Fort Worth is becoming a destination for cryptocurrencies.

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

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

Carlo Capua, the city’s chief strategy and innovation officer, said Texas’s efforts and favorable business practices have encouraged companies to set up shop here.

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

Tangible effect

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

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

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

The company also got closer to its customers.

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

“Just like Fort Worth was the closest city to the oil field — you ended up having a lot of oil and gas people coming to Fort Worth — I think there’s a possibility that Fort Worth could become a bitcoin mining city,” Bratcher said.

There is no federal registry for cryptocurrency mining locations. However, websites have gathered information based on news articles and press releases. Data compiled by Fractracker Alliance As of November 2022, 23 mines in the state were found to be 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 the problem. The first miner to solve the problem is rewarded with a sum 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, many with capacities exceeding 200 megawatts, according to a analysis by the US Energy Information Administration.

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

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

“It’s well-located for miners heading to Abilene, also Midland-Odessa. It’s not too far towards Austin, which is where we have another good batch of customers,” Scaggs said.

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

Blockchain software company Consensys has announced its move to the city around the same time as the 2023 North American Blockchain Summit in Fort Worth.

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 is decentralized, meaning that no single computer has control over the system. Any information uploaded to the blockchain is irreversible.

What is blockchain?

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 in an email.

Double-edged sword

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

When the pilot program is completed in November 2022, Capua called it success and recommended that the machines keep mining. The program’s launch 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 strategy and innovation officer since August 2022. (Cristian ArguetaSoto | Fort Worth Report)

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

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

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

One example is currently taking place in Denton. Bitcoin mining company Core Scientific began mining an underutilized section of Denton’s municipal power grid in 2022. RecentlyDenton has agreed to a second mining center that will also use grid power.

The city of Fort Worth did the best it could “to educate the public” about the pilot program, Capua said.

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

“Our tariff with our energy supplier is confidential, so I’m afraid I can’t share the total cost of electricity as it would be easy for someone to reverse engineer our tariff,” Capua said before the report.

The Future of Fort Worth Cryptocurrency Investing

Fort Worth has no plans to buy more miners, Capua said. The city’s current bitcoin machine has a lifespan of about four years and has been in operation for more than two years.

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

“We can still be profitable with that machine. So we’ll probably keep that machine running 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 evaluate next steps.

He also said the machine will remain at the current City Hall, at 200 Texas St., despite current plans for the rest of the city’s operations to move to the new City Hall, at 100 Fort Worth Trail, in the coming months.

Fort Worth has called its current City Hall home since 1978. The building is pictured in March 2021. (Rodger Mallison | Fort Worth Report)

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

Capua wants to continue to strengthen the city’s reputation as a city that pushes the boundaries of innovation.

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

Other emerging technologies could help the city and its residents, Capua said.

“We’re really looking at how we can look beyond that to provide better services to our residents here in the city and our visitors,” Capua said.

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

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