Texas, the new El Dorado for bitcoin mining

Since China banned the manufacture of primary cryptocurrency last year, large “data centers” have fled to Texas, where electricity is cheap. Because bitcoin mining consumes energy resources in astronomical quantities. But this industry, which is fueling some rural towns, poses an environmental risk. Report.

“This is the most photographed place on our site!” Chad Harris, CEO of the Whinstone company, is proud to show us his heart. Here, there are no coal-blackened faces, but a large sanitized hangar with, over 150 meters long and 6 meters high, thousands of computers lined up, processors overheated. Entering, the deafening sound of fans taking in heat and venting it outside through a “cathedral” – a large hall in the center of the building. Welcome to the largest bitcoin mining factory in the United States.

Chad Harris, the CEO of Whinstone, in a room dubbed “the cathedral” where the heat generated by the processors is evacuated. The bitcoin industry alone will use more energy than countries like Sweden or Poland. April 21, 2022, in Rockdale, Texas. © Valérie Defert for France 24

Mining is the name given to this process of creating the primary cryptocurrency. Because the value of traditional coins is guaranteed by the metal in which they are counterfeited, trust in bitcoin is secured by a “blockchain”, i.e., an encrypted formula that secures bitcoins and their transactions. . This algorithm is calculated by thousands of computers around the world, and in particular, therefore, in the small town of Rockdale.

In the heart of the Texan countryside, an hour and a half drive from Austin, it’s hard to imagine that this faded town of 5,600 inhabitants is home to the world’s modern technology. The main street is full of abandoned houses, shops with curtains for a long time. However, there is a change to come. Proved by the current renovation on this avenue. “It’s relevant, and it has nothing to do at the same time,” confirmed John King, the mayor of Rockdale. “There’s been more traffic in town since the bitcoin factories came in, but the money for the road repairs is coming from the state of Texas.”

Aerial view of Main Street in Rockdale, Texas on April 21, 2022.
Aerial view of Main Street in Rockdale, Texas on April 21, 2022. © Pierrick Leurent for France 24

As a result, the town’s money receipts are limited. The two large bitcoin factories settled in 2019 a ten-minute drive away, just outside the territory where the city collects property taxes. When you go there by car, it is first of all the mesh of the electrical network that you see. Conversely, on the other side of this country’s road, an impressive disused aluminum factory is now occupied by a Chinese bitcoin manufacturing giant, Bitdeer.

Chinese company Bitdeer converted the local Steel factory into a data center, in Rockdale, Texas, on April 21, 2022.
Chinese company Bitdeer converted the local Steel factory into a data center, in Rockdale, Texas, on April 21, 2022. © Valérie Defert for France 24

Just a few dozen meters away, its direct competitor, Chad Harris ’company, has unveiled seven large hangars containing nearly 50,000“ miners ”. “When we use the term‘ miners ’, we’re really talking about these processor-filled computers that process the bitcoin algorithm and create this money,” the Whinstone CEO summarized, showing the radiated hard drive in the process of installation in a new hangar. “Every miner of this model brings in $ 25-30 a day.”

A computer
A computer ‘mints’ Bitcoins at the factory in Whinstone, the largest cryptocurrency mining site in North America. Each processor earns $ 25-30 a day, April 21, 2022, in Rockdale, Texas. © Valérie Defert for France 24

Fireworks and American Football

Invented in 2009, bitcoin has reached new heights, with an exchange rate of $ 67,000 per unit last October. Currently at approximately $ 40,000, it remains very attractive. In Whinstone, in March, computers running at full speed “forged” 511 bitcoins, or more than 20 million dollars. The boss discovered the easy money that a simple machine could bring thanks to his son Ashton. In 2019, he advised it to invest in its first “miners” that Chad runs in his office. “I can’t believe my eyes,” the businessman recalled. “I would just plug in a machine, it would tell me if it was okay with the green or red light, and it was earning me $ 60 a day at the time. I was like, ‘Let’s buy more machines!’ Six engines then 30 then 100… And that’s where the problems start: not enough electricity, too much heat. ”

Chad Harris, CEO of Whinstone, at 1 in 7
Chad Harris, Whinstone’s CEO, is in 1 of Whinstone’s 7 “data centers,” where more than 38,000 processors mine Bitcoin. April 21, 2022, in Rockdale, Texas. © Valérie Defert for France 24

This entrepreneur from Louisiana set up a team responsible for finding solutions on a large scale. Today, 220 people work on the site. A group of high -paying jobs that provide relief to a disaster -stricken community. “That’s why I do all this,” the businessman summarizes, on the verge of tears. “To see people’s lives improve and my employee’s children get a good education.”

The town’s mayor, whose son works for competitor Bitdeer, rubbed his hands: “Whinstone paid for the equipment to broadcast our team’s American football matches on YouTube. And in the high sense, quality is not a bad thing. They also offered fireworks on the 4th of July and the end of school. ” Benefits that may seem anecdotal, but represent concrete improvements for the daily lives of residents.

John King, Rockdale’s mayor for ten years, sees bitcoin mining as a great growth opportunity for his hometown of 5,000, April 21, 2022, in Rockdale, Texas.
John King, Rockdale’s mayor for ten years, sees bitcoin mining as a great growth opportunity for his hometown of 5,000, April 21, 2022, in Rockdale, Texas. © Valérie Defert for France 24

An ecological disaster?

A fairy tale that changed when China banned bitcoin mining on its soil last year. In the Middle Kingdom, electricity comes primarily from coal -fired power stations. Too polluting to feed a virtual industry, at a time when Beijing is becoming aware of climate issues.

Expelled from their country, Chinese businessmen are knocking on Texas, the main producer of electricity in the United States, where taxes are low, environmental standards are virtually nonexistent, and the energy market, which is deregulated and particularly attractive .

“At that time, we were getting 3 or 4 calls a week,” the Rockdale mayor recalled. “We should have about 50 requests from Chinese companies to install 20,000 miners each. But to meet them, you need to easily connect to the power grid. Capacity, and it will take 16 months to build. necessary infrastructure. Chinese entrepreneurs can’t wait that long with computers. ”

Because bitcoin mining consumes energy resources in astronomical quantities. The Whinstone company needs a capacity of 400 Megawatts, or half the electricity produced by a nuclear reactor, to run its computers.

Whinstone employees installed new processors.  The factory made 512 bitcoins last month and generated approximately $ 20 million.  April 21, 2022, in Rockdale, Texas.
Whinstone employees installed new processors. The factory made 512 bitcoins last month and generated approximately $ 20 million. April 21, 2022, in Rockdale, Texas. © Valérie Defert for France 24

“The bitcoin algorithm is not a simple mathematical equation to solve. Instead it can be compared to a betting or lottery system that puts computers in competition, and creates an increase in employment for the machines”, explains Rolf Skar , from the NGO Greenpeace. This is called a “proof of employment” protection system. Conversely, other virtual currencies have a “proof of bet” system that reduces power consumption by 99%. It is for this reason that Greenpeace is calling for a structural change in the code that secures bitcoin to reduce its impact on the environment. “Because if you just ban bitcoin mining in one country, the whole industry is moving elsewhere in the world and becoming more polluted,” Rolf Skar insists.

Bitcoin mining professionals in Texas argue that the growing portion (about 25%) of the electricity produced in this state comes from renewable sources, most of which are wind power. And in the event that there is excessive pressure on the power grid – as happened in 2021 during a historic winter storm – computers can shut down in seconds, and the excess electricity will be returned to the local grid (in very good price.for mining companies).

“I’m sure those operating in Texas are convinced they’re having a positive impact,” Rolf Skar admits. “But will they say the same about bitcoin mines running on coal, in Pennsylvania, in Kentucky? Or in Montana, where they’re even starting coal-fired plants? It’s a systematic issue that we’re raising.”

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