Nearly 30 crypto mines set up shop in Texas, big data centers that consume tremendous amounts of energy to run banks of computers humming away to mine new bitcoins.
But now, many — if not most — are struggling to stay afloat amid the plummeting value of the commodity they create and soaring electricity costs.
“Bitcoin miners are operating under the very slimmest of margins right now,” said Lee Bratcher — president of the nonprofit Texas Blockchain Council. “There are not many bitcoin miners that are making profits similar to what we would have seen. The bitcoin mining industry, as a whole, is tightening the belt.”
Highs and lows:
- Bitcoin’s value peaked in 2021 at $68,000 and collectively more than $60 million per day for miners.
- Value plummeted in 2022 to less than $17,000 with a collective $10 million per day.
Domino effects from the FTX downfall:
- Minnesota-based Compute North, one of the largest operators of crypto-mining data centers in the U.S., in September filed for Chapter 11 bankruptcy protection in Texas.
- Marathon Digital Holdings, another miner operating in Texas, reported an $80 million exposure (potential loss) to the firm.
- In December, Core Scientific in Austin, one of the largest bitcoin mining companies in the U.S., filed for bankruptcy protection in Texas.
- Galaxy Digital Holdings Ltd. founder and CEO Michael Novogratz told Bloomberg that FTX cost his company $77 million.
Murtuza Jadliwala, an associate professor who taught an undergraduate class on cryptocurrency at the University of Texas at San Antonio, said he supports research into the “groundbreaking” blockchain technology — a digital ledger that enables bitcoin by recording the history of transactions. But he's not a fan of bitcoin itself.
“Do we need cryptocurrencies in our life? I don't think so,” he said. “There are already good forms of currencies that humans have gotten used to.”
As part of his academic research, Jadliwala has interviewed state comptrollers around the nation to assess economic arguments for bitcoin mining.
“From the states’ perspective, I presume bitcoin mining can be profitable as a business,” he said. “In Texas, we already have pollution and a climate crisis, and on top of it, you're creating this additional pressure on a delicate energy ecosystem. Is it worth it? It might have been worth it if it's basically doing something good for humanity. I personally don't see that.”
(c)2023 the San Antonio Express-News. Distributed by Tribune Content Agency, LLC.
