market, it points to a nationwide trend that is reshaping the controversy around the carbon footprint.
The ranking of the highest among the states is the focus of renewable energy, a fact that has already begun to reconstruct the statement among skeptics that bitcoin is bad for the environment.
While Carter acknowledges that U.S. mining is not completely renewable, he says the miners here are much better at selecting renewables and buying offsets.
“Immigration is not a net positive overall,” he said. “Going to the hashrate in the United States would mean a much lower carbon footprint.”
Where all the miners went
When Beijing decides to expel all of its crypto mines this spring, about half of the bitcoin network goes dark overnight. Although the network itself did not skip a bit, the incident stopped the biggest transfer of bitcoin mining.
Foundry dataset shows the largest bitcoin mining operation is the most renewable in some states – a game changer for the debate over the environmental impact of bitcoin.
Because miners on the scale compete in low-margin industries, where their only variable cost is usually energy, they are encouraged to move to the world’s cheapest energy sources যা which are also renewable.
Take New York, which leads the foundry’s ranking. According to the latest available data from the US Energy Information Administration, one-third of its internal generation comes from renewables.
New York counts its nuclear power plants as its target of 100% carbon-free electricity, and critically, New York produces more hydropower than any other state before the Rocky Mountains. It was the third largest producer of hydropower in the country.
New York’s cold climate – plus the need to rebuild previously abandoned industrial infrastructure – has also made it an ideal spot for bitcoin mining.
The crypto mining company CoinMint, for example, operates facilities in New York, including a former Alcoa aluminum smelter in Massena, which taps into the area’s abundant wind power, as well as cheap electricity generated from the St. Lawrence River dam. Massena’s site with a capacity of 435 MW transformer is not the largest bitcoin mining facility in the United States.
New York was enacting legislation this year to impose a three-year ban on bitcoin mining so that it can conduct environmental assessments to determine its greenhouse gas emissions. Lawmakers have since largely abandoned it.
“The carbon intensity of bitcoin mining in New York is actually very low, given its hydropower, and as a result, if New York bans bitcoin statewide, it will probably increase the carbon intensity of the bitcoin network as a whole,” Carter said. “It will be the complete opposite of what they wanted.”
Other states that occupy a large part of America’s bitcoin mining industry include Kentucky and Georgia.
The governor of Kentucky is industry-friendly, having just passed a law this year that exempts some taxes on crypto mining operations, the state is also known for its hydropower and wind power.
Another source of energy is connecting the rig to an otherwise trapped energy, like a natural gas well. Although coal is a big player in the energy mix, there is a lot of mining work that attracts renewability.
And then there’s Texas
Texas could rank fourth, according to the foundry’s data set, but many experts believe there is no question that it is now the main authority for mining.
Some of the biggest names in bitcoin mining have set up shop in Texas, including the Riot blockchain, which has 100 acres of land in Rockdale, and the Chinese mining bitcoin, which is just down the street.
According to The Block Crypto, the order for the new ASIC – the special gear used to mint the new bitcoin – shows that thousands more machines will be delivered to Texas.
The appeal of Texas comes down to a few major fundamentals: crypto-friendly lawmakers, an uncontrolled power grid with real-time spot pricing, and perhaps most importantly, access to significant additional energy that is renewable, as well as trapped or burning natural gas.
According to Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced mining, makes the regulatory red carpet industry highly predictable for miners.
“It’s an attractive environment for miners to invest a lot of capital,” he said. “The exact number of land deals and power purchase agreements that are at various stages of negotiation is huge.”
Some miners plug directly into the grid to get their rigs. ERCOT, the company that operates the Texas grid, has the cheapest utility-scale solar in the country at 2.8 cents per kilowatt hour. The grid is rapidly adding wind and solar energy.
“You can’t just lose the price of electricity in West Texas, and when you join an efficient power management company that can manage programs to meet your needs, it’s almost unbeatable anywhere else in the world,” Brammer said.
Regulated grids have the best economy for mining, as they can buy spot energy.
“They can participate in economic remittances, which means they stop buying electricity when prices go up, so you have a lot more flexibility if you’re active in the spot markets,” Carter explained.
Another major energy trend in the Texas bitcoin mining business is the use of natural gas “stuck” in power rigs, both of which reduces greenhouse gas emissions and makes money for gas suppliers as well as miners.
Carter says that if it is fully utilized, only burning gas in Texas can give %% of the Bitcoin network power – which will give Texas a clear lead in bitcoin mining not only in the United States, but in the world.