Bitcoin mining giants Bitdeer, Riot Blockchain in Rockdale, Texas
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Riot’s Whinstone Mine in Rockdale Texas.
Riot’s Whinstone Data Center
ROCKDALE, Texas – In this rural Texas town of 5,600 people, two of the biggest names in bitcoin mining are battling it out for market share and cheap electricity.
This rival also happens to be right next door.
Bitdeer – a firm spun off from Chinese bitcoin mining giant Bitmain – is four-tenths of a mile down the road from Riot BlockchainOne of America’s largest publicly traded mining companies,. They are both tenants in property that was once owned by an aluminum producer. AlcoaWhile they have a lot in common,
Riot’s Whinstone mining is managed by a team that values transparency. Bitdeer on the other side is distant, steeped and mystery-laden and certainly not open to visitors.
“In this industry everyone is like, “Ooh top secret, We have proprietary information!” “No, really, you don’t,” Whinstone CEO Chad Harris explained to CNBC.
You take a cable and plug it in to a machine built by someone else. Then you switch it on.
Chad Harris is the Whinstone CEO and takes CNBC with him on a tour at North America’s largest Bitcoin mine.
Rockdale: Why?
Rockdale is located an hour north of Austin and looks just like rural America. There are rolling hills, pastures of green grass, hay bales, a Walmart – which Mayor John King says is the main driver of sales tax, a key revenue stream for the city’s annual budget.
Rockdale, however, is the perfect place for bitcoin miners. Rockdale has crypto-friendly officials, vast swathes of land and abandoned industrial infrastructure ready to be reused. They also offer the possibility to hook up to Texas’ power grid.
Texas Electric Reliability Council, ERCOTTexas’ grid is managed by, a non-profit organization. Customers can select from a variety of providers because the grid is not regulated.
Miners who work at large compete in an industry that is low margin and where energy costs are their primary variable cost, which gives reason for them to seek out the lowest-cost power supplies. Miners are able to benefit from the competition between Texas’ power suppliers, which typically results in lower rates.
Alcoa used to have the largest aluminum plant anywhere in the world. It was located in Rockdale. According to Lee Bratcher (president of the Texas Blockchain Council), it shut down operations beginning in 2008.
This imbalance was resolved by the arrival of crypto miners.
Miners are also able to adapt to fluctuating prices and power supply. Mining is able to handle an outage, much like an aluminum smelter and other businesses without causing major financial losses.
This is a significant feat for a state which has struggled recently with reliability of its electricity grid.
ERCOT may ask consumers to save energy during heat waves. The blackouts that the state experienced earlier in this year were also due to severe winter storms.
Mayor King believes today’s deal between ERCOT miners and ERCOT was simple and mutually-beneficial. The miners use power that would otherwise go to waste and can turn off machines when it is needed. Financial incentives encourage miners to volunteer.
Miners commit to purchasing a certain amount power, and then they sell it back to the market [value]King said that it was possible to make a profit by selling the contract. They can make a profit by selling it at $9 per kilowatt hour.
Electricity supply to Whinstone’s Bitcoin mine at Rockdale in Texas.
Ted Cruz (R-Texas), said that there were many things that went wrong during the severe winter storm that struck Texas in the early 2021. But I believe that bitcoin can address many aspects of this.”
Cruz has a long history of being a leader in the bitcoin industry and other aspects. Recently, Cruz spoke out at the Texas Blockchain Summit. During his main stage interview, Cruz pointed to the importance of the ability of bitcoin miners to turn on or off within seconds – a feature that is hugely beneficial during times when energy needs to be shifted back to the grid to meet demand.
Cruz stated that bitcoin is often seen as an energy consumer. Cruz stated, “The view I am suggesting is the opposite. It is as a means to improve our energy infrastructure.”
James Gibson, Rockdale’s director of economic development, said that 160 acres are available for purchase.
Nearly 40 inquires have already been received by King from potential mining companies interested in setting up operations there. Many of these are Chinese miners. This spring was also a busy one. Beijing cracked downan industry in crypto-mining. In recent years, many exiled miners fled to the United States for safety and protection. became the top mining destinationThe planet.
They are rich. They are equipped. They just need a place – and power, quick,” said Gibson.
Bitdeer has a bitcoin mine at Rockdale in Texas
David vs. Goliath
A small shed with blue trim and staffed by an upbeat, smiling guard is located at Bitdeer’s Rockdale mine’s main entrance. The pavement is not marked with spikes or a gate to discourage unwelcome cars. Considering how secretive Bitdeer is as a company, it seems relatively welcoming – and surprisingly easy – to gain entry to the property.
The company remains very closed-off. CNBC requested a tour of the company and an interview. We were informed that they valued the meeting but the individual in charge was on the road for many weeks and their schedule was difficult to plan.
Bitdeer is the mayor of Bitdeer, and the mayor’s son shared some information about Bitdeer.
Bitdeer, unlike Riot’s Whinstone mining, was built in a thickly forested area. Bitdeer also took over Alcoa’s closed smelter. It was still connected to the major electric lines. King says most of the football-length buildings that Bitdeer now occupies were constructed in the fifties and had to be retrofitted – a process that included filling concrete into the concaves in the floor where smelting pots once processed aluminum.
King says Bitdeer “expands as fast it can be constructed.”
Bitdeer doesn’t provide much information about how their bitcoin mining operations work. CNBC reached out for information to find out how many Bitdeer’s mining equipment and workers are on-site, as well how much cryptocurrencycash is mined each month. The company didn’t respond.
In January 2020, Whinstone broke ground in Rockdale. Many saw him as the David to Bitdeer’s Goliath. Harris, Whinstone’s CEO was born in New Orleans. There he sold pre-decorated Christmas trees for wealthy families. Harris, Harris’ youngest son and CTO had blue hair.
It was easy to overlook the team. Harris is a champion underdog.
Harris stated that no matter what Alcoa said, they agreed to the terms of the first negotiations.
They said, “You need this amount to deposit,” and we replied, “Absolutely no problem.” Harris described the situation as follows: His business associates would then remind Harris that they had just been broke, and no guarantor. Harris would respond with the following: “This is easy stuff.” They agreed.
Harris’ leadership style doesn’t just revolve around improvisation. CNBC spoke with Whinstone CEO Harris about his most important skill: sending money quickly to suppliers. I joke with my staff that if a million dollars land in an account of a company, accounting will not send it back. They’ll force the people to do it – whatever it is.”
Whinstone has seen the strategy pay off repeatedly, as Bitcoin’s value has increased dramatically over the past year.
We bought every orange conduit available in America. Harris recalled that they bought every last piece of pipe available. They call us back seven days later, saying that they had made a mistake. “We cannot deliver this.” Then they say, “We can’t deliver all this.” Then they tell us, “I think we can fix it.”
Alcoa gives space to Bitdeer, Riot Blockchain and other bitcoin mining firms in the country.
Harris broke ground Jan. 2020, when bitcoin was just $4,100. They turned the mine on when it was $6,100. Harris recalls that they thought they would not go bankrupt if bitcoin reached $8,000 per coin. In mid-October, the coin reached a record of almost $67,000.
“When we showed up here, this place was a forest,” Harris told CNBC from his office – one of many inside a prefab roofed trailer that sits adjacent the mine. We didn’t have powerlines…crazy stuff.”
Whinstone’s first mine began in June 2020. It was only 183 days later. Harris claims that they were able to mine 300% more than Bitdeer on the first day.
Harris does not see the competition as an opportunity to win, and he doesn’t feel the need for trade secrets to be kept from the neighbors.
Harris stated that there is no IP within this company. Harris stated that the statement was absurd. However, he reiterated at numerous points that this is his personal opinion.
Harris claims that Bitdeer used to visit the area before Bitdeer arrived. Most of their interest was in Whinstone’s shelving system and racking.
We brought them in, showed them pictures and told them which machine they should buy. Then we gave them instructions on how to make it. They still had to put the machine in for eight months,” he stated.
Harris documented publicly the entire process of Whinstone construction, uploading videos from within and around Whinstone to YouTube. Harris also posts drone footage for interested parties to show how the expansion is progressing.
Harris stated, “It doesn’t really matter because they’ll take them two years before we catch up.” Harris said, “We are always two years ahead of other people’s work.”
Riot’s Whinstone Mine in Rockdale Texas.
Riot’s Whinstone Data Center
America’s largest Bitcoin mine
If someone mines bitcoin for money, it’s actually giving their computing power and time to the network. Every ten minutes 6.25 new bitcoins are created. To create these tokens, miners from around the world compete to unlock new bitcoin.
There are better chances to win bitcoin if a miner owns more than one machine.
Whinstone houses multiple buildings that are 20ft high, with computer hardware specifically designed for the purpose. Harris says that it produces over 500 bitcoins per month at the moment. That’s about $30.7million or $368 million annually at current prices. According to the firm, there are around 100,000 machines.
Riot purchased the Whinstone mine earlier this yearIt was purchased for $80million and is currently billed as North America’s largest crypto mine. While the company continues to grow, once construction of the 100-acre parcel of land is completed, it is anticipated that the crypto mine will be fully operational. total power capacity of 750 megawatts
Gibson claims that the average use of downtown Dallas is 200 megawatts. Gibson said, “It’s as if we had downtown Manhattan and Downtown Dallas in our backyard.”
This grid can provide that much power. It is the tricky part of physically tapping into it. To adjust voltage levels to be usable, mines require special equipment. Transformers take power from substations and turn it into a lower voltage, which can be used to charge bitcoin miners.
King stated that Transformers can be obtained in 12 weeks, if you have the cash and are willing to work hard. However, you still need to turn off the electricity. King states that the average wait to get a substation can be 16-18 months.
Whinstone constructs its substations in-house, which is a major advantage for potential miners heading to Rockdale. Three 100-megawatt transformers are being installed at the moment.
Harris stated that Harris was ironic because if Harris wants the transformer right away, even though he hasn’t ordered, it takes 64 weeks.
Riot’s Whinstone Bitcoin mine has a “hot aisle”, where temperatures can reach 150°F due to heat from the mining rigs.
Whinstone also tries out new tech.
A computer program crunches thousands of mathematical equations when rigs mine. It is hard work to do all these calculations, so the hardware heats up quickly. A facility may install fans to keep them cool so they don’t heat up. This hot air is drawn into the central chamber, known as “the hot aisle” at the Whinstone location by individual fans.
Harris brought CNBC in to measure the temperature. It can reach 150°F.
Riot now experiments with immersion cooling at Whinstone. They submerge the computers in a special fluid to keep them operating at lower temperatures. After the heated fluid has been circulated, it is further pumped to dissipate heat. The cooled fluid then is pumped back into the computer.
It claims it has the first time it’s been doneAt an industrial scale. Immersion-cooled buildings can house around 46,000 Antminer S19 Series ASICs. The term originally meant the most efficient integrated circuits for mining, but is now used to refer to a computer or mining machine.
Jason Les, Riot CEO believes that this is a major win for the bottom line.
We expect to see an increase in productivity and hashrate through 2022 without needing additional ASICs.” Les said in a statement.
Whiplash Rockdale
Mayor King himself is a cryptocurrency miner. The mayor has 37 hard drives with five-terabyte capacities that are plugged into his homes. These machines allow him to mine the eco-friendly cryptocurrency chia. CNBC hears that he produces.035 chia per day or $4.68.
King spent years studying crypto and blockchain because Rockdale desperately needed this experiment.
Rockdale used to be a town of one company for a while. Alcoa was home to thousands until it had to shut down.
Bitmain was the next. China-based Bitmain stated that it will invest $500million to construct a large mining facility at Rockdale’s Alcoa power plants in Rockdale. The company will create around 400 new jobs. However, as the crypto world fell into chaos, Bitmain’s hopes and dreams were thwarted. Bitmain quickly put all its plans to ice.
It was not a good thing that there wasn’t a single hospital in the area. abruptly shut down in 2018. Rockdale was also fighting for his life. problem with its water systemResidents complained about stale, red-colored water from their taps. Rockdale desperately needed a rest.
Whinstone was then joined by a new-found Bitdeer. Bitmain had split recently after infighting at its top. Whinstone was a leader in numerous initiatives for job creation and community outreach.
Bratcher said that Rockdale’s economy had been devastated for years, until bitcoin miners arrived.
Some people remain skeptical following years of whiplash. King believes this is a different time.
The industry suffered a major blow when Beijing exiled all its crypto miners. China held 75% of world’s top bitcoin miners for many years. After the crackdown, many started to migrate to Texas as a result of mass migrations of people and hardware.
The migration continues and some want to place their flag at Rockdale. King is fine with this.
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