U.S. markets open in 56 minutes

Peter Thiel-Backed Startup Begins Mining Bitcoin In US To Counter Chinese Dominance

Neer Varshney

Bitcoin mining startup Layer1 Technologies has started operations at its West Texas factory, it announced Wednesday.

What Happened

Layer1 said that multiple 2.5-megawatt containers are fully operational and have started mining bitcoin.
The startup didn't pin a number on how many such containers are at work but said it expects to account for 2% of the total Bitcoin hashrate in the coming months.

Layer1 also shared an ambitious goal of accounting for 30% of the bitcoin hashrate by 2021, which would make it the largest single entity controlling the hashrate ahead of more established players like F2Pool, Poolin, AntPoll, and BTC.com.

The startup is funded by PayPal Holdings Inc. (NASDAQ: PYPL) founder and early Facebook Inc. (NASDAQ: FB) investor Peter Thiel in its Series A round, Layer1 announced October last year.

"We are already delivering on our vision of making Layer1 the world leader in vertically integrated, sustainable Bitcoin mining," CEO Alexander Liegl said in a statement.

"Our factory in West Texas is a game changer in bitcoin mining. The facility uses custom ASIC chips and patent-pending liquid cooling technology, that enables us to unlock warmer climates – where others cannot – and benefit from the world's largest supply of low-cost, sustainable local energy."

West Texas is the place with low-cost electricity, which is one of the largest costs involved in cryptocurrency mining. The region has the drawback of a hotter climate, but Layer1 said it is installing a "liquid cooling technology" alongside the mining containers that will negate the climate effect.

Why It Matters

A majority of cryptocurrency mining is still operated from China.

Chinese Bitcoin mining firms, led by Bitmain, MicroBT, and Canaan, performed more than 65% of all Bitcoin mining operations, in the two years until December 2019 studied by digital asset manager CoinShares, Reuters reported.

Layer1 said its goal is "repatriating" the mining back to the United States. On its plan to gain 30% of the Bitcoin hashrate, the startup said it "will enable the U.S. to offset China's dominance in Bitcoin mining and improve the country's national security efforts for an asset class with the potential to be a reserve currency."

Price Action

Bitcoin traded 5.29% lower at $9,566.24 at press time, according to CoinMarketCap data. Ethereum was down 6.76% at $26.98, as almost all major cryptocurrencies tanked. Tezos bucked the trend, trading 9.33% higher at $3.77.

See more from Benzinga

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.