Texas Bitcoin Mining Operations Undergo Intensive Due Diligence

The CoinShares research team recently conducted a due diligence trip to Texas, assessing several Bitcoin (BTC) mining facilities, according to CoinShares. This evaluation included Core Scientific, IREN, Riot Platforms, and Galaxy Digital, entities in which CoinShares has prior investments or that are included in their BLOCK Index and WGMI.

Texas: A Growing Hub for Bitcoin Mining

Texas, traditionally recognized for its agriculture and oil sectors, is swiftly becoming a key player in the data center industry. The state's low-cost land, affordable power, and favorable political climate make it an attractive location for Bitcoin mining operations. Each company visited by CoinShares showcased unique cooling solutions, vital for efficient mining in Texas's hot climate. While some cooling methods were found to be excessively costly, others proved to be more economical.

Innovative Cooling Solutions

IREN stood out with its large-scale, low-cost air-cooled solutions, emphasizing advanced filtration and ventilation systems. At their Childress site, the CoinShares team observed the rapid adjustment capabilities of IREN's machines to align with grid requirements and power pricing.

Galaxy Digital, which acquired the Helios site from Argo Blockchain for $65 million, is moving away from costly immersion cooling in favor of evaporative air cooling. This site has the potential to scale from its current 200MW to over 800MW. Galaxy also practices curtailing mining during high power prices, selling unused power back to the grid, thus aiding in grid load balancing.

Challenges and Expansions

Core Scientific, despite its financial challenges, operates large sites with proven air-cooled technology and is expanding into AI, having secured significant hosting contracts with Coreweave.

Riot Platforms was noted for its technical advancements and capital-intensive operations, particularly at its Corsicana site, which aims to scale to 1GW. Riot's Rockdale site features mining hardware cooled in dielectric fluid baths, a cutting-edge approach that allows for overclocking to boost income when prices rise.

Future Outlook

Post-halving, a ~14% drop in hashrate was observed, pushing out inefficient miners. However, CoinShares anticipates this decline to be temporary. The miners visited have substantial expansion plans, which are likely to elevate the overall network hashrate to over 700 exahash by the end of the year. Listed miners collectively aim to increase hashrate from 118 exahash at the end of 2023 to 234 exahash by the end of 2024, marking a 98% rise.

The Bitcoin mining industry is maturing rapidly and becoming more environmentally conscious. Miners are curtailing power usage during peak demand, improving grid efficiency, and investing in renewable energy and grid infrastructure. This growing environmental awareness is garnering increased political support for the industry in Texas.