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WHIRRRRR. Four thousand computer-cooling fans spin in unison inside a Big Spring warehouse. Clustered on eight-foot-high racks, the toaster-size machines do their thing all day and all night. They whir their whir, crunch their numbers, and they get hot. Really, really hot. The little computers’ little fans pull in cold air on one end. That air heats up as it passes over microchips that are speedily crunching algorithmic code. On the other end of the little machines, hot air is blasted out, filling an alleyway between racks. Even though massive industrial fans vent all that hot air out through the ceiling, it’s still 100 degrees in the warehouse—eight degrees hotter than it is outside on this August day.
This is a Bitcoin mine, and Bitcoin mining is hot, hard work for the machines that do it—more and more of which are being installed in Texas thanks to our combination of cheap power and wide-open spaces. This modern mining camp out here in Big Spring, which was set up in 2018, is located just off the runways at the Big Spring McMahon-Wrinkle Airport and right next to the Big Spring Correctional Center. The mining is done inside a former Coca-Cola bottling plant. Huge silver silos that once contained Coke still stand beside one end of the building. On the other end stands an even taller, orange and white control tower that long ago served Webb Air Force Base.
The mine is owned by Compute North, which is headquartered in Eden Prairie, Minnesota, and which has big plans in Texas that go beyond Big Spring. The company expects to open three more cryptocurrency mines in the state in the coming year, joining in on a rush underway across the state. “Texas is kind of the center of the universe,” says Dave Perrill, the CEO of Compute North. “The regulatory climate, the business-friendly approach and business philosophy, and obviously the energy markets all combined to just be fantastic for us.”
It’s apparently fantastic for other mining companies, too. Texas Blockchain Council president Lee Bratcher, who is also a professor specializing in blockchain technology for real estate at Dallas Baptist University, estimated earlier this year that there were five or six large-scale mining operations and more than twenty small-scale mines across Texas. Mines have set up in sparsely populated communities like Big Spring, which is forty miles east of Midland; Dickens County, which is seventy miles east of Lubbock; and Rockdale, which is about forty miles west of College Station and is also the epicenter of the boom in the state.
The largest Bitcoin mine in North America is in Rockdale. Occupying one hundred acres of farmland, that site, run by Riot Blockchain, has 60,000 miners working in three different buildings. And Rockdale has also drawn Chinese companies BIT Mining and Bitmain, with more Chinese mining businesses expected to come now that China has limited independent Bitcoin mining, apparently because it plans on launching its own national cryptocurrency.
Why all these companies are coming to Texas is simple: cheap power and ample land on which to expand the power grid. Cryptocurrency-mining companies prefer sites with huge electrical-grid infrastructure and open land where solar or wind power-generation facilities can be built near their mines, making their power sources more varied and, ideally, more reliable. Texas has all of that, as well as a deregulated energy market that already offers some of the cheapest power in the country.
But explaining exactly what it is that these companies are doing all over Texas isn’t as simple. For many, it can seem mind-numbingly complex. To understand it, you need to know something about cryptocurrencies and blockchains and hexadecimals and something called “hash rate.” Amid all that complexity and the money to be made from it, I found a surprise when I visited Compute North’s multimillion-dollar Bitcoin-mining operation out in Big Spring this summer. The whole, massive, hot place is run by just two guys.
Angel Blanco hated the heat at first. The 41-year-old former oil worker is one of the two employees who work for the Big Spring Bitcoin-mining site run by Compute North. Blanco’s job is to set up and maintain mining computers, which sometimes break down inside the 100-degree warehouse. That temperature got to Blanco when he started four months ago. He’d go home and sleep, drained from the day’s work. Now “it doesn’t bother me one bit,” he told me when I visited the place in August. But that was just one of the things Blanco had to get used to. He likened his first day on the job, amid all these little boxes and blowing fans and blinking lights, to “walking on the moon.”
The alien nature of the job is understandable when you consider the complexity involved in Bitcoin mining. The computerized miners working in Big Spring are digging into the internet’s blockchains—digital ledgers on which the transfer of money and other assets is recorded. They’re not looking for gold, like pickax-equipped miners of old, but for digital tokens. Those tokens have cash value. To earn them, a mining machine needs to be the first to solve an algorithmic puzzle that is embedded in a blockchain transaction and is used to verify the legitimacy of that transaction. When somebody wants to turn dollars into Bitcoin, one of these miners might take up the task. When an online artist sells out of his or her new NFT collection, one of these nondescript little machines might process the trade. Bits of Ethereum (another form of cryptocurrency) coins might be minted here for someone to spend on some digital bauble. Either way, the mining machine must verify that these transactions are legitimate, usually by coming up with a 64-digit number—a hexadecimal—that matches the hexadecimal embedded in the blockchain transaction. Once it does that, both buyers and sellers know it is safe to proceed.
That work goes fast. The speed of the computations performed by the miners to unlock and verify the embedded codes in the transactions is measured in “hash rate.” Those extremely fast speeds require significant computer horsepower, which is what generates all the heat endured by Blanco and his lone coworker, Anthony Peebles, a 26-year-old who has worked at the mine almost since it opened in 2018. The speedy machines also generate cash. By one estimate, a single Bitcoin-mining machine can earn $30 worth of tokens per day for its work. In Big Spring, with four thousand mining machines running, that adds up to potentially more than $43 million a year.
Not all that money goes to Compute North. The company doesn’t own the mining machines here. Instead, it offers what it calls a “colocation” service, housing and operating machines for a variety of clients who are looking to strike cryptocurrency gold. Those clients include Marathon Digital Holdings and Foundry Digital, which own and procure, respectively, mining computers throughout the country. Companies like those send new machines to the Big Spring mine on an unpredictable, but regular, basis. “Could be up to fifty one day, twenty another day, it just depends,” Blanco says. “They come when they come.” Ultimately, Compute North wants to put 10,000 mining computers in the old bottling plant in Big Spring, which today is still mostly empty. The clients who own those machines pay anywhere from a few hundred to several thousand dollars for them—depending on their processing power. Then clients pay Compute North a monthly fee (the company doesn’t disclose details, but does say the fees are variable) to operate them in the Big Spring mine.
Peebles and Blanco work from about 8 a.m. to 5 p.m. on weekdays. When they head home, the computers keep running, but the warehouse lights get dimmed, making the blinking red and green lights on the rows and rows of miners more visible against their silver metal cases. The whole place looks like a jumbo-size version of the Millennium Falcon’s cockpit. But even after hours, someone is on call should any of those machines fail. The company has a remote support team that monitors all the mining machines it operates. “The remote team knows the moment a miner goes down,” says Peebles. “One single miner, they know.” Breakdowns are rare, both Blanco and Peebles say. But both men are on call seven days a week, at all hours, for when they happen.
When the mining computers first arrive, Blanco and Peebles connect them to the internet and to power. A lot of power. Compute North has access to a 3-megawatt power station just down the road . Officials in Big Spring say they’re prepared to expand that power supply as Compute North, which leases its building directly from the town, needs it. “It’s just a case of getting the right substations in place,” says Mark Willis, the executive director of Big Spring’s Economic Development Corporation. Ultimately, Big Spring officials say they can provide 25 megawatts of power here. That would be enough power to keep the lights on in somewhere between 4,500 and 10,000 Texas homes all year long.
Willis acknowledges that the availability of that power, and the deregulated, competitive market for it in Big Spring, was the key to drawing Compute North to the Permian Basin. “If there’s one thing West Texas has got,” Willis says, “it’s energy.” Although sometimes it doesn’t. During my August visit, Compute North shut down the internet connection to all its miners, pausing their efforts for several hours. It was part of the company’s “curtailment plan” with Oncor Electric Delivery Company. “If energy consumption is too high in our area, we actually drop our loads, so that Oncor is able to distribute it where it needs to be,” Peebles says.
During the severe Texas winter storms in February, some Bitcoin-mining operations across the state still had electricity but chose to pause their operations to help ease the strain on the state’s power grid. In Big Spring, the shutdown lasted two and a half days, even though the mine is directly connected to a power substation that didn’t lose power. One Bitcoin-mining company says it was actually paid by the Electric Reliability Council of Texas to stop buying power when demand surged. (Compute North declined to discuss whether it had such an arrangement with ERCOT.) Still, the Bitcoin boom has prompted scrutiny over the amount of power Bitcoin mines are pulling from the state’s grid. Compute North’s Perrill says he understands the concerns and that he wants his company to use more renewable energy as it expands to 10,000 miners in Big Spring. “I think it’s really important . . . to be not what I consider a parasitic load, but ultimately a strategic partner to the grid,” he says.
Still, for now, most of the Bitcoin-mining industry in Texas relies on a mix of power-grid energy and only a small amount of renewables like solar and wind power. Some critics are worried that the Bitcoin-mining industry’s use of so much electricity from sources including oil, natural gas, and nuclear power will lead to higher carbon dioxide output, accelerating climate change. That kind of concern isn’t just coming from environmentalists; Tesla founder Elon Musk, a recent Texas transplant, announced in May that his company would no longer accept Bitcoin as payment for its vehicles because of the currency’s environmental impact. (Tesla also recently applied with the state of Texas to get into the business of selling deregulated power to consumers and businesses.)
That potentially precarious environmental situation isn’t likely to improve. Texas governor Greg Abbott, an advocate for cryptocurrencies, recently urged the Texas Public Utility Commission to incentivize the development of coal, natural gas, and nuclear power and to penalize producers of renewable energy sources that fail to deliver enough power. Even so, a few mining companies are looking at novel ways to source energy, including by capturing natural gas that would otherwise be burned off—or “flared”—by drillers when they come across gas while extracting oil.
Compute North is also looking for innovative ways to reduce its power intake, and one of those ways uses tech that’s straight out of Hollywood. Remember the scenes in the 1989 movie The Abyss, when Ed Harris swallows pink liquid oxygen inside his dive helmet to breath underwater? Similarly, the thousands of miners in Big Spring will someday be cooled off by being submerged in a nonconductive liquid. The machines will suck in the cool liquid to keep the microchips cold. When that happens—Compute North is already testing the technology and thinks it’ll be deployed in Big Spring by next year—the site will run significantly cooler. It’ll also run more cheaply because it will need less power.
For now, though, Compute North is focusing on expansion. Since opening its first mine in Texas in 2018, the company has set up mining camps in Nebraska and South Dakota and is at work on building three more sites in Texas. “We’re certainly looking forward to the future in Texas,” says Perrill, who is keeping mum about where exactly the new cryptocurrency mines will be. The three locations are so secret that even Peebles and Blanco, who speak regularly to the company’s leaders and are in Zoom meetings every day with Compute North’s support team, don’t know. Mine operators and close observers of the industry say secrecy is key to prevent losing out on advantageous grid sites, or to prevent the theft of the mining machines themselves, which are often located in remote, rural spots like Big Spring, which has long been mostly an oil and gas town.
City officials hope companies’ interest in Big Spring’s cheap power could someday change that. Willis says Compute North’s investment in Big Spring is attracting other tech firms who come to tour the mining operation. Big Spring’s mayor, Shannon Thomason, says he hopes that might lead to more tech companies setting up shop alongside Compute North in Big Spring. “I hate that we’re so dependent on the oil field,” Thomason says. “I’d like to see us diversify more, and obviously tech is a great way to do that.”
Correction: This story initially misstated that Compute North has no arrangement with ERCOT through which it is paid to stop buying power during periods of high demand. In fact, Compute North declined to confirm or deny whether it had made such a deal.
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