The Bitcoin mining industry has never been more bullish. Until now the majority of mining has been centred in China, but is that about to change? Is Texas set to become the new HQ for the Bitcoin mining industry?
Even before the Coronavirus outbreak Bitcoin mining firms announced major plans for new mining farms in Texas.
German mining giant Northern Bitcoin announced their intention to build the biggest mining farm in the world after merging with American competitor Whinstone. The new mining farm will have the capacity of one gigawatt and will be built on a 100-acre plot in Texas.
After raising $50m in a Series A funding round, with investment coming from the likes of Peter Thiel, the new mining farm is now up and running.
Is China’s Dominance of the Bitcoin Mining Industry Coming to an End?
Because of the cheap cost of electricity, China has always been the centre of Bitcoin mining, and until recently had powered 65% of the Bitcoin hashrate. This hasn’t sat well with many within and out of the Bitcoin ecosystem.
Many argue that it centralizes the Bitcoin network, whereas others fear the control China has over the Bitcoin hashrate. But the dominance China has had in the mining industry is waning.
With Layer1’s new mining complex now up and running and helping secure the Bitcoin network, the firm is dipping its toes gradually into the space, but the CEO Alexander Liegl says it’s only the beginning for Layer 1.
Liegl says the firm intends to capture at least 30% of the entire bitcoin hashrate by the end of 2021. At today’s rate, this would give make Layer1 the main player in the bitcoin mining industry.
Layer1 doesn’t intend to stop there either. With the mining hardware industry only set to grow, the San Francisco based company intends to syphon manufacturing dominance away from China by designing and making its own hardware.
Can Texas Really Compete with China?
Many believe mining in the US with the higher electricity prices and the heat in Texas especially puts firms wanting to launch in the U.S. at a disadvantage. After all, one of the main costs for mining operations is the energy consumed from the coolers.
Layer1 have dismissed the negativity of building a mining farm in a hot climate, however. Texas does have cheaper electricity costs and can compete on the world scale. Especially as there’s an overabundance of power grids. Something needed for such a power consuming industry like mining.
As well as using cheaper electricity that would have gone to waste anyway, the mining firm intends to maximise energy efficiency. They intend doing this by investing in green energy innovation. On top of this, Layer1 will utilise a specialised oil-based coolant. It is to protect their mining machines against the heat. This they claim will prolong the life span of the mining rigs.
Bullish for Layer1 – Bullish for Bitcoin
It’s all good timing for Layer1. With the Bitcoin halvening just around the corner and a rise in the BTC price expected, it means the mining difficulty will adjust to suit.
Many of the bigger mining firms are upgrading their system to prepare for this. And with newer machines taking the lion’s share of the rewards it will no doubt expunge older Bitcoin mining rigs. Mainly because, they simply won’t be able to compete.
Layer1’s intention is really bullish for Bitcoin. If anyone had any doubt about the future of the world’s number one cryptocurrency, the fact that this and many other mining farms are under construction, should send a positive signal to anyone still unsure about the future of Bitcoin.
Author: Tommy Limpitlaw