Despite a lack of reserves that caused dayslong blackouts last winter, Texas often has some of the world’s lowest energy prices, and its share of renewables is growing over time, with 20% of its power coming from wind as of 2019.
“You are going to see a dramatic shift over the next few months,” said Brandon Arvanaghi, previously a security engineer at crypto exchange Gemini.
2021 data for the global distribution of mining power is not yet available, but past estimates have shown that 65% to 75% of the world’s bitcoin mining happened in China – mostly in four Chinese provinces: Xinjiang, Inner Mongolia, Sichuan, and Yunnan.
The drawdown in miners has already begun in Inner Mongolia.
Castle Island Ventures founding partner Nic Carter says that while it’s not totally clear how China will handle next steps, a phased rollout is likely.
It also helps that Kazakhstan has a more lax attitude to building, which bodes well for miners who need to construct physical installations in a short period of time.
“Texas not only has the cheapest electricity in the U.S.
For one, the lead time to build the actual physical infrastructure necessary to host miners is likely six to nine months, Carter told CNBC.
A storm that devastated large swaths of the state in 2020 has reignited a debate over whether Texas should winter-proof its systems, a potentially costly project that might affect taxes or other fees for those looking to tap into the state’s power grid.
It is unclear whether the China mining exodus will make or break the case for bitcoin enthusiasts in the debate around the token’s carbon footprint.
Xinjiang’s grid, for example, is 35% powered by wind and solar energy inputs.If all the miners do end up leaving China, it will mean less fossil fuel-powered mining, but it will also mean that the network’s share of renewable energy-powered mining will drop.
Its 2020 report shows that many of the most common renewable energy sources are either equal to or less expensive than conventional energy sources like coal and gas.
For the time being, there isn’t that much mining capacity worldwide that is ready to absorb the Chinese miner diaspora.
“You will see jurisdictions adopting a very favorable stance and creating the equivalent of special zones to encourage miners to host locally,” said Carter.