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The Hard-Luck Texas Town That Bet on Bitcoin--and Lost
Source: Wired
MARK DENT
BACKCHANNEL
07.11.19 07:00 AM
THE HARD-LUCK TEXAS TOWN THAT BET ON BITCOIN—AND LOST
In 1952, The Saturday Evening Post christened Rockdale, Texas, “The Town Where It Rains Money.” An estimated 100 million tons of lignite coal lay buried a few miles south of the city limits, and Alcoa had just swooped in to build a $100 million smelter that would use the cheap energy source to produce aluminum for fighter planes, skyscrapers, automobiles, and more. “At the mere mention of somebody blowing into town with $100,000,000 to spend, many citizens were seized by attacks of vertigo,” wrote local author George Sessions-Perry. “Others merely went off and lay down in an effort to regain their composure. Then things began to happen.”
Seemingly overnight, Rockdale’s population doubled to 5,000. A photo accompanying the Post story shows resident millionaire H. H. “Pete” Coffield and the mayor hosting a party for new Alcoa employees on a patio surrounded by a lush garden. The women wear cocktail dresses, and the men wear ties. “What makes us feel best of all,” Sessions-Perry continued, “is that we’re making a sizable pile of something that the nation needs.”
More recently, though, prosperity has eluded Rockdale. The Alcoa smelter was shuttered in 2008, and an adjoining coal-fired power plant closed last year. More than 1,000 jobs vanished, sending Rockdale and surrounding Milam County, population 25,000, into a nosedive.
Then, last summer, a ray of hope pierced the gloom. Bitmain, a Chinese company that makes specialized computers for “mining” cryptocurrency, said it would invest $500 million in what was to be the world’s largest bitcoin-mining facility at the closed Alcoa smelter, which, crucially, was still connected to massive electrical lines. The large buildings where aluminum was made, called potrooms, would be filled with shipping containers stocked with 325,000 mining machines. Most important for Milam County, Bitmain promised to create between 400 and 600 jobs. New industry would replace the old.
-snip-
Price Plunge
Even as Rockdale welcomed Bitmain, the foundation of the mining operation was eroding. Bitcoin’s value steadily declined throughout 2018. In the fall, the drop accelerated; from November 12 to December 16, the value of a bitcoin fell roughly by half, to $3,195, from $6,327, making it hard for even professional miners with cheap electricity to earn a profit. An estimated 600,000 mining machines worldwide were unplugged. The hash rate, which is the total computing power used on the blockchain, declined by 13 percent. Bitmain, with its revenue tied to mining activities, lost $500 million in the third quarter, according to CoinDesk.
-snip-
BACKCHANNEL
07.11.19 07:00 AM
THE HARD-LUCK TEXAS TOWN THAT BET ON BITCOIN—AND LOST
In 1952, The Saturday Evening Post christened Rockdale, Texas, “The Town Where It Rains Money.” An estimated 100 million tons of lignite coal lay buried a few miles south of the city limits, and Alcoa had just swooped in to build a $100 million smelter that would use the cheap energy source to produce aluminum for fighter planes, skyscrapers, automobiles, and more. “At the mere mention of somebody blowing into town with $100,000,000 to spend, many citizens were seized by attacks of vertigo,” wrote local author George Sessions-Perry. “Others merely went off and lay down in an effort to regain their composure. Then things began to happen.”
Seemingly overnight, Rockdale’s population doubled to 5,000. A photo accompanying the Post story shows resident millionaire H. H. “Pete” Coffield and the mayor hosting a party for new Alcoa employees on a patio surrounded by a lush garden. The women wear cocktail dresses, and the men wear ties. “What makes us feel best of all,” Sessions-Perry continued, “is that we’re making a sizable pile of something that the nation needs.”
More recently, though, prosperity has eluded Rockdale. The Alcoa smelter was shuttered in 2008, and an adjoining coal-fired power plant closed last year. More than 1,000 jobs vanished, sending Rockdale and surrounding Milam County, population 25,000, into a nosedive.
Then, last summer, a ray of hope pierced the gloom. Bitmain, a Chinese company that makes specialized computers for “mining” cryptocurrency, said it would invest $500 million in what was to be the world’s largest bitcoin-mining facility at the closed Alcoa smelter, which, crucially, was still connected to massive electrical lines. The large buildings where aluminum was made, called potrooms, would be filled with shipping containers stocked with 325,000 mining machines. Most important for Milam County, Bitmain promised to create between 400 and 600 jobs. New industry would replace the old.
-snip-
Price Plunge
Even as Rockdale welcomed Bitmain, the foundation of the mining operation was eroding. Bitcoin’s value steadily declined throughout 2018. In the fall, the drop accelerated; from November 12 to December 16, the value of a bitcoin fell roughly by half, to $3,195, from $6,327, making it hard for even professional miners with cheap electricity to earn a profit. An estimated 600,000 mining machines worldwide were unplugged. The hash rate, which is the total computing power used on the blockchain, declined by 13 percent. Bitmain, with its revenue tied to mining activities, lost $500 million in the third quarter, according to CoinDesk.
-snip-
Read more: https://www.wired.com/story/hard-luck-texas-town-bet-bitcoin-lost/
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