Texas’ Bitcoin gold rush results in ghost mines
The Future. Despite a rush to take advantage of low taxes and loose regulations in Texas, crypto miners (Bitcoin mainly) have faced a tougher economic environment and have stalled on their plans to build out mining facilities. With many of these companies on the verge of bankruptcy, Texas may soon be scattered with the modern equivalent of abandoned mines — monuments to a lost opportunity.
Boom to bust
Texas’ big Bitcoin ambitions have run out of juice. According to Bloomberg, a dozen leading Bitcoin mining companies, including Iris Energy, Argo Blockchain, and Core Scientific, have paused the construction of their sprawling facilities halfway through.
Why the stoppage?
- Energy costs in Texas have soared due to major heat waves over the summer and the war in Ukraine.
- The Federal Reserve’s interest-rate hikes have made it harder to repay their loans for infrastructure and supplies.
- The price of Bitcoin has been pummeled this year, dropping more than 60% and crushing the companies’ valuations.
After China (the previous top mining country) banned Bitcoin mining, Texas welcomed crypto companies with open arms. The hope was that the sweet revenue would power the state’s economy.
The problem is that Bitcoin mining takes a lot of power, which Texas’ independent power grid has struggled with in recent years. A case in point was the cold snap of February 2021 that cut power to millions of residents and left over 200 dead.
It’s hard to justify plugging in the 37 gigawatts (yeah, that’s a big number) of crypto-mining requests to connect to the state grid when it’s already that stressed.