Lone Star State ‘Will Be Silicon Valley’ of Crypto: President of the Texas Blockchain Council

Texas’ 88th legislative session has been particularly productive for local residents Bitcoin miners.

Advocates celebrated the blocking of one state law, and the passage of several others, that are likely to ensure the state remains attractive to miners.

“The microchip was invented in 1958, but that technology was monetized in California,” said Lee Bratcher, president of the Texas Blockchain Council. Decrypt by e-mail. Texas is not going to let that happen again. Texas will be the Silicon Valley of the Digital Asset industry.”

First, Senate Bill (SB) 1751, billed as an “anti-mining” bill in the industry, never made it to the governor’s desk. The bill sought to curb lucrative energy credits enjoyed by local miners, including Riot, which collected $9.5 million in credits last July.

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Elsewhere, Senate Bill 1929, which passed, was seen as a victory for industry.

The bill requires massive Bitcoin mines to register with the Electric Reliability Council of Texas (ERCOT). Supporters of the bill see it as a necessary step towards increasing transparency.

“We have vocally supported SB 1929, which requires large flexible loads over 75 megawatts to register certain details about their load with the grid operator, ERCOT,” Bratcher said. “This bill will prove helpful in strengthening communication between ERCOT and Bitcoin miners.”

Texas House Bills Boost Bitcoin Miners

In addition, two House bills – HB 591 and HB 1666 – are also being touted as positive for crypto mining. They have passed House and Senate votes, and are expected to be signed by Texas Governor Abbott.

HB 591 Establishes a tax incentive for the use of flared gas for onsite Bitcoin mining.

Gas flaring is the practice of burning off or releasing gas from oil production wells. The practice is a significant contributor to methane pollution globally and has serious environmental impacts.

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The bill encourages Bitcoin miners to use flared gas as an energy source, creating a use for an energy resource that might otherwise be wasted. But critics warn that using flared gas amounts to further fossil fuel-powered mining.

HB 1666 introduces a proof-of-reserves regime, requiring crypto exchanges to maintain assets “sufficient to meet all obligations to customers” in addition to filing statements with the Texas Department of Banking regarding obligations.

In the wake of the FTX bankruptcy, this move could help bring some skeptical investors back to crypto.

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Critics of the local industry are less enthusiastic about the recent legislative moves.

“From our perspective, what you’re doing here is bringing a new value stream to the industry that is otherwise starting to be priced out of the market,” Texas Director of Public Citizen, Adrian Shelley, told Decrypt.

Public Citizen Texas is a nonprofit advocacy group that has actively lobbied against the burning of coal in Texas, as well as the state’s interest in expanding its network of nuclear power plants.

“This is an industry that doesn’t bring really clear or tangible value into a state,” Shelley said. “[Whereas] it has all these exotic mechanisms to extract value from it.”