Texas city becomes first in country to mine bitcoin in pilot program

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Fort Worth, Texas on Tuesday became the first U.S. city to mine bitcoin in a new pilot program aimed at cultivating a more vibrant tech scene.

Approved unanimously by city council vote Tuesday morning, the small-scale program will run three Bitmain S-9 miners donated by the Texas Blockchain Council, a non-profit crypto advocacy group. The machines — valued at $2,100 total — will operate over the next six months within the government’s IT department at city hall.

The move comes as the United States has evolved into a hotspot for the bitcoin mining industry after the Chinese government banned cryptocurrency mining in June 2021.

“Today, with the support and partnership of Texas Blockchain Council, we’re stepping into that world on a small scale while sending a big message,” said Fort Worth Mayor Mattie Parker after plugging in the three toaster-like machines, officially kicking off the program. “Fort Worth is where the future begins.”

Cryptocurrency miners are seen in a liquid immersion cooling mining tank at the TMG Core stand during the Bitcoin Conference 2022 in Miami Beach, Florida, U.S. April 6, 2022. REUTERS/Marco Bello
Cryptocurrency miners are seen in a liquid immersion cooling mining tank at the TMG Core stand during the Bitcoin Conference 2022 in Miami Beach, Florida, U.S. April 6, 2022. REUTERS/Marco Bello · Marco Bello / reuters

Bitcoin mining is the energy-intensive process that validates the cryptocurrency’s transactions through a process known as proof of work (POW). Specialized mining computers contribute to this effort by solving a cryptographic puzzle and, in return, earn an amount of bitcoin. They also can gain a proportional amount of BTC by combining their computing power in a mining pool.

Fort Worth’s pilot program will join a pool run by Luxor, a Bitcoin mining pool and analytics company. As the city’s program acquires bitcoin, the assets will be held in custody by NYDIG, a bitcoin-focused subsidiary of Stone Ridge Asset Management, which held over $25 billion in assets as of the end of last year, including for some U.S. banks.

“These small but powerful machines mark Fort Worth’s larger commitment to becoming a leading hub for technology and innovation,” Mayor Parker said.

Whinstone CEO Chad Harris walks into a room with Bitcoin mining machines at the Whinstone US Bitcoin mining facility in Rockdale, Texas, on October 10, 2021. - The long sheds at North America's largest bitcoin mine look endless in the Texas sun, packed with the type of machines that have helped the US to become the new global hub for the digital currency. The operation in the quiet town of Rockdale was part of an already bustling US business -- now boosted by Beijing's intensified crypto crackdown that has pushed the industry west. Experts say rule of law and cheap electricity in the US are a draw for bitcoin miners, whose energy-gulping computers race to unlock units of the currency.
Whinstone CEO Chad Harris walks into a room with Bitcoin mining machines at the Whinstone US Bitcoin mining facility in Rockdale, Texas, on October 10, 2021. (Photo by Mark Felix / AFP) (Photo by MARK FELIX/AFP /AFP via Getty Images) · MARK FELIX via Getty Images

The city’s program further cements the Lone Star’s interest in cryptocurrency, especially as the U.S. has grown to be a leader in the space after China’s ban.

The nation contributes 35.4% of bitcoin’s total hashrate — more than any other country in the world as of July 2021. Texas itself has received thousands of pounds of mining equipment since then and Texas Governor Greg Abbott has publicly embraced the industry. Block (SQ) and crypto infrastructure company Blockstream are currently putting the use of bitcoin mining to finance a renewable energy project in Texas.

But the high-power draw needed for bitcoin mining operations makes the new industry a debated topic between climate activists and bitcoin miners about how much energy bitcoin consumes and whether it will pose a problem for power grids.