- Fort Worth is getting into the crypto mining business, albeit in a small way.
- Each of the program's three machines will consume the same amount of energy as a household vacuum cleaner, according to city estimates.
Fort Worth, Texas, is now the first city government in the United States to mine bitcoin — and in an almost poetic devotion to the initiative, Mayor Mattie Parker oversaw the construction of a small mining farm in City Hall.
Three Bitmain Antminer S9 mining rigs will run 24 hours a day, seven days a week, in the climate-controlled information technology wing of Fort Worth City Hall. The city says the miners will be hosted on a private network to minimize the security risk.
Bitcoin operates on a proof-of-work mining model, meaning that miners around the world run high-powered computers to simultaneously create new bitcoin and to validate transactions. The process requires professional-grade equipment, some technical know-how, and a lot of electricity. That's why Fort Worth's pilot project is starting small, according to the mayor.
Each of the program's three machines will consume the same amount of energy as a household vacuum cleaner, according to city estimates. While the mayor doesn't expect the three miners to be major money makers, the cost of electricity needed for the program is expected to be offset by the value of bitcoin mined.
Beyond adding bitcoin to the city's balance sheet, Parker — who took office last year and is the city's first-ever millennial mayor — believes that leaning into bitcoin will go a long way toward putting Fort Worth on the map.
"For Fort Worth, a lot of people don't know who we are," Parker told CNBC.
"We want to change that conversation, and we believe that tech innovation including cryptocurrency is the way we're going to do that."
Building a three-rig mine, even in a crypto-friendly jurisdiction like Texas, requires clearing bureaucratic red tape.
"This is something brand new for any city," said Parker. "There's a lot of policy here that we've had to jump through hoops to understand."
To make it happen, the city has teamed up with a few key partners, including the Texas Blockchain Council, which donated the three mining rigs (each valued at roughly $600 apiece), and Luxor Technologies, a mining pool, which lets a single miner combine its hashing power with thousands of other miners all over the world to increase their chances of earning bitcoin.
Parker, who has been in the job almost a year, got the idea to break into bitcoin after talking with a few friends in the venture capital world, who told her that 80% of venture capital is essentially spent on tech, and cryptocurrency is at the center of that right now.
"We're the fastest growing city in the country. There's so much excitement around North Texas and Fort Worth, in particular. To really keep that energy going, we have to push ourselves differently, and we think cryptocurrency is a huge part of our future economy," said Parker.
After six months, Fort Worth will re-assess and decide whether to sink real cash into building out a mine.
Alex Brammer, VP of business development for Luxor, says Fort Worth's move will bolster the legitimacy of bitcoin as a strategic asset.
"Mayor Parker is setting an example and effectively de-risking both bitcoin mining and bitcoin treasury strategies for every other mayor in the country, and I wouldn't be surprised to see more announcements like this coming in the future," said Brammer.
Brammer also cited the possibility that governments could use bitcoin mining to help stabilize electrical grids in the transition to clean power.
"In the future, it is likely that bitcoin mines will sit alongside industrial-scale battery storage to provide grid-firming services that prevent blackouts and other interruptions to the grid caused by the addition of intermittent wind and solar generation. In this context, it would make sense for cities to start to fund and build large-scale mining infrastructure themselves."
Texas Blockchain Council President Lee Bratcher, who works with bitcoin miners across the state, is also optimistic on Fort Worth's prospects.
"Fort Worth has the geographic proximity to miners and a supportive city leadership that make it a front runner to be the bitcoin mining capital of Texas and therefore the U.S.," said Bratcher.
For now, the project isn't really about profits, nor helping to fix Texas' temperamental power grid. Instead, it's about being a first-mover and normalizing the idea of a city government mining bitcoin and putting the world's biggest cryptocurrency on their balance sheet.
"This is outside the box for any government, right? Usually things move at a snail's pace. And in Fort Worth, we want to do things differently and kind of elbow our way into the room," the mayor said.