Texas Bitcoin Miners Seek Cheap Power, Land and a Place to Stay

(Bloomberg) -- Bitcoin mining company Argo Blockchain Plc posted an unusual job opening a few months back: It needed a housekeeper in rural Texas to clean and maintain a five-bedroom home.

Companies like Argo, which mine coins by building giant computer arrays to solve complex math puzzles, are more used to staffing up with technicians and electrical engineers. But like other cryptocurrency miners that have descended on remote parts of Texas to feast on cheap electricity and inexpensive land, it found itself surrounded by dusty fields with hardly any residential housing. 

So Argo is building the facility at its data center 300 miles (500 kilometers) west of Dallas that will be office and living quarters for employees who come from out of town. The alternative in Dickens County, which is three-fourths the size of Rhode Island but has only 1,700 residents, are the modest hotels 20 miles away in Spur.

The challenges for industries operating in rural Texas is nothing new, of course, with oil and gas producers struggling for decades with how to accommodate workers in remote parts of the Permian and Eagle Ford basins. But learning how to operate in areas lacking basic services like restaurants, gas stations and hotels is a new endeavor for the crypto companies that have set up shop in Texas at a rapid pace since China last year banned miners from operating there.

“You can bring all these jobs to rural Texas, but then you have to be able to lodge these people,” said Collin McLelland, the chief executive officer of Digital Wildcatters, which hosts events to bring together energy industry executives with crypto miners. “It’s all the same issues of where do people live and having to invest in infrastructure.”

Crypto-mining companies are flocking to Texas to tap into cheap, plentiful electricity, generally their single biggest cost. But instead of honing in on big cities, they’ve preferred to set up near underutilized circuits flush with excess energy. Usually that means sites amid sparsely populated farm or ranchland, near towns with no more than a few hundred residents, a grocery store and a greasy cafe. Texas has the highest amount of mining activity among all states, making up as much as 25% of the U.S. total, according to estimates by Luxor Technologies, a mining platform.

The Mining Store, a Grundy Center, Iowa-based mining company, has plans to open a 33,000-square-foot facility in dry prairie about 100 miles north of Amarillo. With so little housing available, CEO J.P. Baric said the company will be buying or leasing houses for workers. Right now, whenever Baric visits he stays in a hotel that is a 45-minute drive away. He’s also looking at setting up trailers that technicians can use as living quarters.

Cormint Data Systems, based in New York, operates a 22-megawatt facility outside of Fort Stockton, some 200 miles east of El Paso. It signed a long-term lease on a four-bedroom house, paying $2,500 a month to have somewhere for workers to live. The company is also looking for residences to purchase. 

“The housing situation out there is tricky,” CEO Jamie McAvity said.

There are other obstacles beyond housing. Oftentimes, miners must upgrade local roads to accommodate the trucks they need to deliver industrial equipment. Matt Lohstroh, the owner of Giga Energy, which uses natural gas at well heads to mine Bitcoin, says his company has had to repair several county roads by a site about 30 miles outside Texarkana. 

Giga Energy operates seven shipping containers that contain more than 2,000 computers on its property. Out there, the closest business is a single gas station about 30 minutes away that also serves decent grub, according to Lohstroh. He and his colleagues often make a lunch stop to pick up burgers when they’re on site.

“All those ladies that work at the gas station recognize us,” Lohstroh said. “They know some of our guys by name.”

But that single gas station closes at 2 p.m. and you better bring cash -- it charges 6% fees for using a credit card and there’s no way to pay at the pump.

Back in Dickens County, Argo is getting ready to begin operations in May after months of construction. The massive project has been a boon for local barbecue joint TC’s Ponderosa. Owner Nancy Hale said she’s bringing in an extra $200 a day in sales from the construction workers who pick up smoked meat sandwiches for lunch or dinner. She has also catered a couple events for Argo.  

Unfortunately for her, the miners enjoyed the restaurant so much that Argo poached its manager to fill the housekeeper job and do some cooking. Argo also hired two more people from TC’s -- one as an administrative assistant and the other as a security guard. 

While Hale said she was sad to see her employees go, she was happy for them. Argo offered around $40,000 to $50,000 in salary, more than she could pay. 

“I was really proud they got a good paying job with benefits,” Hale said.

This might just be the beginning for Dickens County, where the per-capita income is just above $25,000 a year. County Judge Kevin Brendle -- the chief administrator -- said he’s been fielding inquiries from miners who are interested in tapping into the local grid.

“I’m getting calls from Bitcoin miners every time I turn around,” Brendle said.

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