New data suggests that a lot of bitcoin miners are heading to New York, Kentucky, Georgia, and Texas.
According to Foundry USA, the largest mining pool in North America and the sixth largest internationally, New York has 19.9% of bitcoin’s hashrate, while Kentucky has 18.7%, Georgia has 17.3%, and Texas has 14%.
A mining pool allows a single miner to pool their hashing power with thousands of other miners across the world.
“This is the first time we’ve received state-level knowledge on where miners are,” said Nic Carter, co-founder of Castle Island Ventures, who presented Foundry’s statistics at the Texas Blockchain Summit in Austin on Friday. “This is a lot faster approach to find mining in America.”
U.S mining farms?
However, as Carter points out, the Foundry dataset does not represent all US mining hashrate because not all US mining farms use this pool. A big player in Texas is Riot Blockchain, one of America’s largest publicly traded mining companies. They don’t use Foundry, thus their hashrate isn’t included in this statistic, which helps explain Texas’ low mining presence.
However, the data points to broader patterns that are altering the discussion over bitcoin’s carbon footprint.
Many of the top states rank high in renewable energy, which has begun to reshape the environmental narrative among critics of bitcoin.
While Carter concedes that US mining isn’t totally sustainable, he maintains that miners here are far better at acquiring offsets.
“Overall, migration is a net positive,” he remarked. “Moving hashrate to the US will reduce carbon intensity.”
Where are the miners?
When Beijing banned all crypto miners this spring, over half of the bitcoin network fell black. While the network itself was unaffected, the incident triggered the largest ever bitcoin miner migration.
It turns out that the biggest bitcoin mining businesses are in states with the most renewable energy sources.
In a low-margin business where the sole variable cost is energy, miners encouraged to shift to the world’s cheapest sources of electricity, which are usually renewable.
Consider the top-ranked city, New York. Energy Information Administration records show that a third of its in-state generation is renewable.
New York’s Nuclear Power Plant
New York’s nuclear power plants count toward its zero-carbon electricity objective, and the state produces more hydroelectricity than any other state east of the Rockies. It was also the country’s third-largest hydroelectric producer.
New York’s frigid environment and repurposed industrial infrastructure make it perfect for bitcoin mining.
Coinmint, for example, has facilities in New York, including one in a former Alcoa aluminum smelter in Massena, which uses cheap electricity generated by the St. Lawrence River dams. In fact, with 435 megawatts of transformer capacity, it is one of the largest bitcoin mining operations in the US.
New York was considering legislation this year to restrict bitcoin mining for three years to examine its greenhouse gas emissions.
“Bitcoin mining in New York is actually relatively low in carbon intensity, considering its hydro power,” Carter added. “It would be the exact opposite.”
Kentucky and Georgia also have a substantial share of the US bitcoin mining sector.
Aside from the governor’s pro-industry stance, Kentucky noted for its hydroelectric and wind power resources.
Another power source is connecting rigs to stranded energy like natural gas wells. While coal is still a major energy source, many mining businesses there favor renewables.
Although Foundry’s statistics places Texas fourth, many experts feel it is currently the dominant jurisdiction for miners.
Riot Blockchain, with a 100-acre facility in Rockdale, and Chinese miner Bitdeer are just down the road.
According to The Block Crypto, tens of thousands more ASICs — the specialised equipment used to mint new bitcoin – are set to arrive in Texas.
Texas’ allure stems from a few key elements: crypto-friendly policymakers, a deregulated power grid with real-time spot pricing, and, probably most crucially, abundant renewable energy and stranded or flared natural gas.
According to Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners, the regulatory red carpet for miners makes the sector predictable.
“It is a highly appealing climate for huge capital investments,” he remarked. “The amount of land deals and power purchase agreements under negotiation is staggering.”
Some miners use the grid to power their rigs. The Texas grid operator ERCOT offers the lowest utility-scale solar in the country at 2.8 cents per kilowatt hour. Wind and solar power are rapidly entering the grid.
Nowhere else in the world can you beat the cost of power in West Texas, especially when you combine it with a trained power management business that can manage your demand response programs,” Brammer added.
Miners like deregulated systems because they can buy spot electricity.
“They can participate in economic dispatch, which means they cease buying electricity when costs rise, giving them significantly greater flexibility,” Carter noted.
Another important energy trend in Texas bitcoin mining is using “stranded” natural gas to power rigs, which benefits both the gas providers and the miners.
Carter claims that if completely utilized, flared gas in Texas alone could power 34% of the bitcoin network today, making Texas the world leader in bitcoin mining.