The phones are ringing off the hooks at the New York offices of BitOoda, a financial services and brokerage firm that advises Bitcoin mining companies and investors in the Bitcoin space on investment strategies and risk management.
Ryan Porter, head of business development at BitOoda, told Bitcoin Magazine that there’s lots of interest, including from Chinese companies and investors, in the new frontier of Bitcoin mining in the U.S. and Canada. “We’re seeing potentially explosive growth in North America in Bitcoin mining as the number of inquiries from both mining companies and investors in possible mining operations has picked up significantly in 2019. Some institutional investors who have been waiting on the sidelines are making mining their first foray into Bitcoin and many view North America as their best option.”
“With continuing regulatory uncertainty in China and relative stability here, along with plentiful inexpensive power, operators and investors are realizing that North America is a desirable option for Bitcoin mining,” he said.
Similarly, Jonathan Hamel, founder and president of Montreal-based Académie Bitcoin, and a close observer of the Bitcoin mining sector, told Bitcoin Magazine:
“I believe the reputational risk associated with Bitcoin mining is slowly going away. For example, here in Canada, Bitfarms being publicly listed on the [Toronto Stock Exchange] and audited by Ernst & Young, brings a lot of credibility to the industry.”
Bitcoin Mining in the New World
Like the early pioneers, mining companies are turning to the New World, where they hope to find relative freedom from government interference and, in places, plentiful supplies of ready-to-use, cheap power, often in abandoned industrial sites.
In areas like central Texas, there are local economic development officials working with companies like Bitmain to take over sites. The abandoned Alcoa aluminum smelting complex in Rockdale, for example, is already equipped with a built-in power plant and electricity lines.
“As more states and provinces look for markets for abandoned industrial sites with stranded energy, I believe that we’re moving towards a normalization/commoditization of the industry,” said Hamel. “That’s a good thing for Bitcoin: more locations, more decentralization.”
Use of Renewable Energy for Bitcoin Mining
In June 2019, CoinShares (the cryptocurrency investor service providing advice, tools and services) published its report on mining. On one hand, it assured readers it provided the best available information on Bitcoin mining. On the other, it cautioned that Bitcoin mining is “a highly private and secretive industry. As a result, our estimates may be subject to significant potential uncertainty.”
Still, CoinShares made the point that cheap energy is a bottom line for mining companies and, as it happens, an economic change from an industrialized to postindustrial economy has left lots of abandoned facilities with power-generating capacity available.
“Our findings reaffirm our view that Bitcoin mining is acting as a global electricity buyer of last resort and therefore tends to cluster around comparatively under-utilised renewables infrastructure,” per the report.
The report concludes that Bitcoin mining relies heavily on renewables in comparison to other industrial sectors.
“We calculate a conservative estimate of the renewables penetration in the energy mix powering the Bitcoin mining network at 74.1 percent, making Bitcoin mining more renewables-driven than almost every other large-scale industry in the world.”
It also noted that this is “more than four times the global average.”
Following is an initial list of some major players in the Bitcoin mining industry in North America by state/province.
Bitcoin Mining in the United States: A Mix of Resources
According to the CoinShares report, the two major mining centers in the U.S. are in the states of Washington and New York. The cool climates and rugged terrains, along with powerful rivers like the Columbia and the St. Lawrence, make for plentiful hydroelectric power there.
These two states have been on the front line of the economic change from heavily resource-dependent economies with lots of hydroelectric dams to postindustrial, knowledge-based economies leaving lots of surplus power and infrastructure available for Bitcoin mining.
Recent announcements of new Bitcoin mining projects have also come from Texas and Nebraska.
CoinShares calls Washington State one of the two U.S. “major mining centers,” noting its cool climate and abundance of hydroelectric power from a mountainous interior with hydroelectric dams on powerful rivers like the Columbia River.
Washington State officials are more than happy to negotiate cheap power rates for interior…