Texas Steps Closer To Cutting Incentives for Bitcoin Miners
Texas lawmakers have unanimously approved a bill that would unwind tax breaks for local bitcoin mining operations
GreenBelka/Shutterstock, modified by Blockworks
A Texas Senate committee has moved forward on a bill could make the state less attractive for bitcoin miners.
The bill, sponsored by Republican state senators Lois Kolkhorst, Donna Campbell and Robert Nichols, aims to nix tax breaks and demands miners using more than 10 megawatts (MWs) to register as flexible load operators with state grid operator ERCOT.
Lawmakers in the state unanimously approved Senate Bill 1751 in a 10-0 vote on April 4.
Texas is considered one of the largest hubs in the world for bitcoin mining, owing to its deregulated grid, low electricity prices and renewable energy options. Lawmakers pitched the state as a friendly alternative to mining operations exiled by China’s ban in 2021.
Bitcoin miners across Texas are using 75% more power than last year, around 2,100 MW, Reuters reported citing figures from Texas Blockchain Council president Lee Bratcher. That’s about 3.7% of the lowest forecast peak load and almost triple power used in 2021.
Texas’ grid has suffered deadly outages during heat waves and wintery storms over the past few years, making consistent energy supply a hot-button issue for local voters. Under current conditions, miners are rewarded for shutting down when demand is high, so that the power gets redirected to the grid.
A key provision of the new bill restricts miners’ participation in that demand response scheme to just 10% of the total program.
Riot Blockchain, one of the most prominent Texas-based crypto miners, is among firms that benefited from the state’s incentives. Last year, the miner raked in as much as $9.5 million in power credits because it shut down its rigs multiple times.
Dennis Porter, CEO of bitcoin mining advocacy firm Satoshi Action Fund, tweeted that the bill will eliminate incentives for miners to create jobs in rural communities.
“Unfortunately members of the committee were swayed by the influence of the powerful bill sponsor,” Porter said. “There is talk it could also pass through the Senate. It will be critical to fight back against the bill in the House in order to kill the bill.”
The bill is next headed to the Texas Senate for a floor vote before it moves on to the House.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- The Drop: Apps, games, memes and more.
- Lightspeed: All things Solana.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
