[2021-10-09] New York and Texas are winning the war to attract bitcoin miners

[DaveF]

https://www.cnbc.com/2021/10/09/war-to-attract-bitcoin-miners-pits-texas-against-new-york-kentucky.html

As a New Yorker I am glad to see how much we are getting in terms on mining.
As a miner I worry that the big miners are going to want to add regulations that mean nothing to them but can make my life harder.

I figure with all the big money in Wall Street and other investors here getting into BTC, it's going to be more easier to get investors who can take a 1 hour (or less) flight to see the facility and still be back home for dinner.

That an the fact that in the winter in upstate NY you can cool your entire 550WM facility by just leaving the small window in the bathroom open with a fan.
OK fine that an exaggeration, but it does get cold up there. So not running the coolers for part of the year can probably save them a bundle.

-Dave

[NeuroticFish]

not running the coolers for part of the year can probably save them a bundle.

While I could understand southern states, since you can easily use solar power there, I find NY kinda strange, exactly because of the cold. I would even add that - according to want I see on TV - the winters seem to even tend to be colder and colder in NY area.

I am thinking that also the data may not be accurate, since those having their own solar panels for mining may not report everything to the govt (why should they?).
So while the "1h flight" logic probably makes sense, I think that there's something else missing and making NY percents look so good.

All in all, I don't mind. At least there's better chance that they use cleaner energy there. And we can say goodbye to the "Bitcoin is controlled by China's miners" narrative.

[o_e_l_e_o]

While I could understand southern states, since you can easily use solar power there, I find NY kinda strange, exactly because of the cold.

I thought the same, but I didn't realize New York generated such a large amount of hydroelectric power as the article states. A combination of cheap renewable energy and lower cooling costs is obviously very attractive to large miners.

What I find more surprising is how Texas has such a dominance on crypto-mining in the US, but neighboring states like Arizona - which have access to the same solar and wind potential - have very little. I suppose it has to do with infrastructure and electricity costs as well, although I am starting to hear about Oklahoma getting some skin in the game - https://www.greenbiz.com/article/could-one-americas-reddest-states-be-next-green-crypto-capital.

[DaveF]

It's a number of things.

The vast amounts of hydo power and colder climate are a big plus.

Next is as mentioned in the article there are a lot of empty facilities that already had a large amount of the infrastructure in place.
Not having to build a facility but rather just leasing and doing some changes / upgrades to an existing one saves a ton of money and time.

And no matter what, being close to the money people always helps.

What I find more surprising is how Texas has such a dominance on crypto-mining in the US, but neighboring states like Arizona - which have access to the same solar and wind potential - have very little. I suppose it has to do with infrastructure and electricity costs as well, although I am starting to hear about Oklahoma getting some skin in the game - https://www.greenbiz.com/article/could-one-americas-reddest-states-be-next-green-crypto-capital.

They are not neighbors, New Mexico is in the way :-)

Texas has been giving massive tax incentives to companies to move there and due to the way the power is sold in Texas it is a good deal for miners:

From: https://www.washingtonpost.com/technology/2021/07/08/bitcoin-mining-texas-electricity/

But thanks to the way Texas power companies deal with large electricity customers like Whinstone, Harris’s bitcoin mine, one of the few owned by a publicly traded company, didn’t suffer. Instead, the state’s electricity operator, the Electric Reliability Council of Texas (ERCOT), began to pay Whinstone — for having agreed to quit buying power amid heightened demand.

And

During the days-long blackout that crippled Texas in February, bitcoin mines completely went offline. ERCOT paid the companies for doing so.

So yeah, it's a good deal since the people of Texas get to pay them for mining losses when things go wrong.

-Dave

[o_e_l_e_o]

They are not neighbors, New Mexico is in the way :-)

You know what I mean. Still, where are the huge mining farms in New Mexico? Why does Texas have so many, and NM, AZ, OK have almost nothing?

Texas has been giving massive tax incentives to companies to move there and due to the way the power is sold in Texas it is a good deal for miners

So why aren't neighboring states doing this? If Texas are seeing such a profit from miners relocating there that they will offer tax and other incentives, why aren't other states doing the same? Are their officials just not as clued up regarding bitcoin? Do the energy companies not want them there?

[DaveF]

They are not neighbors, New Mexico is in the way :-)

You know what I mean. Still, where are the huge mining farms in New Mexico? Why does Texas have so many, and NM, AZ, OK have almost nothing?

For NM I am going to go with it's a pick your battles / what you can spend money on.

New Mexico is giving HUGE tax incentives for film and TV production.
https://nmfilm.com/for-filmmakers/incentives/
https://www.hollywoodreporter.com/business/business-news/netflix-to-expand-new-mexico-production-hub-with-1-billion-investment-4096357

They also have large tax incentives for BioScience, Alternative Energy, Spaceport-Related Activities and some others.

So while they probably could also give $ and tax incentives for BTC mining, if TX is already doing it then why fight it.
And since the TX power grid is fully socializing the miners losses when there are power issues across all the people in the state and New Mexico does not then it's even a tougher sell to get miners in the state.

For OK, they may be working on it, but it is a build it and they will come thing. But they are WAY behind the build it part, they do not have 1000s of spare MW in a lot of locations that would be good for mining.*

As for AZ, no idea.

-Dave

*OK is about $500 million into a $2 billion green / wind / general update to their grid that is years behind. The grid portion should have been done in 2019 but as of now still no end date in site.

[davis196]

Why does anyone here keep linking crypto mining with solar and wind power?
You guys are focusing way too much attention on the weather in Texas and New York.
I don't think that the weather matters that much.
AFAIK,the electric industry in Texas is not so heavily regulated,so Texas is using more coal burning power plants and nuclear power plants,which means cheaper electricity for the cryptocurrency miners.
New York has lots hydroelectric power,which relatively cheap and sustainable.
I don't think that any cryptocurrency miner is going to use expensive and unstable solar and wind energy
to mine crypto coins.Maybe a small minority of crypto miners will do this,but this simply isn't efficient or lucrative.

[NeuroticFish]

Why does anyone here keep linking crypto mining with solar and wind power?

Because that's supposed to be the cheapest.

You guys are focusing way too much attention on the weather in Texas and New York.
I don't think that the weather matters that much.
[...]
New York has lots hydroelectric power,which relatively cheap and sustainable.

This is something I didn't know. However, in the winter the rivers' debits tend to be smaller, the ice causes problems too and the result is that weather does matter.


Clearly most miners don't have their own power plants and buy any electricity they can as long as the price is good. And clearly there are other factors too (like legislation) that matters (and here TX seems to be winning too).
Still, on long term, I expect the mining farms with own power plants to be the winning solution. Unless nuclear fusion would become usable (if ever).

[DaveF]

Why does anyone here keep linking crypto mining with solar and wind power?
You guys are focusing way too much attention on the weather in Texas and New York.
I don't think that the weather matters that much.
AFAIK,the electric industry in Texas is not so heavily regulated,so Texas is using more coal burning power plants and nuclear power plants,which means cheaper electricity for the cryptocurrency miners.
New York has lots hydroelectric power,which relatively cheap and sustainable.
I don't think that any cryptocurrency miner is going to use expensive and unstable solar and wind energy
to mine crypto coins.Maybe a small minority of crypto miners will do this,but this simply isn't efficient or lucrative.

The weather in NY was more related to cooling then direct cost of power or the solar / wind thing.

If it's 0 degrees (fahrenheit) outside it's cheaper to cool your farm then if it's 50f degrees. Some of the locations in upstate where they are rarely sustain temperatures above 80f during the day and then it's only for a few weeks during the summer.

Picking on IBM.

They had a facility in Fishkill NY that they closed which now other industries including miners are moving into, todays temps are supposed to be a low of 60f to a high of 71f

They have also closed or have closed facilities over the last year in Dallas (70f to 80f today) and Houston (77f to 85f today)  So even if the cost of power and rent is less in TX you are still going to pay more to cool it. When you are spending millions of dollars on equipment and power and rent and construction and everything else you consider everything. And for projects like this ambient outside temperature for cooling is a big one.

-Dave
*All temps pulled from weather.com about 15 minutes before I posted this.  

[cafucafucafu]

This is exactly what will occur in the future, just on a grander scale.

While now governments are trying to ban and restrict access to bitcoin mining and exchanges, in the future they will be in a race to attract the best crypto companies, talents, and mining companies.

They get a lot of benefits including increased tax revenues and greater utilization of their electricity grid. Win win.