Podcast: Bitcoin Mining in Texas

Weaver On-Chain Series

Key Points:

• Texas has become a global leader in bitcoin mining, strengthening the state’s economy by creating new jobs, monetizing abundant resources, and enabling new infrastructure investment opportunities
• The use of energy is a critical component in the economics of the bitcoin network as miners generate a foundational layer of value by converting energy into a monetary network
• There is a need for broader education on how bitcoin mining is at the service of Texas energy

In this episode of Weaver On-Chain, Weaver’s Tim Savage and Kristine Cranley, Director of Business Development at PM Squared Financial, discuss the quickly growing bitcoin mining industry in Texas.

Kristine walks through the idea behind bitcoin mining on stranded natural gas resources. “With stranded natural gas bitcoin mining, the miners are able to take generators and transform waste gas into power by planting data boxes on the oil fields. For the oil fields, it’s a new stream of income for them. They’re selling the natural gas for less than market prices, but they’re not having to do the mitigation. Some oil fields are looking for permitting and need to have a plan for mitigation.” In these situations, bitcoin mining not only facilitates mitigation, operators are able to monetize these resources that would otherwise be flared and wasted. Bitcoin mining also offers a third benefit of methane and carbon emission reduction as generators reduce emissions by up to 65%.

Bitcoin mining is also happening on a commercial level. Several public companies operate large scale mining facilities in rural Texas. These mining companies create local jobs, bring tax revenue to local jurisdictions, and help stabilize the electric grid by offering consistency with energy production and consumption. However, mining is broadly misunderstood by the wider public. Kristine comments on the importance of “educating people on the way bitcoin mining is at the service of Texas energy both on-grid and off-grid. With on-grid mining, bitcoin miners are a buyer of last resort. They’re able to purchase the energy that may not have a use in the middle of the night, but at the same time bitcoin miners can turn off in an instant if there’s a need in order to shore up the strength of the grid.”

While more people are gaining an understanding of the use cases of bitcoin, there is often still a disconnect with how mining and energy consumption is a critical aspect in the bitcoin ecosystem. Currently, the broader narrative is that bitcoin mining is a waste of energy. However, the truth is the opposite. While running the bitcoin network does consume energy, that energy is converted into the bitcoin monetary network, establishing a base layer of value as long as the network is operating. The accountability mechanisms between miners, nodes, and transactional users combined with assets that are characterized by strong monetary properties and perfect scarcity are interesting considerations to those who are entering the digital assets space.

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