Layer1 raises $50M, eyes crypto mining hub in West Texas

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San Francisco, California-based Layer1 Technologies Inc., has raised a US$50 million in Series A funding, bringing the blockchain firm’s valuation to US$200 million and total funding to US$52.1 million.

Established in 2018, Layer1 is the first U.S.-based, vertically-integrated BTC mining company. Its mission is to strengthen the crypto’s decentralization and usage of renewable energy. With this funding, led by Peter Thiel and Shasta Ventures, among others, the company intends to own the whole BTC mining stack by designing, producing, and operating an entire mining infrastructure.

The company plans to build a crypto mining hub in West Texas. According to co-founder Alex Liegl, Layer1’s facility will sit on dozens of acres of land 150 miles outside of Midland, Texas. The move is designed to take advantage of the low energy prices in oil and renewable energy-rich Texas. Layer1 will leverage the vast potential for producing solar and wind energy in the West Texas prairie. Further, Layer1 will take care of the production and supply of electricity.

“The electricity prices in Texas have always been extremely competitive, what happened is that nobody in the cryptocurrency mining industry has been able to take advantage of that yet since they lack the appropriate cooling technology,” said Liegl. “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.”

Crypto mining requires a high amount of electricity and produces a massive amount of heat. The planned hub will have all the necessary computing infrastructure. To counterbalance the warm Texas climate, Liegl said they developed a proprietary new technology for cooling the chips used to mine BTC that “creates only additional power draw of 3%” of the power that mining machines consume.

With the announcement, Layer1 is entering into a sector dominated by Chinese mining farms that benefit from low electricity rates and easy access to crypto mining machines manufactured by China-based companies such as Bitmain and MicroBT. Industry research shows that over 60% of BTC’s hash rate stems from China. There are fears within the crypto sector that China’s dominance could lead miners in that country to conspire to manipulate blockchain records that records all BTC transactions. Layer1’s ambitious plan partially addresses this growing concern of the centralization of crypto mining in China.