Are SBI and GMO going to mine at the world's largest crypto mine?

This article is from Bloomberg, the original author:

Odaily Planet Daily Translator: Nian Yin Si Tang

SBI Holdings Inc. and Japanese internet giant GMO Internet Inc. (GMO) are about to begin extracting bitcoin at the world’s largest cryptocurrency mine — located in the mining industry’s new hotspot: Rockdale, Texas.

The two companies have reached an agreement in principle with Whinstone Inc., a subsidiary of Germany's Northern Bitcoin AG, to process cryptocurrency transactions at the company in the coming months, according to people familiar with the matter.

Leasing mining capacity to SBI Holdings subsidiaries SBI Crypto and GMO could help Northern Bitcoin AG attract more large investors who are well versed in the crypto industry, the people added, asking not to be named because the matter is private. Spokespeople for Northern Bitcoin AG, GMO and SBI declined to comment.

In recent years, Northern Bitcoin AG has moved beyond mining Bitcoin to planning and operating Bitcoin mines for large investors, shielding them from wild price fluctuations. Large lease contracts often increase revenue and profits.

The Frankfurt-based company said last month that its Rockdale data center will start operating with an initial capacity of 300 megawatts and reach 1 gigawatt by the end of the year, more than three times the capacity of a nearby mining farm operated by Bitmain Technologies Ltd. The Rockdale crypto mining farm is believed to be the largest on Earth and is located in an old aluminum smelter owned by Alcoa Corp.

Rockdale, once known as the “town where it rains money” when aluminum production peaked in the 1950s, is now one of the places in Texas seeing an influx of crypto miners. For example, U.S. startup Layer1 plans to build a site in West Texas.

Mike McGlone, senior commodities strategist at Bloomberg Intelligence, said Texas tends to be attractive to crypto supporters with libertarian tendencies given its independent history and the state’s abundance of cheap energy and renewable resources, especially wind power.

Wind power accounted for more than 20% of Texas' electricity generation last year and will surpass coal for the first time this year, BloombergNEF estimates.

Bitcoin miners essentially process transactions by solving math problems on the blockchain and are rewarded with bitcoins. When Bitcoin first came out in 2009, it was easier for everyone to mine bitcoins with a computer; but now, mining enthusiasts need large networked computers to do the job, and cheap electricity is key.

The bets from SBI and GMO mark the entry of high-profile institutional investors into the market just as bitcoin has had a spectacular year in 2019, with gains of nearly 95% despite bouts of volatility. That has emboldened some investors and analysts to call for further gains this year as adoption grows and fans continue to flock to the decentralized currency.

“Bitcoin is attracting more institutional investors with its limited supply and the idea of ​​mass adoption — Bitcoin is winning the race.” McGlone is quite optimistic.