Cryptocurrency miners line up to come to Texas, and rural counties are welcoming them
Cryptocurrency miners line up to come to Texas, and rural counties are welcoming them
“Cryptocurrency miners line up to come to Texas, and rural counties are welcoming them” was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.
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Jacob Rodriguez was driving a John Deere tractor in a West Texas cotton field when he received a phone call that would change his life.
“I was pulling a 59-foot air seeder … and at the same time I was on the phone having my interview,” Rodriguez, 29, said.
On the other end of the phone early this year were representatives from a new business that was coming to Dickens County, a community of around 2,000 people an hour east of Lubbock.
By March, Rodriguez had quit farming cotton — something he called “just another job” — and began training to work in a cryptocurrency mine.
The county had exactly what London-based Argo Blockchain was looking for: plenty of open land and easy access to affordable power, thanks to a large wind farm built there more than a decade ago.
Texas political leaders have been promoting the state as a destination for companies producing bitcoin and other digital currencies, touting the state’s reputation for low taxes and cheap power. Around 30 have come in the past decade, and dozens more have expressed interest in moving to Texas.
But instead of moving to the state’s large urban areas — which have the extensive infrastructure and large workforce that attracts most relocating companies — cryptocurrency companies have largely done the opposite and located in rural areas, according to Lee Bratcher, president of the Texas Blockchain Council, a group promoting crypto growth and innovation.
Crypto companies have been welcomed by many small towns hungry for an economic boost. Argo Blockchain opened its 125,000-square-foot Helios facility in Dickens County in May and hired a couple dozen locals, including Rodriguez. It has also added $17 million to the local tax base, according to Kevin Brendle, the county judge. The county’s overall assessed property tax value is $283 million, he said.
That economic infusion has allowed Dickens County to cut county property taxes by around 1.5%, give small raises to county staff, and purchase new equipment for the sheriff’s office and for road and bridge improvements.
“The end result is enhanced services to the community,” Brendle said. “We’re going to be able to do a better job of serving them, and we’ll be able to be competitive in our wages.”
In Milam County, northeast of Austin, a large crypto facility owned by Riot Blockchain that opened in 2020 has added hundreds of new jobs and millions of dollars for the local tax base, according to County Judge Steve Young. He said the boost in taxes has allowed the county government to pay for basic services such as road improvements. When the crypto company needed to employ contractors for various projects, it hired locally, he added.
Crypto mining involves using powerful computers to produce digital currencies, called tokens, which can be used like traditional money to make online purchases. The crypto transactions run through computers rather than through a centralized entity like a bank, with the goal of providing people the ability to achieve wealth outside the traditional financial system.
The computers require large amounts of electricity. The scores of crypto companies requesting permission to connect to the power grid would use nearly as much electricity as the city of Houston, according to Texas’ power grid operator, the Electric Reliability Council of Texas.
That has raised questions about whether the state’s power grid — which infamously crashed in February 2021 during a powerful winter storm, plunging millions of Texans into darkness for days and killing hundreds — can handle that much additional demand. But energy experts said ERCOT and the state’s power transmission companies won’t allow any large power user to connect to the grid unless there is enough power supply.
Like some other industries, crypto companies can shut down operations when high demand puts stress on the grid. This summer, when the grid operator asked Texans to conserve electricity due to tight grid conditions, Bratcher said crypto companies quickly shut down.
Navigating rural Texas
Cryptocurrency is still a relatively new industry — bitcoin, the first and best-known digital currency, launched in 2009 — and has seen its fortunes rise and fall dramatically this year just as virtual currencies seemed to explode in popularity among both professional and individual investors.
The price of bitcoin plunged more than 50% in value the first half of this year from its peak in November 2021, and the dive continues. Major companies such as Coinbase, a large cryptocurrency exchange, have tanked in value, and firms have lost billions. The fall in cryptocurrencies is part of a wider economic downturn, spurred by inflation, soaring interest rates and economic disruption caused by Russia’s war in Ukraine.
Meanwhile, a decision by China’s government last year to ban cryptocurrency production has had ripple effects all the way to Texas.
“Following the 2021 crypto crackdown in China, many crypto miners came to Texas,” said Alexander Hernández Romanowski, a crypto research analyst at Tribal.credit and a crypto scholar at Rice University’s Baker Institute.
The new crypto companies have encountered opposition in some communities. A grassroots group in Navarro County, northeast of Waco, has rallied some citizens to oppose a bitcoin facility proposed by Riot Blockchain, claiming that it would create pollution by using large amounts of electricity.
But so far there hasn’t been widespread, organized opposition to cryptocurrency operations in Texas, according to energy analysts.
“I don’t know anyone who is actually making a case against it or has done any research,” said Virginia Palacios, executive director of Commission Shift, an organization that seeks to hold the state’s oil and gas regulator accountable.
Many rural counties are offering crypto companies tax breaks to lure them to their communities. Milam County, which lost its biggest employer — an Alcoa aluminum plant that employed nearly 1,000 people at its peak and closed in 2008 — offered Riot Blockchain a 45% discount on local taxes for 10 years, said Young, the county judge.
“Businesses are typically not going to come to your county unless you’re willing to give them a tax abatement,” Young said.
Crypto companies still add millions of dollars to the local tax base, Young said, and in Milam County, Riot Blockchain also helped rebuild the local animal shelter and installed new lights at local sports fields.
On the other side of the state, Brendle said Argo Blockchain has committed to refurbishing the county-owned public pool, which closed more than a decade ago.
Brendle and Young both said local residents didn’t oppose the new businesses but had lots of questions about cryptocurrency and whether outsiders would flock to their rural counties.
“When they first came here, people had no idea what it was — neither did I,” Young said. “As it’s gone forward, the county as a whole has started to get a grasp of what’s going on and clearly appreciates the fact that they’re out there providing jobs, enhancing county services, hiring local contractors for the most part and spending a ton of money here. It’s a huge benefit to the county.”
A new workforce
In Dickens County, Argo Blockchain has hired more than half of its roughly 50 employees from the community. The rest of the workers are bused in from Lubbock every day, Argo Blockchain CEO Peter Wall said.
They’re full-time employees such as site managers, security staff, and technicians who repair, install and monitor the computers.
Rodriguez said he is part of the “dunk team” at the Helios facility. Rodriguez and his co-workers submerge the computers in a liquid that improves their efficiency, keeps them cool and reduces the noise from the machines.
“It sounds counter-intuitive,” said Lane Kingsbery, data center manager at the Helios facility. “But it’s a great tool that actually extends their life and improves efficiency.”
Some communities with new crypto mining facilities have complained about the constant noise.
But in Dickens County, Rodriguez said most people appreciate what Argo Blockchain’s Helios facility has brought to the community. And for him, life has dramatically improved.
“I’m better off emotionally, financially,” said Rodriguez, who is married and has four children. “I have more money and more time with my family.”
Kate Harris, who was working as a freelance audio engineer in Dickens County, decided to apply for a job at the crypto facility after she saw an announcement in the local newspaper that Argo Blockchain was coming to town. Harris, who is 42 and has a son, said her family needed a reliable and steady source of income, and she thought this could be it.
After applying and landing a job as a technician, Harris said she has been promoted twice. She said she makes better money than she did freelancing and now has health benefits.
“Our team wasn’t really hired based on being crypto experts,” Harris said. “We were all hired based on our attitudes and work ethics. We have diverse workers, and we’re better for it.”
“We’re figuring it out as we go along,” Harris added. “To some people, that’s kind of scary. To me, it’s super exciting.”
Disclosure: Rice University, Rice University’s Baker Institute for Public Policy and Texas Blockchain Council have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.
This article originally appeared in The Texas Tribune at https://www.texastribune.org/2022/10/03/texas-cryptocurrency-mining-bitcoin/.
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