When Chad Everett Harris first set foot in the tiny hamlet of Rockdale, Texas, on a sweltering day in July of 2019, both the town and the man were the hardest of hard-luck cases.
Rockdale’s economy was still reeling from a shock two years earlier when Alcoa shuttered what was once the world’s largest aluminum plant. And a plan by China’s Bitmain to repurpose the gigantic ex-smelter as another industrial superlative––the world’s largest Bitcoin mine––had briefly flourished then foundered after the signature cryptocurrency’s price collapsed in the fall of 2018.
An estimated 88% of the facility’s 3,000 workers lost their jobs, pounding the municipal budget. Few enclaves its size had ever seen the kind of swing from boomtown to has-been experienced by the prairie community of 5,900, an hour’s drive north of Austin.
As for Harris, the flamboyant serial entrepreneur had long careened from coups to flops on the wildest of roller-coaster rides, and his steep slide now mirrored Rockdale’s. The mid-Texas outpost was an odd place for New Orleans native Harris to be seeking financial redemption.
In fact, he’d never before set eyes on the rural stretches of the Lone Star State. “Talk about culture shock!” he tells Fortune. “I’m living in uptown New Orleans, blocks from Michelin-rated restaurants and the best food in the world, and I drive through these rolling hills that first day and keep seeing signs, ‘World’s Best Burger,’ and ‘Best Burger in Texas,’ and when I bite in, it’s the same frozen patty from a food services company.”
Harris had once thrived running a landscaping venture that planted New Orleans’s top golf courses and most prominent parks, and cleaned up at an oddball field he virtually invented, selling pre-decorated Christmas trees online. Under severe pressure from his lenders, he chose to close the businesses. Within months, he’d turn the keys to his landscaping franchise over to his top lieutenant for nothing.
A comeback bid hosting Bitcoin mining for a Japanese partner in rented New Orleans warehouses was going poorly, since the economics of doing business in Louisiana, including high energy costs, made it unprofitable to mine Bitcoin.
Still, Harris saw Rockdale as his El Dorado. Put simply, he wanted to achieve what Bitmain, a powerhouse as the world’s leading manufacturer of Bitcoin mining equipment, was so far failing to accomplish: building one of the world’s biggest Bitcoin mining operations, if not the biggest.
For Harris, a successful operation was all about two things, giant scale and supercheap electricity. And unlike New Orleans, Rockdale offered both in such ample supply that he’d trade his hometown’s gourmet burgers for Rockdale’s not-so-specials. (You can read more about the burgeoning business of mining Bitcoin in Texas here.)
But Harris swears that the appeal was swashbuckling freedom as much as rich profits. “I looked at mining Bitcoin in Rockdale as an exit strategy,” he says. “It was a way to solve all my problems and build a business and make everyone a ton of money. We stumbled onto a product called Bitcoin that was profitable and created financial freedom from banking institutions. I loved the idea. In Rockdale, I’d be in control again. I’d work a miracle by getting people to do stuff they never thought they could do, including myself.”
In under three years, the bald, goateed Harris, 52, has reinvented himself as what might be called the king of Bitcoin mining infrastructure, and helped make little Rockdale the industry’s buzzing world capital. Whinstone has mushroomed to become for Bitcoin mining what VW’s Wolfsburg plant and Boeing’s Everett factory are to cars and airplanes.
Since breaking ground in early November of 2019, Harris has transformed a 100-acre forest site once owned by Alcoa, just down the road from the slower moving Bitmain project, into one of the world’s biggest Bitcoin mining centers, measured by total “metered capacity.”
The project now hosts seven gigantic warehouses, three still under construction, covering the equivalent of almost 10 football fields that, when completed by the close of 2022, will house 120,000 state-of-the-art Bitmain Antminer computers. The Whinstone US plant already harbors 400 megawatts in electrical capacity; that’s almost twice the juice powering downtown Dallas.
“Anybody would want to try this with Bitcoin selling at $40,000. We were the ones who did it when no one dared. We started when Bitcoin was selling at around $4,000 and mining looked like a huge risk.”WHINSTONE FOUNDER CHAD HARRIS
But Harris, an avid gravel biker, is still churning gravel as he pedals toward top speed. Whinstone should reach a staggering capacity of 750 MW by the close of 2022. By then, the mine will be generating the codes or “hashes” that win new Bitcoin awards at the rate of 12.8 exahashes per second or EH/s (an exahash equals 1 quintillion hashes, one to the 18th power).
That’s about one-seventh of the computing power of the entire global Bitcoin network at a single plant built by Harris and his New Orleans cowboys. And it’s the portion of the overall hashrate a miner controls that determines the portion of newly minted Bitcoin it receives, meaning that Whinstone will mint a big share of the world’s coins in the years ahead.
In his new role as empire builder, Harris predicts that Whinstone could eventually be mining one in 10 of the world’s Bitcoin. He’s justly immodest about the accomplishment. “Anybody would want to try this with Bitcoin selling at $40,000,” he says. “But we were the ones who did it when no one dared. We started when Bitcoin was selling at around $4,000 and mining looked like a huge risk.”
Harris and his team did all the work designing and building Whinstone, and are still in charge. But they owned the project only briefly. Lacking the gigantic capital Whinstone required, they sold to Northern Data of Germany in late 2019, and last May, Riot Blockchain of Castle Rock, Colo., paid Northern Data $651 million to become the new proprietor.
Harris now serves as CEO of the Whinstone venture, which constitutes most of Riot’s current revenues and is its future growth machine. In a single stroke, the Whinstone purchase catapulted Riot into the top ranks of all publicly traded Bitcoin miners. At almost 13 EH/s by year-end, Riot should rank third in computing power behind Core Scientific, projected at 15 EH/s, and a hair short of Marathon Digital at an estimated 13.3 EH/s.
The Riot acquisition changed Whinstone’s business model. Previously, the facility mainly housed third-party miners, who pay handsomely for the Harris team to provide housing, electricity, maintenance, and all other services. While Whinstone still serves outside customers, Riot has shifted the main focus to generating Bitcoin for its own account. In January, Riot companywide mined 458 Bitcoin valued at over $20 million, the vast bulk at Whinstone, and it’s on track to more than double that output by late 2022.
It also appears that at Bitcoin’s current price of around $40,000, Whinstone is extremely lucrative. A major reason is its ultralow electricity costs of 2.4 cents per kWh. By Fortune’s estimate, its expense of labor, electricity, and equipment is around $15,000 per coin.
Analyst Lucas Pipes of B. Riley predicts that by late this year when Whinstone is fully up and running, Riot will be generating 80% Ebita margins on sales of around $600 million at a price of $40,000 per coin, making it one of the world’s three biggest publicly traded miners, and among the most profitable.
Where does Whinstone rank among largest Bitcoin mining sites around the globe? It’s unquestionably first in North America. But its global position is hard to gauge since information on the scale of facilities in such nations as Iran, Kazakhstan, and Russia, all major producers, isn’t publicly available. “I wouldn’t want to die on the hill saying it’s the biggest,” notes analyst Pipes. “But I don’t know of any others that are even at their current 400 megawatts, let alone higher than their 700 MW goal for this year. Whinstone could well be the world’s largest.”
Even for New Orleans, a town that relishes wild improvisation as the birthplace of jazz, and Texas, where the lore of bet-the-ranch wildcatters is as rooted in its culture as the cactus in its soil, Harris’s story stands tall for sheer rollicking, rags-to-riches crypto-jackpot adventure. For this multi-megawatt personality, it’s something of a moral tale. “I’ve had incredible successes and failures,” he tells me. He attributes his amazing ability to keep bouncing back to his favorite credo: “Hard times create strong men. Good times create weak men. And weak men create hard times.”
An early Bitcoin mining foray
Harris was raised by his divorced mother, also a daring entrepreneur whose business of running conventions often met with failure. “She’d get so nervous and sick to her stomach she’d stay in our hotel room, and at age 14 I’d have to go down on the convention floor and bark orders,” he recalls.
His mom ran events for a libertarian organization that advocated buying gold and silver, and doubted that paper money would hold its value; Harris says its philosophical heirs are backing Bitcoin. “It was a subculture of non-dollar currency,” he says. “My mom would take groups to visit gold mines in South Africa and Afghanistan.”
As a teenager, he’d drive marquee names from the airport to the events. “It was wild,” he says. “I was chauffeuring celebrities from Henry Kissinger to G. Gordon Liddy.” Higher education wasn’t for Harris. “I spent one day at the University of New Orleans, then dropped out,” he says. “I got a refund on what my mother paid and used it all to buy lawn-mowing equipment. I was so ashamed to tell her that I pretended to go to college for two months.”
Harris built his teenage venture into a large landscaping business. “We’d do projects where we’d plant 500 trees and 40,000 of one type of plants, and install miles of irrigation pipe,” he recalls. “It was great training for building Whinstone.”
Among his successes were the New Orleans Sculpture Garden and Audubon Park Golf Course, a public course near downtown New Orleans renowned for its sumptuous greenery. He also operated a home and garden store that sold a variety of items, from saplings to cast stone planters to jewelry. But around 2015, Harris closed the store and started selling exclusively online.
He’d already witnessed the power of internet sales by establishing a sideline that marketed those fully appointed Christmas trees online. “I was the one of the first to do it. I’d buy the trees from North Carolina and install hand-strung lights,” he says.
“I’d deliver the trees within 10 days, and pick them up after Christmas. People doubted it would work, because customers supposedly needed to ‘touch and feel’ the trees. But in the internet age, what they wanted most was convenience. I was selling 2,000 pre-lit trees a year. New Orleans folks were reserving their trees in January.”
Despite the coup in yuletide marketing, Harris’s bankers thought switching his brick-and-mortar garden store to an online platform would prove a disaster. “Let’s say I didn’t see eye to eye with my lenders,” he notes. Harris found a new field that could restart his career. Years earlier, his younger son Ashton, then in the ninth grade, was using a new, cool new “digital currency” to buy stuff online. “Ashton introduced me to Bitcoin,” says Harris.
In 2017, Harris, Lyle Theriot, a then 27-year-old CrossFit gym owner who’s now Whinstone’s COO, and Ashton, who’d left college as a freshman, built a tiny pilot project deploying 300 computers. At the time, Ashton sported blue hair. “Ashton came home from college and decided this is what he wanted to do,” says his dad.
He was just as enthralled by the romance of entrepreneurship as Harris. Even in winter, the computers heated the warehouse to over 100 degrees, slowing their hashrate. To lower the temperature, the team built a 20-foot-tall rectangular wooden box to contain a rack of computers, and devised an exhaust system, using parts bought at Home Depot, to pump the hot air through ducts in the roof.
Suddenly, the thermometer dropped into the 70s. At a Bitcoin conference in Tbilisi, Georgia, Theriot and Ashton met someone in a bar who became fascinated by their description of the contraption, and showed it to reps from a big Japanese conglomerate Harris declines to name.
At the time, the company wanted to expand into Bitcoin mining in the United States. Of all things, Harris’s unwieldy tower would spearhead the company’s campaign.
Three weeks later, a retinue of 15 managers from Japanese company swooped down on the team’s homegrown Bitcoin farm in New Orleans. “They said, ‘We’ve been to 11 countries, and this is by far the best solution we’ve seen to expelling hot air from miners,’” recalls Harris.
According to Harris, the Japanese company reckoned that these guys were handicapped by “a primitive corporate structure” but redeemed themselves by being “as inventive as hell.” Harris summoned his older son, Aiden, then an accounting MSA student at Northeastern University in Boston.
Aiden flew to New Orleans that very day and quickly assembled a business plan for the Japanese client––in exchange for the team to pay off his student loans. In mid-November of 2018, the Harris team clinched a deal to provide the warehousing, power, and services for the Japanese company’s first Bitcoin mining operation in the U.S.
Harris and his client had big plans, quickly ramping to 6,000 machines. But the project was a disaster. The cost of electricity in New Orleans was around 5.6 cents per kilowatt-hour, not excessive by national standards but much higher than the rates where miners mostly operated, from China to Iran to Texas.
“Power was just too expensive, especially when the price of Bitcoin dropped sharply $3,500 by February of 2019,” notes Harris. “Mining in New Orleans wasn’t business friendly or tax friendly, and the workforce wasn’t the best.” By this time, a fourth New Orleans buccaneer had joined the team of Harris père et fils and Theriot—David Schatz, a former railroad diesel mechanic who now heads operations at Whinstone.
In early 2019, the Harris partners looked to Texas for the essentials missing in New Orleans: supercheap electricity, as well as low taxes, and a posse of super-motivated on-the-job longhorns who shared their thirst for adventure.
Texas as Bitcoin’s prairie promised land
The original idea was to build a facility from scratch where Harris would host the Japanese client and other third parties. The team wanted to acquire the HODL Ranch location, which had power to the site, in Pyote, west of Midland. To secure the financing, the group hired a fundraiser. The deal, however, collapsed when a competing bidder snatched the prize.
In early July, three days after the HODL foray failed, Harris read a story in Wired called “The Hard-Luck Texas Town That Bet on Bitcoin—and Lost,” about Rockdale’s travails. He figured that since Bitmain hadn’t increased production at the old Alcoa plant nearly as fast as expected, it might lease him excess space for hosting miners.
Two weeks later, Harris hit the ground in Rockdale. “Our guys went to a town hall meeting where the Rockdale folks talked a lot about the need for speed bumps,” he recalls. “From that meeting, we realized that the town needed revitalization.” Relations wouldn’t go as well with Bitmain.
By September, Harris hadn’t been able to secure an agreement to rent space, and wasn’t sure he wanted to, since Alcoa’s old buildings lacked the open spans ideal for housing towering racks of computers. The Japanese client gave him exactly seven days to find another venue, or it would end its pledge to contract with Harris for hosting.
Instead of aiming to lease from Bitmain, the Crescent City gambler now raised his bet. Harris’s target: The empty, 100-acre forest down the street from the Bitmain farm. Now, Harris aimed to build his own giant facility from scratch, at a time when Bitcoin’s price was so low that that even giant Bitmain was retreating.
Harris started negotiations to rent the vacant land from Alcoa (it’s since been sold to an investor). “They wanted a Moody’s-rated guarantor, a $1 million deposit, and three years of $1 million a year in rent paid in advance,” he says. “All the team had [was] a million dollars in Bitcoin that we wanted to use to start the project. So we didn’t have the guarantee or the $4 million. But we said we did. My attitude was agree with everything and get the money later. As long as we were saying yes to everything, they were saying yes, too, and we knew what we had to do. If we failed, we’d have zero.” Still anxious to secure hosting in Texas, the Japanese client provided guarantee and the support to clinch a 10-year lease.
Harris broke ground in early November, an event immortalized in a photo of the Harris team sporting wacky grins and loaded shovels. By then, Ashton’s blue hair was gone. But the founders lacked the cash to realize their giant vision. “We were in desperate need of money,” recalls Harris.
A plunge in Bitcoin’s price discouraged investors from backing the project, estimated to cost $150 million. The day Harris started construction, coins were selling at just $4,100, versus $15,000 in early 2018. Two weeks after the groundbreaking ceremony, in mid-November of 2019, the team agreed to sell Whinstone to Northern Data in an all-stock deal that, by the closing in February of 2020, was worth $164 million.
Northern Data recognized that the New Orleans founders were as essential as steel and transformers to building the giant project, and left the full team in place. The new owner enjoyed a huge windfall when Bitcoin prices soared. In early April of 2021, with Bitcoin cresting at over $60,000, Riot agreed to buy Whinstone for multiples of what Northern Data had paid.
Living conditions were spare. “I lived in a barn on one floor with two other guys, with one bathroom. I’m talking a real barn, not the Instagram kind where even the cows are perfect,” Harris recalls. “In New Orleans, I lived in a nice house on less than a quarter acre and saw my neighbors every day.
In the Rockdale barn, I met my one neighbor once in six months.” Harris says that he’s done 700 phone meetings in the past three years with executives in Japan that started between 11 p.m. and 12 p.m., and often lasted well into the early morning hours. “Then I’d sleep a couple of hours on the floor in the office, and get back to work ordering supplies, say, at 6 a.m., then go all day and take a nap at five before the calls to Japan.”
Building fast through the pandemic while doing jobs in house and helping suppliers
Harris deployed two strategies that helped him skirt the snarls that slowed so many big infrastructure projects after COVID-19 struck in March of 2020. The first is using his own electricians, engineers, and other workers to build equipment and perform complicated tasks that are usually outsourced.
Whinstone fashioned its own “interconnect,” a silvery web of wiring that links the 138,000-volt grid outside its property to its own substation. Harris’s employees and contractors built the substation on-site as well. “It would have taken 16 to 18 months to get one delivered, so we bought all the parts and did it ourselves in a couple of months,” he says.
The second strategy is doing everything possible to make life easy for suppliers. “Part of that is making giant orders in advance,” says Harris. “When we first started, I ordered all the four-inch–diameter orange conduit, the pipe that runs underground and contains the wiring, that was available in the U.S.” Each of Whinstone’s seven buildings has 35 to 50 transformers that lower the heavy current from the substation so that it’s at the right level to power the computers.
“I ordered tons of them in August of 2019 before we even had a lease from Alcoa. What a gamble! But it worked.” He’s also built a reputation for paying suppliers right on time, or even in advance. “We make sure they’re not using their own money to support our project,” he notes.
“We buy materials for them all the time that they normally have to buy for themselves. So their only expenses are labor and overhead. Not a lot of project managers think that way. Our greatest skill is sending money to contractors as fast as we can.”
For Harris, the payoff is that during the pandemic shortages, loyal suppliers tended to fill Whinstone’s orders first, a benefit that continues to this day.
Cooling technology is a crucial area for improving the productivity and longevity of the ASIC machines that mostly run 24/7 spewing Bitcoin-winning codes. And Whinstone’s a pioneer in the field. It’s first in the world to deploy groundbreaking “immersion cooled” mining on an industrial scale.
The process is a big improvement over standard air cooling. The miners are submerged in a specialized, oil-based “dielectric” fluid that circulates to keep the computers’ integrated circuits at lower temperatures. The liquid absorbs the heat from the machines.
In a continuous loop, the heated fluid is pumped to a heat-exchanger that cools it down, and the re-cooled liquid flows back into the immersion tank to circulate around integrated circuits. Of the 400 MW expansion that will get Whinstone to 700 MW by year-end, 200 MW will feature immersion cooling. Says Harris, “It controls the temperature of the miners much better than air cooling.”
The technology provides two major advantages. First, it prolongs the life of the computers. “Instead of lasting three years, the machines can last five years,” says Harris. “You’re depreciating them over longer periods, lowering capital costs.” Second, the process can greatly raise the hashrate for the same ASIC miners.
In an October press release, Riot stated that its own test result and industry data showed a 25% increase in hashes per second, and that the potential jump could be as much as 50%. In addition, the machines run in what Harris calls “dead silence” versus the regular loud humming noise, and all the tanks stand at desk height, making machines much easier to maintain than when they’re stacked in towering racks. It’s possible that the extra efficiency provided by immersion cooling could lift Whinstone’s output to as much as 10% of the world’s Bitcoin production.
Meanwhile, Harris has gotten to love life in Rockdale. He’s even persuaded craggy restaurant owners to use real ground beef in their burgers, and fancy them up New Orleans–style. After a long day installing computers or ordering transformers, he rides his gravel bike at night, followed by a buddy driving behind him to illuminate the bumpy road.
He’s thrilled that Brett Boren, who runs his favorite eatery, Brett’s Backyard Bar-B-Que is running for mayor. “Brett’s an all or nothing guy like me,” says Harris. He marvels that Rockdale’s upswing is now following his own. Bitcoin is helping swell the town’s tax receipts by 25% a month, he says, and providing the funds for new lights at the baseball field.
I asked Harris, as a former landscaper, how he felt about clearing an entire forest to create the sandpit where Whinstone’s seven buildings now rise. He responded that he’s already using his old skills in summoning nature to perfume and beautify the site.
“When I’m finished it will look like a botanical garden,” he says. “We’ve already planted about 300 trees. I put organics in the soil and ran irrigation lines. We’ll have holly trees, and crape myrtles for flowers.” The refugee from New Orleans has also planted the roots for what may be the biggest crop of Bitcoin in any place on the planet, in probably the last spot he ever expected would become his field of dreams.
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