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- 1 Texas is currently the largest BTC hashrate-producing state in the US.
- 2 Cheap energy is attracting a lot of crypto miners in the state.
While activists are urging Bitcoin (BTC) miners to refrain from the development of crypto mines, some are using the flagship virtual currency to counterbalance their income from gas wells in Texas. American business newspaper The Wall Street Journal (WSJ) reported on how a BTC mine owner is using fluctuating crypto and gas prices in tandem.
Balancing Profits In a Volatile Market
Chris Alfano, owner of crypto mining company 360 Mining, explained to WSJ that the company mines Bitcoin “using power generated from natural gas produced by the wells.” His proposal to the prospective clients is simple—they can generate $10 by mining instead of selling the gas for $1.5 or less.
He spoke about the volatility in cryptocurrency and a drastic slump in gas prices. Both factors counterbalance each other. Gas, when cheap, could be used for Bitcoin mining. However, the strategy may not come in handy during a crypto winter. Selling gas would be the only viable option during the period, with profitability relying on market price.
Bitcoin’s volatility would eventually affect the business to an extreme. The asset has fluctuated between $3,000 to nearly $70,000 in the last 5 years. Moreover, the report elucidates on threats to the company from other crypto miners. It writes, “The number of coins they will earn can be reduced by new miners joining the fray and by old ones upgrading their machines.”
Texas has become a crypto mining hub in the United States. The state is home to around 30% BTC hashrate in the country, with Riot Platforms being the biggest crypto miner. The company is reportedly developing a crypto mining facility in Navarro County. News reports suggest it would become the biggest Bitcoin mine if raised globally.
The demand and response program offered by the Electric Reliability Council of Texas (ERCOT), the state’s grid operator, is among the leading causes attracting crypto miners. Crypto miners can generate revenue by selling excess energy during times of high electricity demand.
Renewable energy sources like wind and solar are further pretexts for the rising population of crypto miners. Texas generates more power from such resources compared to any other state. Bitcoin mining is infamous for its energy consumption and, in turn, is generating carbon emissions. However, that is the case when fossil fuels are burnt to run computers busy mining crypto blocks.
Virtual currencies using Proof-of-Work (PoW), one of the algorithms used to mine cryptocurrencies, are reckoned a threat to the environment. BTC today stands as the largest asset using the mechanism. There are nearly a million Bitcoin miners active globally, each holding a diverse array of highly advanced energy-intensive machines to mine profits.
Data suggests a Bitcoin transaction equals the power consumption of 100,000 Visa transactions. Besides energy, the flagship asset might be depleting other resources. A recent United Nations (UN) study discusses the effects of Bitcoin mining going beyond carbon footprints with land and water consumption going haywire.
Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.
