Fort Worth is exchanging its three bitcoin mining machines for a single, more energy efficient model, less than two months after the city announced plans to make itself a capital for cryptocurrency and emerging technology.
“What I would say is, this was definitely a learning opportunity for us in the city,” District 3 council member Michael Crain said.
The new machine will use less energy and mine more bitcoin, said Carlo Capua, deputy chief of staff for the mayor and council. The Texas Blockchain Council offered the updated machine to Fort Worth after receiving it through a donation from Shepler Capital.
“Essentially, we got a better, more efficient machine,” Capua said.
In a welcoming gesture to the cryptocurrency and tech industries, Fort Worth became the first city in the country to mine its own bitcoin in April. The process of “mining” refers to the machines working to solve a complicated math problem to verify a bitcoin transaction.
After the city initially received the donated machines, Quinn PR crafted a media campaign to promote Fort Worth’s tech forward leadership. Headlines in national news outlets, such as USA Today, read: “Fort Worth, Texas becomes first in the US to mine bitcoin: ‘Where the future begins”
The stories had a reach of over 600 million clicks, according to the city. Leonard Firestone, chair of the entrepreneurship and innovation committee, touted the public relations partnership. The new machine will just be an extension of the publicity Fort Worth has already gained, Firestone said.
“I would suspect that Carlo Capua will publicize (the energy efficiency) a bit,” Firestone said.
Les Kreis, the managing principal at Steelhead Capital and co-founder of Bios Partner and one person who brought up the idea of bitcoin to the mayor, said the Texas Blockchain Council is updating the machines because it was donated a newer machine, the Bitmain Antminer S19. That will replace the city’s three S9 models.
The three S9 machines expended 3,969 watts per hour combined, creating a fixed energy cost the city said it accounted for. The three machines, donated by the Texas Blockchain Council, ran 24 hours a day, seven days a week and were embedded in the city’s information technology wing of City Hall.
The new model will use 18% less energy and mine 147% more bitcoin, Capua said, making it more efficient than the three S9 models.
In making the initial announcement, city officials touted the machines as using the same amount of electricity as a household vacuum cleaner and said the cost of the electricity was going to be minimal, according to previous reporting by the Fort Worth Report. However, the new machines presented an opportunity to increase fuel efficiency even more.
“That’s the beauty of a pilot program is we’ve got the flexibility to experiment and tinker a little bit to make the program more efficient as it goes along,” Capua said.
The new machine has an estimated value of $9,000, exceeding the combined $2,100 value of the prior three machines. If Fort Worth decides to stop mining bitcoin, the machine will be returned to the Texas Blockchain Council.
“As leaders, sometimes you have to make that leap,” Crain said. “We may get criticism for it. But at the same time, it goes back to that theme that we are a large urban environment, and we have large city problems.”
A bitcoin skeptic said the currency is not a wise investment.
“It seemed misguided that Fort Worth believed that having a computer system running a program would raise the profile of Fort Worth as a forward-thinking city,” Gordon Kelly, a longtime tech executive, said.
Much of the criticism of the bitcoin mining industry comes from the massive amount of energy it takes to mine.
Joshua Partheepan, an assistant professor of systems engineering at West Texas A&M University, said countries like China were allowing cryptocurrency but banned it because of the energy use.
Texas has the lowest price per kilowatt hour for energy in the country, making it an attractive location for miners to set up shop, Partheepan said.
The city’s exchange is basically consolidating, he said.
“I wouldn’t say it’s more energy efficient or anything like that,” he said. “It just will cut down your energy costs.”
Kreis said it’s understandable to be concerned about energy, but it’s also worth questioning what justifies energy consumption. He compares bitcoin mining to other mining processes.
“Gold is scarce, and it’s scarce because it is so hard and requires so much energy to go dig up and find,” Kreis said. “That’s why bitcoin mining is kind of similar to gold in that it requires a tremendous amount of energy to create bitcoin.”
The city relies on the Texas Blockchain Council to model the potential gains from the bitcoin machines. The city took a leap to be innovative, before knowing all the ins and outs of bitcoin mining themselves, Capua said.
“It’s obvious that digital assets are the future,” Capua said. “Any chance we can get to learn when the risk is very, very low. I consider it a big win for the city.”
— Fort Worth Report government accountability reporter Emily Wolf contributed to this report.
Seth Bodine is a business and economic development reporter for the Fort Worth Report. Contact him at email@example.com and follow on Twitter at @sbodine120.
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