ROCKDALE, Texas – In this rural Texas, the city of 5,600, two of the biggest names in bitcoin mining compete for a market share and reasonable electricity.
These rivals will also be immediate neighbors.
Bitdeer, a spin-off of Chinese bitcoin mining giant Bitmain, is four-tenths of a mile away on the way to Riot Blockchain, one of the largest publicly traded mining companies in the United States. however, they don’t have much else in common.
Riot’s Whinstone mine runs through a team that feeds on transparency and opens its doors to the media on a basis, while Bitdeer is remote, full of mystery, and in fact dislikes visitors.
“In this industry, everyone says, ‘Oh, the most sensible secret, we have confidential information!’Well, actually, it’s not,” Whinstone CEO Chad Harris told CNBC.
“You take a cable, connect it to a device you’ve built the most, turn it on, upload a group, and extract bitcoins. “
Located an hour northeast of Austin, Rockdale resembles ancient rural America. There are hills, green grass pastures, bales of hay, a Walmart, which Mayor John King says is the main driving force behind the sales tax, a key source of profit for the country. annual budget of the city.
But for the most discerning eyes, Rockdale offers all the elements of a bitcoin miner’s dream home: pro-crypto politicians, vast tracts of land, abandoned and reused commercial infrastructure in the past, and the ability to connect to Texas’ network of strength.
The Texas Electric Reliability Council, or ERCOT, is the non-profit organization that operates the Texas grid. The network is deregulated, meaning consumers can between providers.
Because large-scale miners compete in a low-margin industry where energy is their highest variable cost, they have reasons to migrate to the world’s cheapest energy sources. Competition among electric power providers in Texas is a smart thing for miners, as it affects lowering rates.
Rockdale once housed the world’s largest aluminum plant, traversing Alcoa, but starting in 2008, it began shutting down its operations, meaning power capacity will be reduced, due to the prohibitive construction charge, the transportation capacity needed to bring it to elementary school. population centers, according to Lee Bratcher, president of the Texas Blockchain Council.
The advent of crypto miners has solved this imbalance.
In addition, miners can be flexible in the face of fluctuations in force materials and prices. Unlike an aluminum smelter or any other business, miners can deal with a breakdown that suffers primary monetary damage.
This resilience is for a state that has recently struggled with the reliability of its network of strength, which is separate from the rest of the country.
ERCOT rarely asks consumers to save force heat waves. The state also experienced power outages notoriously before this year after serious winter storms.
Mayor King says today’s agreement between the miners and ERCOT is quite undeniable and mutually beneficial. Not only do miners use energy that would otherwise be wasted, but they also serve as an “interruptible load,” meaning they can turn off all their machines with a few seconds’ realizing that the grid is crowded and you want more power. Minors volunteer to do so because of monetary incentives.
“Miners are dedicated to buying a certain amount of electrical energy and what they do is resell it at the market [value] and make a profit,” King explained. “They have a contract of two or three hundred . . . and they can sell it for $9 a kilowatt hour. “
“There were a lot of things that went wrong,” Sen. Ted Cruz, R-Texas, said of the winter typhoon of early 2021 that devastated much of the state. “But I think Bitcoin has the ability to deal with many facets of that. “
Cruz, whose perspectives on bitcoin and the mining industry have more widely proven prophetic, recently weighed in on the topic at the Texas Blockchain Summit in Austin. During his interview on the main stage, Cruz highlighted the importance of bitcoin miners’ ability to turn on or off in seconds: an incredibly favorable feature in periods when energy wants to be redirected to the grid to meet demand.
“Much of the discussion about bitcoin bitcoin’s attitudes as an energy consumer,” Cruz said. “The attitude I’m suggesting is quite the opposite, that is, as a form of our energy infrastructure. “
Rockdale’s director of economic development, James Gibson, says the city has 160 acres in a position to be razed.
King has already responded to nearly 40 requests from mining corporations to settle there, many of which are Chinese miners. Earlier this spring, Beijing cracked down on its domestic crypto mining industry. Exiled miners have since begun taking refuge in places like the United States, which has recently become the world’s top mining destination.
“They have money. They have equipment. They just want a position and power, fast,” Gibson said.
On the main front of Bitdeer’s Rockdale Mine is a small shed of improved sheet steel with a soft blue trim, with a smiling and positive caretaker. There are no barriers or crampons on the sidewalk to deter unwanted vehicles. Given bitdeer’s reserved nature as a company, it’s welcoming, and strangely simple, to enter the property.
But the corporation is still closed. CNBC asked for a tour and an interview, and we were told that although they “enjoyed” the meeting, the manager had been traveling for several weeks, and it was complicated to outline his schedule.
The mayor, whose son got a full-time assignment at Bitdeer this year, talked a bit about the operation.
Unlike Riot’s Whinstone mine, built in what was once a densely forested forest, Bitdeer took over Alcoa’s closed smelter, which was still conveniently connected to the primary power lines. to be remodeled – a procedure that included filling concrete into the concave floor where melt pots once processed the aluminum.
According to King, Bitdeer “is developing as fast as it can be built. “
Not much else is known about the main points of how Bitdeer bitcoin mining works. CNBC asked how many mining rigs and workers they have on the site, as well as how many cryptocurrencies they mine in a given month, and the company responded.
When Whinstone began cleaning up rockdale in January 2020, many saw him as David’s Goliath in Bitdeer. Harris, the CEO of Whinstone, originally from New Orleans, where he was known for promoting decorated Christmas trees among wealthy families. Younger son, he had blue hair and had just dropped out of school after his fresh year.
It’s easy to underestimate the team. But Harris thrives as an outsider.
“No, what Alcoa told us, we accepted,” Harris said of the initial negotiations.
“They would say, ‘You want this amount for a deposit,’ and we would say, ‘Absolutely, no problem. ‘They were like, ‘You want a qualified guarantor from Moody’s,’ and I said, ‘Absolutely, no problem,'” Harris said. After leaving those meetings, his business partners reminded him that they were bankrupt and had no guarantor, but Harris’ reaction was the same: “It’s the simplest thing. They said yes. “
Harris’ taste for leadership is not limited to improvisation. Whinstone’s CEO told CNBC that his greatest skill is to send cash to suppliers as quickly as possible. They will force other people to do it, whatever it is. “
This strategy has been worth it several times for Whinstone, as the value of bitcoin has skyrocketed over the next year.
“We buy all the orange ducts in the United States. Every last piece of pipe you can get,” Harris said. “And then they call back a week later saying they made a mistake. “We can’t deliver all of that. ” We thought, ‘Just send the cash. ‘And then they say, ‘Wait, I think we can figure it out. ‘”
Harris broke a new floor in January 2020 when bitcoin $ 4,100, they lit the mine when $ 6,100, and Harris recalls thinking that if bitcoin can succeed at $ 8,000 per coin, they would not go bankrupt. almost $ 67,000 in mid-October.
“When we were given here, this position was a forest,” Harris told CNBC from his workplace, one of many prefabricated roof internal trailers found next to the mine. “We had no lines of force. . . crazy stuff. “
183 days later, in June 2020, Whinstone began operations. Harris estimates that on the first day they had 300% more capacity than Bitdeer.
But Harris doesn’t see it as a competition, nor does he feel the desire to hide the secrets of the industry from his neighbors.
“There are no intellectual assets in this company. It’s nonsense,” Harris said, though he continually clarified that this is just his opinion.
Harris says that before Bitdeer came to town, Bitmain came all the time to take a look. They were very interested in Whinstone’s shelving and shelving system.
“We brought them in, we gave them the pictures, we told them what device to buy, how to do it. It took them about 8 months to plug in the device,” he said.
Harris has publicly documented the entire Whinstone construction procedure, posting videos in and around the Whinstone facility on YouTube. It also stores drones to give stakeholders a concept of the evolution of expansion.
“It doesn’t matter, because what we’re doing will take them two years to reach us,” Harris said. “We are two years ahead of what others are doing. “
When someone searches for bitcoins, they lend their computing power to the bitcoin network. Every ten minutes or so, 6. 25 new bitcoins are created. To mint those new tokens, a global organization of miners is struggling to see who can unlock a lot. of new bitcoins first.
The more machines an online miner has, the higher their percentage of the network’s hashrate and the higher their bitcoin profit.
Whinstone has several buildings on site, stacked 20 feet on top with rows of specially designed PC equipment. Harris estimates that at its current capacity, it produces more than 500 bitcoins consistent with the month, which, at existing prices, is approximately $30. 7 million, or $368 million in line with the year. The company claims to have around 100,000 machines on site.
Riot acquired the Whinstone mine earlier this year for $80 million, and it is now the largest in North America. The company is still expanding and once the 100-acre land structure is completed, the crypto mine is expected to have an overall electrical capacity. of 750 megawatts.
To put this in context, Gibson says downtown Dallas uses only two hundred megawatts. “So it’s like having downtown Manhattan, downtown Dallas, all in our backyard,” Gibson continued.
The network has that amount of strength to give. The complicated component is to physically extract it. Mines want special apparatus to adjust the voltage to a usable level. Transformers take the force of a substation and convert it into a decreasing voltage that can then be used to force bitcoin miners.
“Transformers you can get in about 12 weeks if you felt like paying and you had money, but you still have to cut the strength of the lines,” King said. The wait for a substation is 16 to 18 months, according to the king.
Whinstone built its own substations, which gave the company merit over other potential miners looking for Rockdale. They are now installing 3 100 megawatt transformers.
“The irony is that if you need that transformer today and didn’t order it, it’s 64 weeks,” Harris said.
Whinstone is also looking for cutting-edge technologies.
When the platforms work, they run a PC program that calculates millions of mathematical equations. Doing all those calculations is hard work, so the curtains heat up quickly. To make sure they don’t overheat, a facility will install enthusiasts to cool them down. At the Whinstone site, this hot air is blown through individual enthusiasts into a central chamber called a “hot aisle. “
Harris took the cnbc inside to feel the temperature, which can reach 150 degrees.
But now Riot is looking for immersion cooling in some buildings in Whinstone. The computers are immersed in a specialized fluid that helps keep the built-in circuits running at lower temperatures. The heated liquid is then pumped and circulated to help burn the heat, at which point the cooled fluid is then pumped back.
The corporation says this is the first time this has been done on a commercial scale. In total, immersion-cooled buildings are expected to make room for approximately 46,000 S19 series ANTminer ASCI (the term originally referred to the maximum utility specialized built-in circuits for mining, but is now used as a shortcut to a mining rig or computer).
Riot CEO Jason Les believes this will change the company’s backline.
“We expect to see an increase in the company’s hash rate and productivity through 2022, without having to rely only on acquiring more ASICIs,” Les said in a statement.
Mayor King is a cryptocurrency miner, has 37 five-terabyte units connected to his home and uses those machines to mine chia, an environmentally friendly cryptocurrency. .
King spent years learning how cryptocurrencies and blockchain work, basically because the city of Rockdale needed this Bitcoin fun to work.
For a long time, Rockdale was a city with only one business. Alcoa hired thousands of residents, until it was forced to close.
China-based company Bitmain. La then said it would invest $500 million to build a massive mining facility at Alcoa’s decommissioned power plant in Rockdale in 2018 to create 400 local jobs. Bitmain’s corporate ambitions temporarily put its plans on ice.
It didn’t help that the city’s only hospital closed in 2018. Al same time, Rockdale was struggling with a challenge with its water supply system, where citizens complained about smelly red water coming out of their taps. Rockdale seriously needed a break.
But then came Whinstone and a recently revitalized Bitdeer, which had recently split from Bitmain as a result of internal disputes at the top. Whinstone has led efforts to create jobs and raise awareness among the local community.
“Rockdale’s economy was devastated for several years until bitcoin miners showed up,” Bratcher said.
Some remain skeptical after years of whiplash, but King believes this time is different.
Beijing exiles all its crypto miners, a black swan occasion for the industry. For years, China has ruled this activity, with 75% of the world’s bitcoin miners at their peak. But after its repression, a large migration of humans and physical curtains began and many began to head to Texas.
This migration is still now and many need to plant their flag in Rockdale, which is wonderful for King.
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