Mapping out North America’s crypto mining infrastructure boom

China’s Great Crypto Mining Shutdown has unplugged around six gigawatts (GW) of energy generating capacity — roughly the equivalent of three Hoover Dams — that before this summer had been devoted to securing blockchain networks for profit. That's caused a worldwide supply crunch for crypto mining hosting availability. 

Now, more than a dozen firms are poised to restore around half of that capacity in North America.

Based on The Block’s analysis of recently announced investment plans, institutions in North America are either building or have plans to build up to 2.8 gigawatts (GW) of new crypto mining facilities located in different parts of the U.S. and Canada. All that new capacity is expected to be fully operational by the end of 2022.

Apart from the existing crypto mining firms that are rapidly expanding their capacity, there are also new players coming to the field from the energy sector, some through proprietary acquisition and some via joint ventures.

New players and struggling power plants

The table below adds more information about the specific deals, including timelines and partnerships. One thing that stands out from the list of deals over the past quarter is the interest from struggling power generators trying to capitalize on self-mining opportunities, for instance Nautilus Cryptomine and Stronghold Digital. 

Nautilus Cryptomine is a joint venture involving a Pennsylvania-based Talen Energy and Texas-based mining firm TeraWulf. It's also a strategic pivot for the debt-laden power producer as it tries to salvage its declining fortunes.

According to Bloomberg, Talen Energy “has struggled to support its $4 billion debt load amid weak energy prices, dividend payments to its sponsor and growing pressure to become more environmentally friendly.” The firm owns fossil fuel and nuclear plants as well as some solar assets that are in development.

Talen is hoping to raise $800 million from equity investors in order to fund the construction of two mining data centers powered by nuclear plants in Pennsylvania with a total capacity of up to 300 MW. About $400 million would go to the first phase of the project: getting 180 MW up and running by the middle of 2022. TeraWulf, Talen’s partner in the venture, recently pre-ordered 30,000 ASIC miners from Bitmain.

Meanwhile, Pennsylvania-based Stronghold Digital Mining has already transformed its Scrubgrass waste coal plant into functional bitcoin mining facilities and has plans to scale up. 

According to the Pittsburgh Post-Gazette, in early 2017, Stronghold co-chairman Bill Spence bought the Scrubgrass plant, which was struggling to compete with cheap natural gas power on the grid. The firm eventually decided that self-mining bitcoin could significantly add to the plant’s operating revenues.

Stronghold has recently acquired a second plant that would double its capacity to 165 megawatts (MW).

A company representative told The Block that this plant is also ready and “they just need to put the new acquired miners there.” The firm is planning to have a total of 57,000 miners by the end of next year.

Chinese imports

Several Chinese mining firms have also turned to opportunities in North America.

Dallas-based Applied Blockchain said on July 30 that it raised $32 million in a private equity funding round to launch a crypto-mining hosting business. The leading investor was Bitmain, the Beijing-headquartered mining equipment manufacturing giant. The Block reported previously that following China’s crackdown Bitmain has committed to investing in new crypto mining infrastructure for itself and customers through joint ventures. 

Through the investment, Bitmain has joined Hangzhou-headquartered Sparkpool, one of the largest Ethereum mining pools, as a strategic partner of Applied Blockchain. In return, Bitmain and Sparkpool are able to reserve long-term hosting capacity at Applied Blockchain when the infrastructure becomes operational.

Applied Blockchain says the facility will be able to house up to 500 MW of power and it expects the first 50 MW to be operational by the end of the year. Another 50 MW is supposed to be ready by the first quarter of 2022.

"We are entering into a long term agreement with a utility and are strategically locating our hosting operations in the Upper Midwest where there is an abundance of energy production and ample real estate available at an attractive valuation for additional expansion," said Wes Cummins, Applied Blockchain’s founder and CEO.

In June, Dallas local media reported that Applied Blockchain had also signed purchase agreements with Sparkpool to procure and deploy $5 million GPUs for moving into mining ETH and other crypto assets.

Meanwhile, New York-based bitcoin mining firm BIT Digital, which had 80% of its fleet in China as of May, has expanded its hosting agreement with New York-based Digihost for a capacity of 100 MW to house the equipment that it needs to relocate from China.