< Previous138 SEPTEMBER 2018 SI T E S E L E C T IO Nsuccessful long term, there are few markets as strong as the United States that can legitimize the process. e problem with having the majority of these networks outside the United States is they’re arguably more exposed to corruption and malpractice. If it’s within the United States, I think the investment community and institutional investors will be much more comfortable.”Enright agrees that big-time investment is key to the growth of blockchain technology. He believes that now is the time.“Do I think we’ll catch up? You better believe it. And that’s where TMGcore comes into play from an institutional, industrial scale infrastructure company with solid leadership, proper funding and the right technology.“To date, things have been in done in peoples’ garages,” he says. “We said from the start that if we’re going to develop the solid infrastructure that allows for a stable and secure system like blockchain, then we need to do things better. We need to do it in a way that will allow institutional investment in the United States to come o the sideline.”Principals of Houston-based Pinchal & Company have invested more than $ million in TMGcore. e company has raised another $ million from private equity investors. Enright says he has skin in the game, as well.“I’m basically risking it all,” he says.Rival in RockdaleAll Sputnik moments need a bitter rival. In this case, China’s Bitmain appears to like American (and Texas) ingenuity too, along with its remnants.In early August, the Beijing-based company con rmed that it would invest more than $ million in a new Bitcoin mining operation on the site of a closed Alcoa aluminum smelter in Rockdale, Texas, next to a closed coal- red power plant. e Milam County Industrial Development Corporation and the Milam majority of these networks outside the United majority of these networks outside the United States is they’re arguably more exposed to majority of these networks outside the United majority of these networks outside the United majority of these networks outside the United majority of these networks outside the United majority of these networks outside the United strong as the United States that can legitimize strong as the United States that can legitimize investment in the United States to come o the investment in the United States to come o the investment in the United States to come o 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He key to the growth of blockchain technology. He believes that now is the time.“I’m basically risking it all,” he says.“I’m basically risking it all,” he says.says he has skin in the game, as well.says he has skin in the game, as well.Principals of Houston-based Pinchal & Company have invested more than $ million Principals of Houston-based Pinchal & Principals of Houston-based Pinchal & in TMGcore. e company has raised another $ million from private equity investors. Enright Principals of Houston-based Pinchal & Principals of Houston-based Pinchal & Principals of Houston-based Pinchal & Principals of Houston-based Pinchal & Company have invested more than $ million in TMGcore. e company has raised another Principals of Houston-based Pinchal & Company have invested more than $ million Principals of Houston-based Pinchal & Company have invested more than $ million in TMGcore. e company has raised another need to do it in a way that will allow institutional need to do it in a way that will allow institutional need to do it in a way that will allow institutional need to do it in a way that will allow institutional need to do it in a way that will allow institutional need to do it in a way that will allow institutional need to do it in a way that will allow institutional need to do it in a way that will allow institutional need to do it in a way that will allow institutional investment in the United States to come o the United States, I think the investment community and institutional investors will be much more United States, I think the investment community and institutional investors will be much more United States, I think the investment community and institutional investors will be much more and institutional investors will be much more United States, I think the investment community United States, I think the investment community and institutional investors will be much more the process. e problem with having the the process. e problem with having the majority of these networks outside the United the process. e problem with having the strong as the United States that can legitimize the process. e problem with having the the process. e problem with having the successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize successful long term, there are few markets as strong as the United States that can legitimize the process. e problem with having the strong as the United States that can legitimize strong as the United States that can legitimize the process. e problem with having the the process. e problem with having the corruption and malpractice. If it’s within the United States, I think the investment community and institutional investors will be much more and institutional investors will be much more comfortable.”Enright agrees that big-time investment is successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize the process. e problem with having the the process. e problem with having the majority of these networks outside the United majority of these networks outside the United majority of these networks outside the United States is they’re arguably more exposed to corruption and malpractice. If it’s within the United States, I think the investment community majority of these networks outside the United majority of these networks outside the United the process. e problem with having the majority of these networks outside the United strong as the United States that can legitimize strong as the United States that can legitimize the process. e problem with having the majority of these networks outside the United States is they’re arguably more exposed to corruption and malpractice. If it’s within the United States, I think the investment community and institutional investors will be much more strong as the United States that can legitimize strong as the United States that can legitimize strong as the United States that can legitimize and institutional investors will be much more successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize strong as the United States that can legitimize successful long term, there are few markets as strong as the United States that can legitimize strong as the United States that can legitimize strong as the United States that can legitimize strong as the United States that can legitimize successful long term, there are few markets as strong as the United States that can legitimize need to do it in a way that will allow institutional need to do it in a way that will allow institutional need to do it in a way that will allow institutional Principals of Houston-based Pinchal & Principals of Houston-based Pinchal & Company have invested more than $ million in TMGcore. e company has raised another $ million from private equity investors. Enright says he has skin in the game, as well.Principals of Houston-based Pinchal & need to do it in a way that will allow institutional investment in the United States to come o the Principals of Houston-based Pinchal & need to do it in a way that will allow institutional successful long term, there are few markets as strong as the United States that can legitimize strong as the United States that can legitimize successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize strong as the United States that can legitimize strong as the United States that can legitimize strong as the United States that can legitimize the process. e problem with having the strong as the United States that can legitimize strong as the United States that can legitimize strong as the United States that can legitimize the process. e problem with having the successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize strong as the United States that can legitimize strong as the United States that can legitimize successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize strong as the United States that can legitimize successful long term, there are few markets as successful long term, there are few markets as the process. e problem with having the need to do it in a way that will allow institutional need to do it in a way that will allow institutional need to do it in a way that will allow institutional investment in the United States to come o the need to do it in a way that will allow institutional Principals of Houston-based Pinchal & Principals of Houston-based Pinchal & Principals of Houston-based Pinchal & Company have invested more than $ million Principals of Houston-based Pinchal & Company have invested more than $ million in TMGcore. e company has raised another Principals of Houston-based Pinchal & Principals of Houston-based Pinchal & Principals of Houston-based Pinchal & key to the growth of blockchain technology. He key to the growth of blockchain technology. He and institutional investors will be much more and institutional investors will be much more “I’m basically risking it all,” he says.says he has skin in the game, as well.“I’m basically risking it all,” he says.successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize successful long term, there are few markets as strong as the United States that can legitimize successful long term, there are few markets as strong as the United States that can legitimize strong as the United States that can legitimize strong as the United States that can legitimize successful long term, there are few markets as successful long term, there are few markets as successful long term, there are few markets as strong as the United States that can legitimize successful long term, there are few markets as strong as the United States that can legitimize among them the facts that Texas is growing its manufacturing workforce and attracting rms that want access to renewable power.Texas added 36,300 manufacturing jobs last year, accounting for 21.34 percent of all new manufacturing jobs nationwide. Texas contributed about 20 percent of the new jobs nationwide in trade, transportation and utilities, as well as nancial services.As for alternative energy, blue skies are ahead for Texas in this area too.“High-pro le rms such as Amazon, Google and Apple are committed to using green power in data centers and other facilities,” Perryman noted in a recent report. “The fact that Texas has more wind power than any other state, by a huge margin, as well as solar and other forms of renewable energy, is a notable competitive advantage.”Other factors contribute to Texas’ success. Texas imposes no personal income tax and no corporate income tax, and Texas reduced its business franchise tax by 25 percent.CNBC ranks Texas No. 1 in infrastructure, No. 1 in the economy, No. 7 in workforce, and No. 9 in technology and innovation. Site Selection ranked Texas No. 4 in the magazine’s annual Prosperity Cup ranking, based on overall competitiveness, in both 2017 and 2018. And WalletHub ranked Austin No. 1 in the annual Top 20 State Capitals to Live In.Perryman says that all this bodes well for Texas’ future. “All in all, I think Texas is likely to see somewhat faster growth than the nation, with real gross product up by 3.25 percent per annum through 2040,” he noted in a recent forecast. “I am projecting that employment will rise by 1.7 percent per year over the period, which represents a solid rate of expansion.” — Ron Starner(Continued from page )(Continued on page )140 SEPTEMBER 2018 SI T E S E L E C T IO NRECORD HAULThe Port of Corpus Christi, the nation’s fourth-largest based on tonnage, is on track to set a volume record in 2018.In July, of cials announced that the port moved 52.2 million tons of products between January 1 and June 30, compared with 51 million tons during the same period last year. The port, which handled a record 102.4 million tons in 2017, witnessed 9-percent growth in crude oil traf c and a 2-percent increase in all other petroleum products. “This is not an anomaly,” said Sean Strawbridge, the port’s CEO. “We are elated by the momentum and consider this a credit to the leadership of our Commission and the continued investment by our industry partners. The port is in the midst of a $327-million expansion of its ship channel that would widen it to 530 feet to accommodate two-way traf c. The channel’s depth is being increased from 47 feet to 54 feet to allow for full loading of vessels capable of transporting 1 million gallons of crude. The target date for completion is 2021. The Port of Corpus Christi is the nation’s leading crude exporter and handles growing volumes of crude from the Permian Basin.In July, Enterprise Products Partners of Houston said it plans to build an even larger offshore oil exporting terminal south of Galveston.On August 6, Swiss commodities trading rm Tra gura group announced plans to build the Texas Gulf Terminals Project off the coast of Corpus Christi in the Gulf of Mexico. The oating offshore terminal would avoid port traf c and allow for the loading of vessels capable of carrying two million barrels of crude.“The Texas Gulf Terminals Project will give U.S. crude oil producers — particularly Texas operators — safer, cleaner and more ef cient access to very large crude carriers, ensuring that the economic and employment bene ts of increasing domestic crude production can be fully realized right here at home,” said Corey Prologo, director of Tra gura, North America. — Gary DaughtersCounty Commissioners Court approved an economic development incentives package that includes a tax abatement phased in over years. Agencies are working with Bitmain to develop training opportunities for future employees. e operation is expected to create as many as jobs in its rst two years. Alcoa is working with Bitmain on how to go about repurposing part of the giant smelter complex.“ is is a great example of what can happen when we work together as a team,” said County Judge Dave Barkemeyer. “I would particularly like to thank Mr. Tommy Hodges [Alcoa’s energy manager at the site] and Alcoa for their consideration of the needs of our community in the manner in which they have marketed the property.”Operations in Rockdale had been curtailed since , then Alcoa in December announced its decision to permanently close its Rockdale operations site, which includes a primary aluminum smelter and casthouse, an aluminum powder plant and associated buildings and equipment. Separately, the company at the time said it continued to market for sale more than , acres of land at the Rockdale site. Icon Global Group has been marketing the property as Sandow Lakes Ranch, and declared in May that the property was “now clear of former encumbrances due to the permanent closure of Alcoa’s facility and the separate closure of a power plant and an associated mine operated by another company.”After the Bitmain announcement, on August , Icon announced a nal call for o ers on the Sandow Lakes land and facilities, including , acre-feet of permitted ground water per year, “the largest water rights opportunity in Texas.” e agent also noted that Bitmain’s deal was “the rst of many high-pro le and revenue-generating leases to global companies in growing (Continued from page ) S I T E S E L E C T I O N SEPTEMBER 2018 143Even overcoming the impact of Hurricane Harvey didn’t prevent Port Houston (pictured) from reaching records in total tonnage and total container business in 2017, with volumes of 38.3 million tons and 2.18 million TEUS, respectively. The port is home to U.S. Free Trade Zone No. 84. According to gures from the U.S. FTZ Board’s November 2017 report to Congress, Texas was No. 1 in Foreign-Trade Zone Activity in 2016 for merchandise received and for exports. Among the 32 FTZs in the state, the report showed 26 with industry activity, totaling 546 warehouse/distribution companies and 96 manufacturers. — Adam BrunsFTZS MAKE BIG IMPACT144 SEPTEMBER 2018 SI T E S E L E C T IO Nindustries such as green energy, agriculture and technology. In fact, several thousand acres have already been allocated for solar development, with Sandow expected to become one of the largest solar sites in Texas.”Questions to Bitmain’s spokesperson were not responded to in time for publication. News reports cite the Chinese government’s crackdown this year on power consumption by bitcoin miners, incentivizing Bitmain to look abroad. Similar measures have been passed by governments in North America concerned about the power drain, even if such projects repurpose derelict properties. But there appear to be no such concerns in Rockdale. “A deal like Bitmain is a game changer for Milam County,” said Richard E. Williams, Jr., president of MCIDC. “While a ‘clean’ industry, it will diversify the labor supply, signi cantly increase exposure to technology, increase by half the tax base of Milam County and more than double the tax base of Rockdale ISD. e new jobs in addition to an estimated spin-o jobs could make a major dent in Milam County’s relatively high unemployment rate, while salaries and bene ts are above average for Central Texas. Additionally, these types of projects typically create a signi cant amount of high-end construction employment for an initial period, and once built, they become a key component of the company’s overall operating environment and can create a long-term investment for Milam County. Finally, these types of projects tend to group together, and it is likely that once a certain geography, site, and attributes of the site attract a big-name user, others will follow. What is not to like?”Plenty, says Enright. Asked whether he welcomes Bitmain’s incursion into his territory, Enright says, “Not at all. Remember, Bitmain is a state-sponsored company that’s one of the biggest companies on the planet as far as revenue is concerned. ey make billions of dollars a year. I have a problem with states and cities o ering incentives to bring a company to the U.S. who is state-sponsored and who is furthering the centralization of what is supposed to be a de-centralized network.”Done Dirt CheapIndustrial-scale cryptocurrency mining is a costly proposition, due in large part to the power consumed by high-performance chips making S I T E S E L E C T I O N SEPTEMBER 2018 145Blockchain is having a signi cant impact on real estate around North America, primarily related to cryptomining operations.”— Haynes Strader, Senior Associate, CBREtrillions of computations per second and the cooling required to keep such systems from over-heating. Digiconomist’s Bitcoin Energy Consumption Index reported late last year that Bitcoin mining is using more electricity than individual countries. According to Digiconomist, if Bitcoin miners were a nation, they’d rank st in the world in terms of energy usage.Industrial power in Texas costs under $ per megawatt-hour, about $ . cheaper than the national average.“It’s some of the best rates in the country,” says CBRE’s Strader. “If you go to some parts of Washington state, some parts of Oregon, Canada and upstate New York, you can nd some less expensive power. But for the most part Texas is about as competitive as anywhere 146 SEPTEMBER 2018 SI T E S E L E C T IO Nin the country.” at dirt-cheap power has helped make the Dallas-Fort Worth region the second largest data center market in the U.S., with megawatts of inventory as of the end of , according to CBRE. Brant Berent, CBRE senior vice president, says power isn’t the only advantage North Texas o ers to huge data miners like TMGcore.“ ere’s an abundance of long-haul ber from almost every carrier that comes through Dallas. at has attracted a lot of the data center users. Plus, there’s an abundance of land. You’ve got to have land to build on, and we’ve got plenty. And then you’ve got a very pro-business attitude with the various governments in and around Dallas that have all embraced this data center trend. Plus, just location. We’re in the middle of the country, so if you have an East Coast presence and you want something to back that up, Dallas is a great place for that. Same for the West Coast. We’ve got a lot of activity of both coasts and we happen to be right in the middle with tons of ber.” e address in booming Plano appealed to TMGcore. And crucial to the deal was nding a facility that could support the company’s ambitions.“It’s not easy to nd a building that’s got megawatts,” says Enright. “A -megawatt or megawatt facility is a very special thing. A hundred megawatts could roughly feed Dallas, give or take a few casinos. To nd that building that has that kind of power for a reasonable price and not have to build it from scratch was crucial. Plus, it’s a great location. Plano is a showcase, which helps bring large, institutional investors to the table.”Beating the HeatCryptocurrency miners have gravitated toward colder climates to take advantage of the ambient air. Texas heat could yield staggering cooling costs. To circumvent that problem, TMGcore was able to partner with M on a proprietary cooling method that it says will decrease those costs by up to percent. Called two-phase liquid immersion cooling, the process uses skids to immerse the mining setup in a special cooling uid that absorbs heat, evaporates into gas, then condenses back into liquid.“We very quickly realized,” says Enright, “that air-cooled mining is not pro table unless you’re stealing the power, you’re government subsidized like Bitmain, or you’re on the side of a hill in a cold climate. ose days are over, quite frankly.”Enright say TMGcore will be one of the rst companies to utilize M’s Novel uorochemical coolant at the heart of an enterprise-scale cryptocurrency mining apparatus.“E ectively,” he says, “it allows us to completely remove the environment from the equation. at’s why we can locate in Dallas. It can be degrees out and percent humidity, and we don’t care. We can operate at a lower cost than even Bitmain can, and that’s saying a lot. And we’ve accomplished that in the last six months.”Just the BeginningBlockchain technology remains in its infancy. Enright likens the state of play to the internet of the s, when TV anchors made themselves silly trying to explain what it was. CBRE’s Strader puts it this way:“We’re not even in the rst inning yet. But every single major enterprise that is a tip-of-the-tongue company is investing in blockchain. Figuring out how that works and what the use cases are and exactly how that’s going to apply to each of these companies is very much up in the air. It applies to supply chain, it applies to real estate, it applies to nance and it applies to e-commerce. ere’s hundreds of applications.“As enterprise adoption ramps up into blockchain,” says Strader, “there will be clear data-center-related requirements. ey will probably look a little more similar to data centers than a typical cryptocurrency facility.”Enright prefers to call TMGcore “an infrastructure company. Cryptocurrency mining is key to it. But the innovation of the technology expands beyond that and into the data center world.“A traditional data center, for megawatt, is going to cost you about $ million. And it’s going to take up about , square feet. With our technology,” says Enright, “we can take that same , square feet and package it into a -square-foot box. We can take that $ million and we can do it for $ . million. We’ve basically gured out a way to transform the data center world and do it in the most e ective, e cient way ever known to man.“ ink about the implications,” he says. “Go out on the edge and look at these small municipalities that can’t a ord their needs for data storage. We can take our completely portable -megawatt hydropod skids — which are real and sitting in our facilities and running right now — and we can deploy them on the back of a truck and they can sit them in a warehouse. All they need is power and a cooling tower with some water. ey can be running megawatt and they can do it for $ . million. at’s revolutionary. “And, says Enright, “we can deploy these globally. We could put these on the back of a C- and deploy them in the middle of the military and they’ll have a data center that looks like a piece of industrial equipment. No one will ever know it’s a -megawatt supercomputer. It’s very special stu . We’re working on that right now.” Next >