According to data from Foundry USA, the largest mining pool in the world, Texas is the dominant state for bitcoin mining in the United States.
Texas has attracted miners because of its supportive local energy provider, ERCOT, and its pro-crypto regulatory framework.
States throughout the South and the Midwest, including Nebraska, North Carolina, Kentucky, and Oklahoma, have seen a large influx of immigrants.
Kevin Zhang, who has been mining bitcoin for ten years, is unfazed by crypto winters. He has experienced a few downturn markets in the past ten years, but no matter where he has established himself, including the United States, Sweden, the Republic of Georgia, and China, he has always come out on top. In fact, Zhang frequently increases his stakes right when the situation in the industry appears to be at its worst.
For instance, China originally outlawed bitcoin in 2013. The biggest cryptocurrency in the world started to fall in value right away, and for the following few years, it did so slowly. Zhang made the decision to enter the mining industry as a number of Western businesses fell under.
He obtained equipment and institutional know-how from China over the course of the following four years, eventually expanding a location in Montana to become the biggest bitcoin mining operation in North America. Since then, Zhang has brought that same carefree outlook to Foundry, a mining company hidden within Barry Silbert’s crypto empire.
Bitcoin miners were hit hard twice in May 2020: As the number of Covid cases increased and the most recent halving had recently reduced the mining incentive from 12.5 to 6.25 bitcoin per block produced, much of the world shut down. Zhang and the Foundry team ignored the two black swan episodes and invested hundreds of millions of dollars and tens of thousands of machines in their mining operation. Bitcoin reached a record high by November 2021.
Bitcoin
The “halving”—a significant market-making event that some fear may be the death knell for many in the industry—is something that miners are speeding toward. It refers to an inflation-curbing plan built into the bitcoin code where the reward for mining a new block of transactions gets reduced by half every four years. In the past, it has also coincided with the beginning of a bull run in cryptocurrency prices.
While investors excitedly anticipate the halving in the hopes of a future rise in bitcoin’s price, miners will directly suffer as they will now receive 50% less bitcoin for each block they verify. The diminished return might be cataclysmic for certain businesses in a capital-intensive sector with already slim profitability.
The miner’s final test is here, according to Zhang, senior vice president of business development at Foundry. “Some might not survive; others might. However, I am convinced that if they cooperate with us and other capable actors, they may stand a fair chance of surviving this.
The incentive for miners will be halved in April 2024, falling to 3.125 bitcoin, or roughly $83,000. In contrast, the reward for the initial bitcoin blocks that were mined in 2009 was 50 bitcoin.
Without a corresponding increase in bitcoin’s price to offset the reduced block rewards, many mining operations—particularly those saddled with rising energy bills and paying off equipment purchased at their peak price in 2021—may vanish overnight.
However, Foundry is growing its operations by foraying into machine sales, on-site deployment, and logistics rather than viewing the 2024 halving as an extinction-level catastrophe.
While its recently disclosed logistics arm deals with the deployment and shipment of miners across state lines and international borders, FoundryX is a marketplace for buying and selling miners, both new and secondhand. Another recently introduced initiative is managed site services, where Foundry will help staff and oversee miners on-site for its U.S. clients.
“Foundry is in this for the long haul,” Zhang declared. “We’re placing a long-term wager on bitcoin and the likelihood that bitcoin mining will endure and thrive again.”
