China, a workshop for more than 65% of the world's bitcoin, has taken a tough stance against crypto mining and related transactions, including a total crackdown on bitcoin mining.
As a result, China-based miners are being drawn into what is now being called "the great mining migration," most of which is heading to the U.S. state of Texas. Why Texas?
Since two-thirds of the bills paid by crypto miners have to do with electricity, any crackdown on electricity could cause miners to unplug their rigs and try elsewhere. A total ban on crypto transactions would also put miners out of work. This is exactly what is happening in many cities in China after authorities warned central banks not to allow crypto transactions and shut down mining companies. In Xinjian, Yunan and Sichuan provinces and Inner Mongolia, where most of the world's Bitcoins are mined, this crackdown has led to the massive exit of miners.
Although China insists that it is blocking cryptocurrency transactions for environmental reasons, critical analysts have found that it is really about getting rid of unnecessary market competition from cryptocurrencies and altcoins like Bitcoin, Ethereum, and others, and paving the way for the digital yuan, which is expected to be launched soon.
Crypto mining, unlike traditional businesses, can be done from anywhere without having to be so close to customers. This explains why China has long been the global bitcoin mining centre, even though bitcoin consumption may be greater elsewhere.
In the great mining migration, Texas was considered a major destination for miners because of its crypto-friendly environment. Other regions considered by miners include Canada, Central Asia and Northern Europe.
Although winter storms earlier this year caused power shortages and affected crypto mining in Texas, the state is by far the most energy-rich in America, with wind power accounting for 20% of its electricity supply. Compared to other US states where an average consumer pays at least 12.4 cents per kWh of electricity, it's a different storey in Texas where that figure is just 11 cents. Other research has recently found that the cost of electricity in the state of Texas is six times lower than the national average.
But why is electricity so cheap in the state of Texas? There's one primary reason: Texas is the leading producer of natural gas in all of America, responsible for 25% of the total natural gas supply in the United States.
In Texas, at least 85% of all electricity supply is not regulated, but is placed in the hands of Retail Electricity Providers (REP). This type of regulation is based on free market principles where the forces of supply and demand determine market behaviour. This has created room for research and innovation, competition and quality electricity services in Texas.
After the harsh Communist Party treatment in China, crypto miners may finally find greener pastures in Texas. Greg Abbott , the state Texas Governor is not only pro-crypto, but recently signed HB5 legislation that will provide households across Texas with access to high-speed internet. This is another benefit for crypto miners and traders in Texas.
In a tweet he sent out on June 19, 2021, Governor Greg welcomed cryptocurrencies and said that Texas will be the crypto leader.
With the influx of crypto miners to Texas after China's recent crackdown on cryptocurrencies, Texas could become the world's next crypto mining powerhouse and a city of immense crypto development. Crypto enthusiasts are safer there due to the conducive crypto environment in the US state.