Due to a serendipitous confluence of political, geographical, and jurisdictional stability, as well as low-cost energy in U.S. states, coupled with Beijing’s recent crypto crackdown, bitcoin mining is booming in the U.S.
As the world witnessed the virtually overnight shutdown of bitcoin mining in China, the preparation of certain U.S. states with respect to friendly regulation, cheap energy and mining infrastructure, saw the U.S. become the new global hashrate king. According to data released by the Cambridge Center for Alternative Finance, 35.4% of the global hashrate (a measure of computing power) is now housed in the United States, as of July 2021. Recently, silicon vendor Bitmain, one of the world’s primary suppliers of bitcoin mining rigs, stopped shipping to Chinese mainland addresses.
Miners set up shop in the U.S. using renewable energy
Mining is a business endeavor with very low margins, so cheap energy, and energy source flexibility is vital to profitability. The capacity for hosting miners increased in the crypto winter years following the 2017 crash. Infrastructure providers were able to buy equipment relatively cheaply during that time to set up shop in the U.S., in anticipation of the influx of miners. What is encouraging for miners in their quest to find cheaper sources of energy, is the proliferation of renewable energy, which, due to the extraction, refinement, and transport costs involved in fossil fuel generation and distribution, is proving cheaper. New York State produces more hydroelectric power than any state east of the Rocky Mountains, Texas has 20% of its energy coming from wind power, and Washington state provides hydroelectric power for its miners, and is home to the seventh-largest hydroelectric plant in the world. Miners are also making use of nuclear energy, as well as stranded natural gas in Texan oil fields, which is infeasible to pipeline.
During COVID-19, stimulus payments fueled the rise to dominance of U.S.-based mining companies. People suddenly had cash that they were willing to invest, and it is likely that much of that money found its way into mining operations outside of China.
Cheap, but not renewable energy
Following the U.S. Kazakhstan is the country with the greatest hashrate of 18.1%. The energy there is cheap and abundant but does not come from renewable sources. Alex Brammer of Luxor mining sees Kazakhstan as a destination for miners with older hardware and is a temporary stopover until these machines become obsolete, after which they should move to areas with more renewable, energy-efficient sources. Legislation recently ratified will also see additional taxes imposed on crypto miners in Kazakhstan, come 2022.
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