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Texas promotes 'master plan' to lure the world's crypto billionaires forced out of China

·2 min read
Two technicians inspect bitcon mining at Bitfarms in Saint Hyacinthe, Quebec - LARS HAGBERG/AFP/Getty Images
Two technicians inspect bitcon mining at Bitfarms in Saint Hyacinthe, Quebec - LARS HAGBERG/AFP/Getty Images

Texas has unveiled a “master plan” to lure the world’s crypto billionaires to the state, offering cheap energy, secure transactions and respite from the Chinese government crackdown on bitcoin mining.

“Blockchain is a booming industry that Texas needs to be involved in,” said Governor Greg Abbot as he signed into law a plan which allows state-chartered banks to provide custody, or safekeeping, services for virtual currencies.

The lone star state is fast-becoming a favourable destination for bitcoin miners, who use thousands of computers and enormous amounts of electricity to create the digital currencies.

The conditions contrast with China, where miners are leaving in their droves after top economic officials in Beijing pledged to “crack down on bitcoin mining and trading” last month.

Since then, the pressure has intensified, with allegations of crypto chat being censored on social media, hotlines being set up to report illegal operations and four major provinces - Xinjiang, Qinghai, Yunnan and Sichuan - banning bitcoin production.

China is seeking to act swiftly in order to meet its climate goals and because it cannot regulate a decentralised currency.

Researchers at the Chinese Academy of Social Sciences predicted earlier this year that China’s bitcoin mining industry could consume more energy than Italy by 2024.

Jiang Zhuoer told the Washington Post how he installed 300,000 computers in 20 specially ventilated warehouses across northern China, so that he could mine bitcoin and become a multimillionaire.

The electricity was cheap, but it was coming from fossil fuels and now he is winding down his operations and considering shipping the equipment to Texas.

“You are going to see a dramatic shift over the next few months,” said Brandon Arvanaghi, a former security engineer at crypto exchange Gemini.

Illustrative representation of a bitcoin - REUTERS/Edgar Su
Illustrative representation of a bitcoin - REUTERS/Edgar Su

“We have governors like Greg Abbott in Texas who are promoting mining,” he told CNBC.

“It is going to become a real industry in the United States, which is going to be incredible.

“Texas not only has the cheapest electricity in the US but some of the cheapest in the globe,” he said.

“It’s also very easy to start up a mining company.”

Argo Blockchain CEO Peter Wall recently told Bitcoin Magazine: "We chose West Texas because it offers us some of the lowest electricity rates in the world and the majority is from renewable sources, namely wind and solar.”

But there has been a backlash.

Critics have pointed out that Texas’s power grid failed during a winter storm earlier this year and that the significant drain on resources could lead to future blackouts.

More than four million people were left without power, some for days, and 111 people died.