Bitmain Scales Back Texas Bitcoin Mine
Chinese cryptocurrency company Bitmain has suspended its operations in Rockdale, east of Austin. The future of what was billed as the biggest cryptocurrency mine in the country just a few months ago is now uncertain.
The county had recently struggled after two of the largest employers had shut down and the county lost an estimated 30 percent in tax base.
“I’m really disappointed because we had advertised this. We had waited for this. We had wanted this. We had welcomed this,” Milam County Judge Steve Young said. “This was huge, we need some positive news here. We need some jobs here. We need tax base here and this was a step in the right direction.”
Young issued a statement earlier in the day saying all Bitmain employees other than two engineers and the director of human relations had been laid off and all operations had been suspended. Young later said things aren’t as dire as he originally thought and the company has told him it will continue with a less ambitious facility.
“They have spent millions thus far to renovate the buildings,” Young said. “I’m told there are 7,000 or 8,000 servers out there already."
One reason Young cited for the decision to scale back was the precipitous drop in the value of bitcoin, the cryptocurrency the company focuses its mining efforts on and for which it sells hardware to mine.
When Bitmain announced it was bringing the $500 million investment and 400 jobs to an aluminum smelter outside Rockdale in July, the value of Bitcoin was over $8,000 per coin. Today, it's less than half at $3,700.
Bitmain officials have declined comment, but in an email to Young shared with TPR, a company spokesman said it had reduced staff not only at the Rockdale site as it has across the company.
“The right-sized team at Rockdale now has the expertise to re-start the project at small scale anytime. Bitmain would like to ramp up the site at a slower pace and scale based on market conditions,” said the spokesman.
The company has reportedly laid off more than half its global workforce and closed its operations in Israel.
Young said he was told there are currently five employees at the Rockdale site, down from around 15.
Rockdale City Manager Chris Whittaker said he’s hopeful the company continues in Rockdale and there are still positive things happening at the former aluminum smelter.
“I am optimistic that maybe they (Bitmain) are reorganizing. They haven't totally shut down. All those things are encouraging," said Whittaker. "We're optimistic that future companies are coming to the Alcoa property.”
Young cited the cheap electricity in Milam County and the industrial infrastructure at the Alcoa property as attractive to other companies.
“This is a valuable asset to the county and it will remain and some company will come here and take advantage of this cheap source of power,” he said.
In addition to the decline in bitcoin value, the end of last year saw many complications for Bitmain. It has been sued in U.S. federal court by users of its hardware who say it is siphoning off processing speed directly for the company, and its CEO and co-founder Jihan Wu was replaced.
“I view that very seriously and I’m keeping an eye on that,” said Young of the company’s problems. “I want to help them as best we can, but I’m not going to go out and advertise a company that’s not going to do right and not going to pay their bills.”
Thus far, he said the company has been upfront with them and haven’t given the county reason to worry. He said the company’s commitment to hiring locally as well as its insistence on paying the school district taxes as opposed to taking an offered abatement.
Questions remain on the 10-year tax break on county taxes on real and personal property. The abatement intended to give 80 percent breaks on improvements and technology the company purchases for the site, which would stagger downward over time. But the agreement has deliverables attached like jobs and investment numbers that may need to be renegotiated or clawed back if the company misses targets.