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Layer1 opens Texas Bitcoin Mining Operation

While China has long dominated Bitcoin mining, new operations in the U.S. are poised to pull the industry further West.

On the plains of West Texas, Layer1 Technology has started mining Bitcoin with a pioneering model that promises to eventually put U.S. Bitcoin mining on a more equal footing with China.

The operation is backed by big names including PayPal founder Peter Thiel, and it has equally big plans for growth, expecting to scale to 200MW in the coming months to eventually capture 30 percent of Bitcoin’s total network hashrate by the end of 2021.

Chasing cheap electricity

Texas might seem an unlikely location for running power-hungry mining chips, but an abundance of natural gas from fracking, and large renewable energy investments from the state, have created a glut of electricity. As Layer1 CEO Alexander Liegl told Fortune, “the cheapest electricity in the world, at scale, is in West Texas right now.”

To take advantage of the cheap power in the hot Texas weather, Layer1 has designed a liquid cooling system that lets the chips access affordable energy in warm temperatures. This immerses the mining chips in an oil-based coolant, making it possible to overclock them without danger of overheating.

In another efficiency measure, Layer1 is adopting a ‘vertical integration’ approach that puts the whole mining operation — from the creation of ASIC chips to power procurement and cooling — under one roof. This effectively makes Layer1 a one-stop Bitcoin mining shop.

With such an efficient setup, Layer1 hopes to reach the goal of "repatriating" Bitcoin mining from China, and bring it back to freedom-loving Texas. And, several other ambitious mining projects operating in the same region have similar goals in mind.

Bitmain launched its Rockdale, Texas-based mining farm in October 2019, which aims to be the world’s largest with a capacity of over 300 MW. And Northern Data — formerly known as Northern Bitcoin — is building an even bigger mining farm in the same area that is expected to have a capacity of one gigawatt.

As the Bitcoin network matures and mining grows ever more competitive, we could see these American mining plants chip away at China’s dominance over the mining industry. This would make the Bitcoin network more decentralized, and alleviate the current concerns that exist over the centralization threat of China’s mining power.


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