Fort Worth began cryptocurrency mining over two years ago. What were the results?

Fort Worth is becoming a cryptocurrency destination.

An influx of cryptocurrency businesses now call Cowtown home — and Fort Worth is embracing them. Experts and Fort Worth officials attribute that growth to the city’s decision to bring a bitcoin mining operation to City Hall in April 2022.

“For Fort Worth, the municipal bitcoin mining, I think, created this tech-hub energy that the city needs to continue to build on,” said Brandon Chicotsky, an assistant marketing professor at Texas Christian University.

Carlo Capua, the city’s chief of strategy and innovation, said that effort and Texas’ favorable business practices spurred companies to set up shop here.

“Fort Worth is innovative, it’s forward thinking, it’s not afraid to try dynamic things to position itself as a great home for entrepreneurs,” Capua said. “You can talk theoretically sometimes about why your city’s great, and (the program’s success) is a perfect opportunity to give a real specific example of how we are putting our money where our mouth is.”

Tangible effect

Advanced Crypto Services is one of the companies that moved to Fort Worth in the last two years.

Started in the garage of founder and CEO James Scaggs in Frisco, the maintenance and repair bitcoin mining company is a startup/nonprofit member of the Texas Blockchain Council, an organization dedicated to promoting blockchain technology.

Fort Worth’s relationship to the cryptocurrency industry played a factor in Advanced Crypto Services’ move and has been a net positive, Scaggs said. The business gained access to local opportunities, grants and programs.

The company also got closer to clients.

Businesses are moving to Tarrant County to be closer to where the mines are being built, Texas Blockchain Council President Lee Bratcher said.

“Just like Fort Worth was the nearest city to the oil field — you ended up having a lot of oil and gas folks that landed in Fort Worth — I think there is a possibility for Fort Worth to become a bitcoin mining-centric city,” Bratcher said.

No federal registry for cryptocurrency mine locations exists. However, websites have collected information based on news articles and press releases. Data compiled by Fractracker Alliance in November 2022 found 23 mines in the state that are either operating or under construction, including 10 near Midland and Odessa in West Texas.

What is a cryptocurrency mine?

Cryptocurrency miners are computers that solve complex mathematical problems. Machines around the world compete to be the first to solve it. The first mine to solve the problem is awarded an amount of cryptocurrency, which has monetary value. Most mining facilities have around 10,000 to 20,000 mines, but the largest have around 100,000.

Several of the mining facilities are considered large, with many having a capacity of over 200 megawatts, according to an analysis by the U.S. Energy Information Administration.

Texas leads the nation in large mines, with 10 that use enough power to support more than 30,000 homes, according to The New York Times. Thirty-four mines across the country use more power than 30,000 homes. New York is second, with four.

By moving to Fort Worth in September 2022, Scaggs said Advanced Crypto Services is primed to serve mines across Texas.

“It’s pretty well-located to the miners that are out toward Abilene, also Midland-Odessa. It’s not crazy far down toward Austin, which is where we have another good like batch of customers,” Scaggs said.

Long before the city itself joined the market, the world’s largest bitcoin ATM operator, Coinsource, was founded in Fort Worth in 2015.

Consensys, a blockchain software company, announced its relocation to the city around the same time as the 2023 North American Blockchain Summit in Fort Worth.

What is blockchain?

Blockchain is a digital database that stores information. In cryptocurrency systems, the blockchain stores a record of transactions. Blockchain differs from other digital databases in that it’s decentralized, meaning no one computer has control over the system. Any information uploaded to the blockchain is irreversible.

The state’s “pro-crypto policies” and the vibrant entrepreneurial ecosystem in Fort Worth prompted Consensys’ move from New York, said Simon Morris, chief strategy officer at Consensys.

“It’s encouraging to be surrounded by a community that values innovation and economic independence,” Morris said by email.

Double-edged sword

Fort Worth’s bitcoin mining program began in 2022 with three machines donated by the Texas Blockchain Council. Two months in, the city replaced the miners with a donated newer machine.

When the pilot program concluded in November 2022, Capua called it a success and recommended the machines continue mining. The launch of the program generated more than 752 million web impressions in those first six months, according to city officials.

Carlo Capua has served as the city of Fort Worth’s chief of strategy and innovation since August 2022.

Despite the positive effects of the program, Bratcher said Fort Worth is still the only city to participate. The Texas Blockchain Council donated a machine to the city of Temple in central Texas, but the city never installed it, he said.

Bratcher doesn’t think cities will mine for profit. However, he does think municipal power districts may participate more in the industry.

“There are municipally owned power generation that’s underutilized and they could monetize that for the citizens of their community more effectively,” Bratcher said.

One example is currently occurring in Denton. Bitcoin mining company Core Scientific started tapping into an underused section of the Denton Municipal Electric power grid in 2022. Recently, Denton agreed to a second mining center that will also pull from the power grid.

The city of Fort Worth has done its best “to educate the public” on the pilot program, Capua said.

However, the city has not disclosed the total energy cost of running the machine. The Report filed an open records request for the machine’s electricity costs, but did not receive a response by time of publication.

“Our rate with our energy provider is confidential, so I’m afraid I can’t share the total electricity cost as it would be easy for someone to reverse engineer our rate,” Capua previously told the Report.

Future of Fort Worth’s crypto investment

Fort Worth has no plans to purchase more miners, Capua said. The city’s current bitcoin machine has a shelf life of about four years and has been operational for more than two years.

The primary cost for the machine is electricity, which was offset by the mined bitcoin, Capua said. In August 2023, Capua said the machine had generated nearly $2,000 after electricity costs and recently confirmed the amount of profit the machine has made is “in the thousands.”

“We’re still able to be profitable with that machine. So we’ll probably just keep that machine going until it becomes completely obsolete,” Capua said.

If the machine stops working or can no longer compete with other miners, Capua said the city will then evaluate next steps.

He also said the machine will stay at the current City Hall at 200 Texas St., despite current plans for the remainder of city operations to move to new City Hall at 100 Fort Worth Trail in the next couple of months.

Fort Worth has called its current City Hall home since 1978. The building is pictured in March 2021.

Chicotsky, the TCU professor, said Fort Worth can now make a claim to be more technologically savvy in “a way that is responsible and likely generating revenue for the city and for its residents.”

Capua wants to continue boosting the city’s reputation as pushing the boundaries of innovation.

Last year, the city adopted a policy defining the appropriate and responsible uses of artificial intelligence for the municipal government. The goal was for the city to outline the ways AI could be used in several city departments, Capua said.

Other emerging technology may help the city and its residents, Capua said.

“It’s really looking at how we can take a peek around the corner to deliver services better to our residents here in the city, and our visitors,” Capua said.

Ismael M. Belkoura is a reporting fellow for the Fort Worth Report. Contact him at ismael.belkoura@fortworthreport.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.

This article first appeared on Fort Worth Report and is republished here under a Creative Commons license.

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