Bitcoin mining is the process of creating new bitcoins by solving puzzles. It consists of computer systems equipped with specialized chips that compete to solve mathematical puzzles. The first bitcoin miner (as these systems are called) to solve the puzzle is rewarded with bitcoin. The mining process also confirms transactions on the cryptocurrency network and makes them reliable.
Most Bitcoin mining is done where energy is abundant and cheap. For example, 65% of the current hash rate is based on China, where coal power is cheap, hydro and wind power are plentiful, and locally manufactured mining hardware is cost-effective and convenient to deliver. A war is brewing between states to attract bitcoin miners, and new data shows many of them are heading to New York, Kentucky, Georgia and Texas. A mining pool allows a single miner to combine their hash power with thousands of other miners around the world, and there are dozens to choose from.
Although the dataset only captures part of the country's domestic mining market, it does point to national trends that are reshaping the debate around bitcoin's carbon footprint. Many of the top-ranking states are epicenters of renewable energy, a fact that has already begun to reframe the narrative among skeptics that bitcoin is bad for the environment. Mining is not totally renewable, it does say that miners here are much better at selecting renewables and buying compensations. When Beijing decided to expel all its crypto miners this spring, about half of the bitcoin network went out practically overnight. While the network itself didn't skip the pace, the incident triggered the largest migration of bitcoin miners ever seen.
For example, New York, which leads the Foundry ranking. One-third of its generation in the state comes from renewable energy, according to the latest data available from the United States. New York is counting its nuclear power plants toward its goal of 100% carbon-free electricity, and more importantly, New York produces more hydropower than any other state east of the Rocky Mountains. It was also the third largest hydropower producer in the nation. New York was weighing legislation this year to ban bitcoin mining for three years so that it could conduct an environmental assessment to measure its greenhouse gas emissions.
Since then, legislators have pushed it back. Other states that capture a large portion of America's bitcoin mining industry include Kentucky and Georgia. Beyond the fact that the governor of Kentucky is industry friendly, having just passed a law this year granting certain tax breaks to crypto mining operations, the state is also known for its hydroelectric and wind power. Another source of energy is to connect platforms to energy that would otherwise be stranded, such as natural gas wells. While coal is also an important player in the energy mix, many mining operations there gravitate towards renewable energy. Texas may be ranked fourth according to Foundry's data set, but many experts believe there's no doubt that it's the top jurisdiction for miners right now.
Some of the biggest names in bitcoin mining have established themselves in Texas, including Riot Blockchain, which has a 100-acre site in Rockdale, and Chinese miner Bitdeer, which is just down the street. The regulatory red carpet being rolled out for miners also makes the industry very predictable, according to Alex Brammer of Luxor Mining, a cryptocurrency group created for advanced miners. Some miners connect directly to the power grid to power their platforms. ERCOT, the organization that operates the Texas electricity grid, has the cheapest utility-scale solar energy in the country, at 2.8 cents per kilowatt-hour. The grid is also rapidly adding wind and solar energy.
Deregulated grids tend to have the best economy for miners, because they can buy spot energy. Another major energy trend in the bitcoin mining business in Texas is the use of stranded natural gas to power platforms, which reduces greenhouse gas emissions and generates money for gas suppliers, as well as miners. It is now the number one destination for bitcoin miners, eclipsing China for the first time. While it was already trending in that direction, new data from the University of Cambridge released early Wednesday make it official. The United States has to thank in part China for its new dominance in the mining industry. Miners began fleeing China en masse, targeting the planet's cheapest energy sources in what was dubbed the great mining migration.
Many of them ended up in the United States. The US ticks a lot of boxes for migrant bitcoin miners looking for a new home. On one hand states like Texas have some of lowest energy prices in world which is an important incentive for miners competing in low-margin industry where their only variable cost usually energy. It's also full of renewable energy sources. Miners across country have also harnessed nuclear power some are blocking their platforms otherwise stranded energy such as natural gas wasted Texas oil fields. This reduces greenhouse gas emissions generates money gas suppliers miners shift clean zero-emission energy sources already begun reframe narrative among skeptics that bitcoin bad environment. In addition reducing electricity costs some United States states like Texas also have crypto-friendly legislators adequate supply hosting infrastructure state has deregulated power grid real-time spot prices allows customers choose between energy providers most importantly political leaders favor crypto. These dream conditions miners who want friendly welcome cheap energy sources rise United States top also lucky case preparation meeting been quietly increasing hosting capacity years before bitcoin miners began come United States companies across country. Do you have any confidential news? We want hear from you Get this delivered your inbox learn more about our products services.
