This week, Layer1 revealed it has raised $50 million at a $200 million valuation from Thiel, Shasta Ventures and other undisclosed bitcoin and cryptocurrency investors, adding to a previous $2.1 million seed round that included Thiel, as well as venture capital company Digital Currency Group.
Layer1 is aiming to challenge the perceived wisdom that bitcoin mining the in the U.S. will not be able to compete with regions such as China, where some 60% of bitcoin mining operations are currently located, with some research suggesting that number could be even higher.
Layer1, which has pivoted to renewable energy bitcoin mining from a previous focus on the development of programmable money and store-of-value applications, wants to bring wind-powered bitcoin mining rigs to West Texas by early next year.
“According to industry research, over 60% of bitcoin’s hash rate and 100% of bitcoin hardware production are located in China,” Layer1’s cofounder and chief executive Alexander Liegl wrote in a blog post announcing the fresh funding.
“Less than 5% of bitcoin’s hashrate and 0% of hardware production are located in the United States.”
China dominates not only bitcoin mining but also the manufacture of computer chips and other equipment needed for the process.
Bitcoin mining uses huge amounts of electricity to both fuel the powerful computers required and keep them cool, making hotter climates in developed nations less appealing.
“The future of bitcoin mining lies in the heart of the United States: Texas,” Liegl wrote.
“This is where world-class electricity prices, friendly regulation, and an abundance of renewable energy sources meet. It is here that we are rapidly scaling our mining operations to bring as much hash rate as possible back to the United States.”
Layer1 has been buying up land in Texas to build its own electricity substations and is creating its own processing chips with a Beijing-based semiconductor company as it puts together its mining machine infrastructure.
Bitcoin trading volume among the top ten biggest bitcoin and crypto exchanges has fallen to under $200 million a day, according to bitcoin and crypto data company Messari, down 20-fold from a peak of $4 billion per day just a few months ago.
“Across all crypto venues, volumes are dismal,” eToro’s senior market analyst Mati Greenspan wrote in a Twitter thread, sparking industry concern.Today In: Money
“This is a giant lull in crypto volumes across the board.”
Bitcoin numbers from derivatives giant BitMEX and peer-to-peer exchange LocalBitcoins reveal a similar slump.
Elsewhere, transactional volume on the bitcoin blockchain has also plummeted, with the amount of money being sent each day the lowest since May, falling below $800 million.
The number of individual transactions has though stayed steady at around 320,000 transactions per day, Greenspan pointed out, while reminding readers bitcoin is coming off a bull run that’s seen the bitcoin price more than double since the beginning of the year.
“Let’s not forget that bitcoin is one of the best performing assets this year. After all this action a period of stabilization is more than welcome. Bitcoin is not dead. It’s just resting.”