2021 was a great year for bitcoin mining in America as the market is flooded with new talent and equipment, but some states are definitely more attractive destinations than others.
The latest data from the World Energy Institute shows that the average price of electricity is lowest in states including Texas and Washington, which certainly contrasts with the fact that both states are becoming increasingly hot destinations for new cryptocurrency minting.
While energy cost isn’t everything when deciding where to set up a shop, it certainly goes a long way.
Large-scale miners compete in a low-margin industry, where their only variable cost is usually energy, so they are incentivized to migrate to the world’s cheapest energy sources.
The price of power varies across the United States.
In California and Connecticut, you’ll pay anywhere between 18 to 19 cents a kilowatt-hour, while in Texas, Wyoming, Washington, and Kentucky, you’ll pay less than half that, according to The World Energy Institute, which makes an annual map of electricity prices for a country, using the most recent full-year data available from the US Energy Information Administration.
The institute does not warnHowever, “while the mix of energy available within a state plays a large role in state electricity prices, in some states energy-limiting policies are artificially raising prices, making the price of electricity much higher for consumers and businesses.”
Ultimately, what bitcoin miners care about most is finding low-cost sources of electricity.
This is part of the reason why the US is proving particularly attractive to potential miners, given that the country is home to some of the cheapest energy sources on the planet, many of which tend to be renewable.
Fred Thiel, CEO of cryptocurrency mining company Marathon Digital Holdings, expects that most of the new miners moving to North America will be powered by renewables, or gas that is offset by renewable energy credits.
“Mining is price sensitive, so looking for less affordable, less expensive energy tends to be renewable because if you’re burning fossil fuels…it involves extraction, refining, and transportation costs,” Adam, CEO of Blockstream said again .
Washington state is the mecca of hydro-powered mining farms, while Texas’ share of renewables is increasing over time, with 20% of its energy comes from wind As of 2019.
But electricity costs aren’t everything. Friendly policy makers and adequate infrastructure are also key factors.
Take Texas, for example.
It has an unregulated power grid that allows customers to choose between energy providers, and most importantly, its political leaders are pro-cryptocurrency – dreaming of conditions for a miner looking for cheap and welcome energy sources.
“You will see a drastic transformation over the next few months,” said Bitcoin mining engineer Brandon Arvanaghi. “We have governors like Greg Abbott in Texas who are promoting mining. It’s going to be a real industry in the United States, which is unbelievable.”
The United States also spent years investing in crypto infrastructure, long before its popularity.
When bitcoin crashed in late 2017 and the broader market entered a multi-year crypto winter, there was little demand for large bitcoin farms. Mining operators in the United States saw their opening and seized the opportunity to spread cheap money to build the mining ecosystem in the United States.
“Large miners and public traders have been able to raise capital to make major purchases,” said Mike Collier, CEO of cryptocurrency Foundry, which helped bring more than $300 million in mining equipment to North America.
Companies like North American crypto operator Core Scientific continued to build hosting space throughout that period in order to have the ability to connect new equipment, according to Collier. Core, which operates in North Dakota, North Carolina, Georgia, and Kentucky, is one of the largest blockchain infrastructure and hosting providers in North America.
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