Today is the first class of our new four class set. We will begin class with a casual discussion. Our reading today is about oil and gas and our listening is about Bitcoin. We will start chapter 18 of The Giver in class.
Click HERE for the reading
A MARTINEZ, HOST:
Now to a piece about bitcoin. Most of the world's cryptocurrency used to be created in China, but now all that bitcoin is moving to new and unlikely places. NPR China correspondents Emily Feng and John Ruwitch went to take a look.
JOHN RUWITCH, BYLINE: In the farmland on the outskirts of Kearney, Neb., there's a field full of modified 40-foot shipping containers lined up in rows. It's off the main road and easy to miss. There are no signs, no big buildings. But as you approach, you notice one thing.
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RUWITCH: It makes a lot of noise. I visited, one cold night in December, and stepped into one of the containers with Dave Perrill, CEO and co-founder of Compute North, the company that runs the facility.
DAVE PERRILL: These are all individual fans and all our individual computers. And they're all doing the actual processing of the systems itself. So you can feel kind of the immense airflow.
RUWITCH: How many decibels?
PERRILL: Within the units here, about 85.
RUWITCH: The computers - thousands of them - are doing complex math problems that verify blockchain transactions and, in doing so, create bitcoins and other cryptocurrencies, like Ethereum. In industry parlance, it's called mining. Compute North was not always a bitcoin mining giant, because until the middle of last year, most cryptocurrency mining like this took place in China, which has had an on-again, off-again relationship with cryptocurrency. Perrill explains.
PERRILL: We've certainly heard this news more than once that China was banning crypto, but we had also heard the rumor so many times, and it never came true. So when we first heard this one, we kind of thought the same, right? And then suddenly, we started getting the phone calls.
RUWITCH: Calls from China-based cryptocurrency miners. They were asking if Compute North could house their machines. Christopher Herbig is lead technician at Compute North in Nebraska. He explains what it was like at the time.
CHRISTOPHER HERBIG: We doubled in size. Like, we were busy nonstop for the whole summer. It's just crazy. And they just - there's just continuing more and more demand all the time. So...
EMILY FENG, BYLINE: In China, miners were busy, too. At one point, they had produced about three-fourths of the world's bitcoins. They used power from hydroelectric dams and wind farms built in really remote places with no cities nearby. So bitcoin miners used that electricity.
ABDULLAH HAN: So we are somehow welcomed by the local Chinese government and to - because we can buy electricity from them, and we have good incentives to create local jobs.
FENG: That's Abdullah Han, a Chinese bitcoin miner and the founder of Meer Energy, which sells mining hardware. Bitcoin mining takes a lot of electricity to power all the computer servers, so people like Han set up data centers in rural Chinese villages to tap into these unused renewable energy sources.
HAN: So we enjoy the lowest price of industrial electricity. And sometime we were - when we were invited by the local government, they would give us, like, industry perk. And from that industry perk, they would give us, like, a lot of benefit from tax treatment and everything.
FENG: But a backlash was brewing. And last May, China cut the cord on bitcoin mining. Here's one Chinese miner, K.C. Tang.
K C TANG: The next day, we already heard some of mining farms being shutting down, and that mining farm was, like, huge. They have, like, tens of thousand machines. So we start realizing, like, the government is being serious.
FENG: The Chinese government had had enough. It found the unregulated cryptocurrency a dangerous idea, and it blamed miners for sucking up too much power. For years, it made it hard for people in China to buy and sell bitcoin. Now it's getting ready to outlaw mining. Thus began the great mining migration. Tang is trying to find a new country to plug in his mining hardware.
TANG: I do not want to say about my numbers. I will say the total now is counting millions.
FENG: Kazakhstan and Russia are two leading contenders because power there is cheap, but infrastructure is not great. And Tang says he is afraid that Russia, like China, could seize his servers.
TANG: Maybe the government's not only shutting down the operation, but also take all your machines. You might lose everything. So United States is a safe choice.
FENG: Hence why a once-quiet field in Nebraska is now humming with bitcoin mines.
RUWITCH: Almost overnight during the summer, China went from being home to around three-quarters of all bitcoin mining to basically none. And by last fall, the U.S. commanded the biggest share, according to Britain's Cambridge Centre for Alternative Finance.
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RUWITCH: For Kearney, it's been a windfall. The city sits near the middle of the U.S. It's bisected by one of America's busiest rail lines and Interstate 80. It's in a good spot and not just geographically. Stan Clouse, the mayor, says unemployment is low, the demographics are good and land is plentiful.
STAN CLOUSE: We're fairly diverse in our economic profile, but we felt that technology was one area where we needed to step up, develop a tech park, recruit tech industries.
RUWITCH: After a failed bid to host a Facebook facility in Kearney, the town brought in Compute North. It opened here in 2019. By this past summer, when crypto miners started fleeing China, it was poised for expansion. Bureaucratic hang-ups in China and infrastructure bottlenecks in the U.S. have slowed the mining migration. But towns in places like Texas, upstate New York and Wyoming are scrambling to build facilities for miners and craft business-friendly regulation. Dave Perrill from Compute North says this is all good.
PERRILL: Because one of the criticisms of bitcoin is that it was "controlled by China," quote-unquote, that if you had over 50% of the hash rate, you could potentially do nefarious things. So the idea that it's, you know, moved to the U.S. and it's gotten even more diversified, I think, overall is a good story.
RUWITCH: Lamont Black is a professor of finance at DePaul University. He teaches a class on blockchain, the decentralized ledger technology at the heart of cryptocurrencies. He says China's crackdown and the flow of mining to the U.S. will probably be good for America's overall blockchain ecosystem. If the coins are minted here, it could spur innovation around the technology.
LAMONT BLACK: We're seeing an institutionalization of crypto that's becoming more mainstream, more regulated. And I think if we can facilitate that in countries like the U.S., then I think that gives us global competitive advantage.
RUWITCH: And global competitive advantage could be crucial in an industry that many think will be as transformative as the internet.
John Ruwitch, NPR News, Kearney, Neb.
FENG: And Emily Feng, NPR News, in Beijing.
(SOUNDBITE OF CASHMERE CAT'S "MIRROR MARU")