MAY 23, 2023 – Mining is a fundamental activity in the Bitcoin network, as it helps verify transactions on the blockchain and create new tokens via block rewards. It’s accomplished by solving complex cryptographic hash puzzles called Proof of Work. Miners invest so much time and energy into solving these problems that the protocol rewards them for their effort, an amount that is cut in half every four years or so. If you don’t have the resources to indulge in mining, i.e., specialized technology, there are other ways to earn Bitcoin. For example, you can buy Bitcoin from a cryptocurrency exchange.
Territories outside defined urbanized areas and urban clusters are counting on companies that produce Bitcoin, as they’re keen on increasing employment access and enhancing their tax revenue. Many people living in rural America have accepted Bitcoin as a way to take part in the global economy, get long-term protection against inflation, and draw earnings from more sources. Bitcoin mining requires affordable and reliable energy that rural communities can provide, owing to their natural resource reserves and low population densities.
Rural America Is an Ideal Fit for Bitcoin Mining
Until not long ago, most Bitcoin mining unfolded in China. In May 2021, China informed banks to stop facilitating transactions and issued bans on mining, so the hardware, a few million pieces, was set up in the United States. The great mining migration was set off. At present, America is the largest Bitcoin mining center; authorities are more tolerant than ever and even welcome Bitcoin mining. Texas is slowly but surely becoming the capital for Bitcoin mining, offering tax breaks for local operations. Given that Bitcoin mining is an energy-intensive undertaking, it makes sense that places like Texas are full of miners.
Miners must maximize their share of mineable Bitcoin, so they’re incentivized to use inexpensive energy to optimize profit margins. Texas is currently undergoing a renewable energy boom, with solar and wind development, which can drastically improve Bitcoin mining operations while helping combat climate change. The cost of solar or wind energy is lower than electricity, so Bitcoin miners are encouraged to use renewable energy. Mining facilities can increase or decrease activity according to the real-time availability of low-cost renewable energy. Moreover, Bitcoin miners can sell the excess energy, therefore, improving the profit margins for renewable developers.
Bitcoin Provides Value in The Local Community
By mining Bitcoin, people from rural areas support the security, decentralization, and resilience of the network. The question now is: How does Bitcoin mining affect the local community? According to Hongumart, a Bitcoin maximalist, Bitcoin is a benefit to rural America because:
- It enables small businesses to expand by lowering costs and bringing in more customers. Bitcoin requires little to no processing fees, so business owners can keep more of the profit, not to mention that transactions are faster. If they accept Bitcoin payments, small businesses can attract maximum customers, which is convenient, to say the least, as more and more customers prefer using digital currencies. It’s possible to accept Bitcoin payments from anyone in the world, so the business isn’t only reachable to the people who live close by.
- It helps farmers and producers leverage new markets and opportunities, selling their goods directly to consumers. By eliminating the need for mediators and intermediaries, farmers and producers can significantly reduce their costs; they can create their own marketplaces and set their own prices. Bitcoin can be used to invest in new technologies and services, such as drones that can monitor crops and detect pests. The distributed ledger technology on which Bitcoin is developed enhances transparency and traceability in the supply chain, which eliminates the risk of fraud.
- It enables groups sharing common interests to raise funds for their own projects and initiatives. This is possible thanks to something called an Initial Coin Offering (ICO), which is the equivalent of the Initial Public Offering (IPO). Local communities can take advantage of Bitcoin to raise money for the causes dearest to their hearts, such as healthcare, education, and infrastructure, to name a few. Equally, adding rewards and recognition to a volunteer program creates a sense of accomplishment and increases volunteer retention.
What Does the Future Hold for Bitcoin Mining?
Bitcoin mining creates jobs, tax revenue, and economic development for rural communities. Nevertheless, the mining industry faces some challenges which can restrict its progression, such as new-age efficient machines, not to mention the upcoming Bitcoin halving, which is due in April 2024. The block reward will draw nearer to zero over many halvings, so miners will have no incentive to mine blocks of currency. The rate at which new Bitcoins enter circulation will no doubt decrease. It’s difficult, if not impossible, to predict the future of Bitcoin mining. Time will tell, but for now, Bitcoin mining is still profitable, even if it’s not as rewarding as in the past.
Chances are that Bitcoin miners will continue to move to rural areas, creating workforce cultures that blend in with the local communities. Territories outside defined urbanized areas and urban clusters are connected to regional energy grids, meaning mining companies are able to get power from across the region. As can be expected, not everyone is excited about the cryptocurrency boom, particularly experts and activists, who are concerned that energy isn’t used as efficiently as they’d like. The power to mine Bitcoin can be obtained from renewable sources and from waste streams, so it could be argued that miners care about the environment.
Bitcoin mining can help stimulate the rural economy, creating jobs and improving a country’s tax base. In exchange, the mine is powered by some of the cheapest electricity in history – solar power and wind energy, which don’t incur costs once installed. The electricity market in Texas is deregulated, which means customers are able to choose between different power providers, which are incentivized to provide low rates. Bitcoin miners are committed to buying energy for years, no matter what happens. Development doesn’t happen overnight, but the current economic wind opens a window of opportunity.