Texas-based Bitcoin mining companies may soon be without the financial incentives that have let the industry gain a strong competitive advantage in the Lone Star State.
Introduced earlier this month, Senate Bill 1751 seeks to protect the state’s electric grid during peak loads, with one proposed measure being the utility-scale.
A key provision of the bill is that it would restrict Bitcoin mining companies from participating in a state-run demand response program. This program rewards miners for giving power back to the grid when demand threatens to overwhelm the system unless the anticipated demand for electricity “is less than 10 percent of the total load required by all loads in the program,” the bill reads.
The bill would also bar "virtual currency mining from tax abatements given that the large scale of growth in virtual currency mining is already projected to occur in the state,” said the bill’s sponsor Senator Lois Kolkhorst during Tuesday's testimony, adding that there’s no need to subsidize that growth.
The Texas senator insisted that the bill is not a “punitive” one, but rather “rightsizes for the industry” that doesn’t need that kind of assistance.
Sharing portions of his speech made during the same testimony with Decrypt, U.S. Blockchain Corp.'s chief commercial officer Matt Prusak said that his firm understands "that the goal of SB1751 is to ensure the responsible growth of the bitcoin mining industry in Texas. While we share this goal, we believe that the current proposal may have unintended consequences that could negatively impact both the mining sector and the broader energy market."
Riot Blockchain, one of the largest Texas-based Bitcoin mining companies that recently rebranded to Riot Platforms, has been a large beneficiary of the current incentives in Texas. Last Summer, it earned as much as $9.5 million in power credits after suspending operations during the heatwave.
Riot’s Rockdale Bitcoin mining facility, which is believed to be one of the largest in North America, has a total power capacity of 750 MW. The firm has also kicked off development for a large-scale 1 gigawatt (GW) development to expand its Bitcoin mining and hosting capabilities in Navarro County, with the initial 400 MW of capacity expected to begin in July 2023.
Bitcoin miners' electricity use grows
According to a recent Reuters report citing the Texas Blockchain Council president Lee Bratcher, Texas-based Bitcoin miners currently consume about 2,100 megawatts of the state's power supplies, up 75% over the last year.
Moreover, the latest power usage metric was almost triple that of the prior year, said Bratcher.
Data by ERCOT also shows that the Texas Bitcoin mining industry’s power demand accounts for nearly 3.7% of the state’s lowest forecast peak load this year.
Those opposing the bill and taking part in the testimony included the Texas Blockchain Council president Lee Bratcher and the organization’s director of Business Development Kristine Cranley, as well as Riot’s VP Pierre Rochard.
In Austin today testifying in the Senate Business and Commerce Committee to ensure Texas remains a place for innovation, business expansion and prosperity! Thanks to @BitcoinPierre, @KristineCranley and @MattPrusak for providing testimony as well! pic.twitter.com/v5f1DvaJKC
— Lee ₿ratcher (@lee_bratcher) March 28, 2023
“Bitcoin mining is uniquely capable of addressing the needs of the grid, unlike any other industry, because it is able to shut off in an instant and then come back relatively quickly,” said Cranley.
Lee Bratcher stressed that the Bitcoin mining industry in Texas directly employs about 2,000 people across the state and another 20,000 people for indirect jobs, while also working closely with the ERCOT “to ensure that miners are interconnecting responsibly.”
Pierre Rochard also addressed the matter of cutting tax abatements for the industry, noting that “these abatements have created hundreds of rural jobs.”
U.S. Bitcoin Corp.'s Prusak told Decrypt that his firm "is committed to responsible growth and cooperation with regulators to ensure a sustainable future for both the bitcoin mining industry and Texas' energy infrastructure."
According to Rochard, Riot is currently the number one employer and the number one taxpayer in Rockdale.”
Decrypt has reached out for comments to Riot Platforms and the Texas Blockchain Council and will update the article should we hear back.