Here’s one possible answer to that question I posed the other day.
Jacob Rodriguez was driving a John Deere tractor in a West Texas cotton field when he received a phone call that would change his life.
“I was pulling a 59-foot air seeder … and at the same time I was on the phone having my interview,” Rodriguez, 29, said.
On the other end of the phone early this year were representatives from a new business that was coming to Dickens County, a community of around 2,000 people an hour east of Lubbock.
By March, Rodriguez had quit farming cotton — something he called “just another job” — and began training to work in a cryptocurrency mine.
The county had exactly what London-based Argo Blockchain was looking for: plenty of open land and easy access to affordable power, thanks to a large wind farm built there more than a decade ago.
Texas political leaders have been promoting the state as a destination for companies producing bitcoin and other digital currencies, touting the state’s reputation for low taxes and cheap power. Around 30 have come in the past decade, and dozens more have expressed interest in moving to Texas.
But instead of moving to the state’s large urban areas — which have the extensive infrastructure and large workforce that attracts most relocating companies — cryptocurrency companies have largely done the opposite and located in rural areas, according to Lee Bratcher, president of the Texas Blockchain Council, a group promoting crypto growth and innovation.
Crypto companies have been welcomed by many small towns hungry for an economic boost. Argo Blockchain opened its 125,000-square-foot Helios facility in Dickens County in May and hired a couple dozen locals, including Rodriguez. It has also added $17 million to the local tax base, according to Kevin Brendle, the county judge. The county’s overall assessed property tax value is $283 million, he said.
That economic infusion has allowed Dickens County to cut county property taxes by around 1.5%, give small raises to county staff, and purchase new equipment for the sheriff’s office and for road and bridge improvements.
“The end result is enhanced services to the community,” Brendle said. “We’re going to be able to do a better job of serving them, and we’ll be able to be competitive in our wages.”
In Milam County, northeast of Austin, a large crypto facility owned by Riot Blockchain that opened in 2020 has added hundreds of new jobs and millions of dollars for the local tax base, according to County Judge Steve Young. He said the boost in taxes has allowed the county government to pay for basic services such as road improvements. When the crypto company needed to employ contractors for various projects, it hired locally, he added.
See here for my question. The article notes that the recent crackdown on crypto mining in China has led to opportunities in places like Texas to pick up the slack. The Republican obsession with cryptocurrency and the fact that these places are locating in rural areas makes a lot of sense politically. And of course, as always, there’s this:
Many rural counties are offering crypto companies tax breaks to lure them to their communities. Milam County, which lost its biggest employer — an Alcoa aluminum plant that employed nearly 1,000 people at its peak and closed in 2008 — offered Riot Blockchain a 45% discount on local taxes for 10 years, said Young, the county judge.
“Businesses are typically not going to come to your county unless you’re willing to give them a tax abatement,” Young said.
Crypto companies still add millions of dollars to the local tax base, Young said, and in Milam County, Riot Blockchain also helped rebuild the local animal shelter and installed new lights at local sports fields.
On the other side of the state, Brendle said Argo Blockchain has committed to refurbishing the county-owned public pool, which closed more than a decade ago.
Brendle and Young both said local residents didn’t oppose the new businesses but had lots of questions about cryptocurrency and whether outsiders would flock to their rural counties.
“When they first came here, people had no idea what it was — neither did I,” Young said. “As it’s gone forward, the county as a whole has started to get a grasp of what’s going on and clearly appreciates the fact that they’re out there providing jobs, enhancing county services, hiring local contractors for the most part and spending a ton of money here. It’s a huge benefit to the county.”
Dig down far enough, there’s always a tax break. Look, I hope this works out well for these communities. Rural Texas has been losing population for a variety of reasons, and they could use the economic boost. I remain skeptical of cryptocurrency as a long-term endeavor, and I remain very worried about the demand it puts on our power grid, but there’s not much I can do about that. All I can say is that the last Big Economic Thing that happened in rural Texas was the private prison industry, and I really hope this turns out better all around than that. You’ll forgive me, I hope, if I will need to see it to believe it.
NOTE: This is the time of year when I clear out some posts that have been sitting in my Drafts while other more important news items got blogged about. This one was from early October, well before the crash of FTX. I’ll have a separate post about that shortly; the news hook for that is what prompted me to finally publish this one.
All that cheap renewable power should be going to the bigger cities instead of to crypto miners. It isn’t going to cities because the oil and gas lobby has paid many millions into Republican reelection funds to stop transmission line build-out in order to favor gas fired electricity generation, raising electricity prices for all of us, again. Chris Tomlinson has written a lot about Greg Abbott’s war on cheap renewable power, e.g.,
https://www.houstonchronicle.com/business/columnists/tomlinson/article/Tomlinson-More-transmission-lines-could-carry-17492151.php
Every time you look at your power bill, remember to offer up a little thank-you to Republican voters.
I may have an answer to the question of ‘Why crypto mining in Texas’. As we have seen Greg Abbott has been well quidproquo’ed by Oil and Gas to keep cheap renewable power out of the big metros. But renewable power companies have deep pockets too. Perhaps by promising them a local market for their power with cryptomines he can get cryptominers and renewable power lobbyists to pay to play too. Makes sense to me, this way every player is paying in. To hell with the grid and Texas ratepayers, cash for Greg Abbott is all that matters.
And after the crypto boom is over, the locals will still be paying for expensive grid connections made to the now-defunct mines.