The digital gold rush in Texas is losing its luster as Bitcoin miners grapple with financial woes, leaving behind what some fear will be a wasteland of unfinished sites and abandoned equipment.

In an effort to become a haven for crypto mining, Texas has aggressively lured miners with cheap power and favorable regulations, prompting many to take out billions in loans to buy pricey machines and build out infrastructure.

However, soaring energy costs, a sharp decline in Bitcoin prices and more competition have compressed profit margins and made it difficult for miners to repay debt. Some are on the verge of bankruptcy.

“There are just tons of assets everywhere, it’s like a mess.” said Mason Jappa, chief executive at Austin, Texas-based crypto-mining service firm Blockware Solutions. “I got messages about transformers, switch gears, and mobile data centers and containers for mining, they are just sitting there.”

There are a lot of losers if the Bitcoin mining industry goes bust. For one, local authorities provided incentives such as tax abatements that reached into the tens of millions of dollars. The power generation planned that the region sorely needs to avoid another energy crisis may not materialize. Some developers made hefty investments to build out Bitcoin mining facilities. The average cost to have one-megawatt capacity of mining infrastructure is currently around $300,000 in the state, the high end of the range, according to Jappa.

Iris Energy said it would assess how much and when they will build out facilities beyond the initial 20-megawatt construction on their Childress site after closing out two facilities and defaulting on $108 million in loans. The firm planned to have 600-megawatt of capacity at the site. Compute North, which has another 600-megawatt site under construction at Hood County, filed for bankruptcy in September.

Argo Blockchain initially planned to complete its 800-megawatt mining farm at Dickens County earlier this year but the miner has experienced a liquidity crunch. It warned in October that if new financing isn’t secured, it would need to “curtail or cease operations.” Core Scientific warned of potential bankruptcy after announcing its plan to build facilities with 200-megawatt of capacity near Dallas.

The companies represent the largest participants in Texas’ crypto-mining industry out of a dozen crypto-mining firms with plans to build facilities. They are projected to produce as much as 7-gigawatt of power demand from Texas’ grid, with 3 gigawatt coming in 2023, based on announcements and US Securities and Exchange Commission filings.

It will take several years for Lancium, which has two sites with over 1-gigawatt of capacity in Taylor and Pecos Counties, to fill the facilities, a spokesperson said. In addition to miners, the firm expects to host different applications such as high-performance computing.

Riot Blockchain, Argo, Compute North and Core Scientific, Genesis Digital Assets and Bitdeer did not respond to requests for comment.

First « 1 2 » Next