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Bitcoin Boomtown: Major Cryptocurrency Firm Investing $500M in Tiny Texas Town

400 Jobs Planned at Data Mining Center on Former Alcoa Site
August 9, 2018
Halfway between Austin and College Station you’ll find Rockdale, population 5,628. The tiny Texas town has long been known as home to a large Alcoa aluminum smelting facility, where the furnace's fire has been out since 2008.

Cryptocurrency and blockchain data firm Bitmain is about to bring the heat of a new industry, forged in the digital age, back to struggling Rockdale with a seven-year, $500 million investment the company said would create 400 jobs.

Bitmain said the new facility is to be located within a section of the former Alcoa Rockdale Operations site. Construction and setup is underway, and Bitmain estimates this phase will finish early in the fourth quarter of 2018, with the data center initiation in early 2019.

Bitmain, known for its specialized cryptocurrency hardware widely used by large, so-called "mining" groups, called pools, has solidified itself as an industry leader in the fast-paced sector. Bitmain’s mining pools, Antpool and BTC.com, are two of the most profitable groups currently creating Bitcoin by verifying transactions and adding them to a public, electronic ledger. Back in June, the two controlled almost 51 percent of hash rate -- the overall processing power being used to confirm transactions, according to CoinDance, an e-coin statistic service.

Bitmain’s $500 million investment is backed by $1 billion profit in just the first quarter of this year, according to cryptocurrency analysts. The crypto-giant could also be inching closer to being publicly listed via an initial public offering. The company’s most recent Series B capital raise valued the operation at $12 billion.

Bitmain said it would bring 400 jobs to Rockdale within two years. To facilitate the workforce, Bitmain plans to partner with local schools and educational institutions to provide professional and technical training programs to prepare members of the community for careers in cryptocurrency and blockchain technology.

"Bitmain is truly honored to announce this news and is excited to work with local partners, government and stakeholders in realizing this vision, throughout the initial setup phase, operations and beyond," said Jeff Stearns, executive vice president and director of operations for Bitmain, North America, in announcing the investment.

Rockdale isn’t the first place to be taken over by the modern-day miners. Bitcoin mining, the complex process in which computers solve a complicated math puzzle to earn a stack of virtual currency, uses an inordinate amount of electricity. In places like China, Venezuela and Iceland, cheap land and even cheaper electricity have resulted in bustling mining hubs.

Eastern Washington, home to abundant and cheap hydroelectric power thanks to the Columbia River, has drawn several mining operations. Bitmain is building another facility in that region as well. By the end of year, according to Politico's Paul Roberts, miners in eastern Washington could account for anywhere from 15 to 30 percent of all bitcoin mining in the world.

The modern-day Bitcoin boomtowns have brought tension. Disputes between miners and locals are frequent. In East Wenatchee, Washington, a guerilla war between local utility crews and an army of bootleg miners who set up their servers in basements and garages, maxing out the local electrical grids, is raging.

Much has changed since the first bitcoin boomtowns came into being. Bitcoin’s price has skyrocketed, large corporations have formed and capital has flooded the sector. Now, instead of trying to keep miners away, cities and municipalities are trying to attract them. Bitcoin mining facilities’ need for nearly limitless electricity makes them a perfect fit for former industrial sites, like the Alcoa plant in Rockdale. Virginia Beach, Virginia, has granted $500,000 to help establish a new bitcoin mine in the area. Last June, Montana's state government provided a $416,000 grant to a bitcoin mining operation there.

While details of economic incentives from Rockdale were not released, the city of Rockdale offers business development incentives to prospective businesses including property tax abatements, Chapter 380 sales tax incentive agreements and negotiated city permits and fees.

"The 400 new jobs, in addition to an estimated 137 spin-off jobs, could make a major dent in Milam County’s relatively high unemployment rate," Milam County Industrial Development Corporation president Richard E. Williams Jr. told local TV station KXXV.

Kyle Hagerty, Houston Market Reporter  CoStar Group   
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