Cryptocurrency miners are flocking to Texas in what’s been dubbed “the great mining migration.”
The trend could pick up even more, because China—long home to more than half of the world’s bitcoin miners—recently escalated its war against cryptocurrency by booting mining from its energy-rich regions and provinces entirely.
According to the latest estimates, 65% to 75% of bitcoin mining occurs in four Chinese regions: the provinces of Xinjiang, Sichuan, and Yunnan and the autonomous region of Inner Mongolia. Mining consumes colossal amounts of energy. Xinjiang and Inner Mongolia are where many of China’s coal plants are located, while Sichuan and Yunnan boast robust hydropower networks.
Burning mountains of fossil fuels runs counter to Beijing’s ambitious green energy goals, as China hopes to become a global leader in fighting climate change.
After the country missed its climate targets earlier this year, it began cracking down on the vast population of crypto miners in the region, giving them two months to clear out operations. It subsequently banned mining in Xinjiang and Yunnan as well, issuing a steady stream of notices promising stricter enforcement and harsher punishment.
Texas is a natural destination for the mass exodus. Bitcoin Magazine reported in May that numerous mining companies were setting up shop in the Lone Star state, including big names like Bitmain, Blockcap, Argo Blockchain, Great American Mining, Layer1, and Riot Blockchain. Major draws are the state’s plentiful solar and wind power, relatively inexpensive energy prices, and unregulated market for crypto mining. Experts told CNBC that up to 60% of bitcoin’s total hashrate (a measure of the mining network’s processing power at any time) could eventually leave China and a large part may relocate to Texas.
That wouldn’t happen instantly, so a swath of the network may be offline for a while and the lag could give Texas time to fortify its energy grid. The greatest concern surrounding the migration is Texas’s capacity to handle the surge, because the state’s grid has historically struggled during extreme weather. Both winter storms and summer heat waves have caused widespread power blackouts.