The last two years have seen wavy navigation for Bitcoin. A significant imminent change even means more uncertainties in the future of the world’s most popular cryptocurrency. Nevertheless, investors are still passionate about the likely returns from Bitcoin mining activities, investing millions in setting up the high power mining facilities.
Layer1 Technologies, a San Francisco-based mining company that Peter Thiel helped raise funds, announced on February 19 that it’s West Texas mining facility is going online. The Peter Thiel mining company is the latest to explore the abundant energy supply of West Texas to mine Bitcoin.
Peter Thiel is among the biggest names in technology investing and the co-founder of the online remittances service company PayPal. He is one of the early investors in Facebook. Back in 2019, Peter Thiel was one of the investors who helped raise $50 million to set up a new Layer1 mining facility in West Texas. The facility with an undisclosed number of mining units is located 100 miles west of Midland Texas.
Indeed, investment in digital currencies has been hugely frustrated in the continued crypto winter. Nonetheless, Bitcoin has always stood out as one of the bright spots of investing in cryptocurrency. In particular, Bitcoin is still recovering since bursting a major speculative bubble back in 2017. Just before hitting $20,000, the price of Bitcoin fell significantly to as low as $3,500. The cryptocurrency is now gradually recovering and at the moment it has climbed up to about $10,000.
Layer1 Plans to Control 30% Hash Rate in the U.S. by 2021
Moving forward, earlier this year a Layer1 Technologies representative said the company is planning to control about 35% of the world’s total hash rate. Well, if that happens, then Layer1 will have doubled the hash rate of the current mining heavyweights. Mining firms such as Bitmain, Hut 8 and Bitfarm all expanded their mining facilities last year. Over the past twelve months, the total hash rate of all mining companies in the world has more than doubled.
The Layer1 facility has several 2.5 megawatts mining containers equipped with cooling liquid do control the high temperatures in west Texas. According to the press release, the firm is planning to scale up the containers up to 100 megawatts in the coming months. In fact, the company hopes to increase its share of mining activities in the United States. It plans to exceed at least 2% of the total computing power once it scales up to 100 MW.
Furthermore, Layer1 totally relies on renewable energy to run its mining activities. The firm describes itself as the first “vertically-integrated” Bitcoin mining company since it designs and manufactures its own proprietary ASIC chips, mining containers, and power procurement. The co-founder and CEO of Layer1 Technologies, Alex Leigl in the press release claimed:
“We are already delivering on our vision of making Layer1 the world leader in vertically integrated, sustainable Bitcoin mining. Our factory in West Texas is a game changer in Bitcoin mining. The facility uses custom ASIC chips and patent-pending liquid cooling technology that enables us to unlock warmer climates—where others cannot—and benefit from the world’s largest supply of low-cost, sustainable local energy.”
In reality, most mining firms in the world are located in cool areas to avoid mining machines heating. However, Layer1 is located in a very hot Texas area which has forced the company to use cooling liquids to control the high temperatures. According to Leigl, “the cheapest electricity in the world, at scale, is in West Texas right now.” Electricity being the biggest cost in the mining of crypto, we can assume why Layer1 decided to set up its mining facility in west Texas.