By
Bena Ilyas
April 25th, 2024
In response to the bill, three lobbying groups including the Texas Blockchain Council, the Chamber of Digital Commerce, and the Satoshi Action Fund launched an “anti-competitive” campaign called “Don’t Mess With Texas Innovation”.
The Texas Senate has passed a bill that aims at removing incentives for crypto miners operating under the current regulatory crypto environment. In particular, senators want to limit the participation of Bitcoin (BTC) miners in so-called demand response programs that allow them to reduce their energy costs and increase their returns. During the 88th legislative session of the Texas Senate on April 12, as many as 30 senators voted in favor of passing Bill SB 1751, while one vote was against it. Now, the crypto mining bill will proceed to the Texas House of Representatives. If approved, Texas Governor Greg Abbott will sign the bill into law.
Demand response programs provide financial incentives to reduce or shift energy use during times of high demand. When it comes to Bitcoin mining, demand response programs help miners not only save money by mining at less expensive times but also generate revenue by quickly curtailing large amounts of electric load without impairing operations. In other words, miners can turn off within seconds without affecting the Bitcoin network, providing power to the grid at a moment’s notice and creating a reservoir of emergency electricity. Back in July 2022, Bitcoin miners in Texas curtailed more than 50,000 MWh in response to record heat and energy demand.
Under the bill proposed by the Texas Senate yesterday, Bitcoin miners’ participation in demand response programs should be limited to 10%. Besides, tax abatements for the industry will be abolished starting from September this year.
According to Fred Thiel, CEO of BTC mining firm Marathon Digital Holdings (MARA), the bill is unlikely to see support in the House as its representatives are more optimistic about Bitcoin, and “the opinions in the House are much more aligned with the positive aspects and the benefits of Bitcoin mining.”
In response to the bill, three lobbying groups including the Texas Blockchain Council, the Chamber of Digital Commerce, and the Satoshi Action Fund launched an “anti-competitive” campaign called “Don’t Mess With Texas Innovation”.
Texas’ Status of Bitcoin Mining Heaven
Until June 2021, Bitcoin mining activities were mostly located in China. Then the country banned Bitcoin operations, at least for a time, citing their power use among other reasons. The United States quickly became the industry’s global leader. The state of Texas has been considered a capital of mining since then. Attracted by relatively cheap electricity, businesses that mine Bitcoin and other cryptocurrencies have been moving to the state. Bitcoin miners consume about 2,100 megawatts of the state’s power supplies. That power usage rose 75% last year and was nearly triple that of the prior 12 months.
As a result of such consumption and the constant flow of miners, the Texas grid operator slowed approvals for new facilities. The approval of Bill SB 1751 will also change a lot of things. Requiring mining companies to coordinate directly with ERCOT in a power emergency, the bill will be the strictest mining law in the state so far.