Could Texas Become a Model for Crypto Mining Regulation?

Cryptocurrency miners have flocked to Texas in recent years. But a slowdown in the crypto market, along with a new permitting process aimed at managing power consumption more efficiently, means projects are taking longer to get approved. Does all this mean that the crypto boom in Texas is over?

Eliza Gkritsi, is a mining reporter for CoinDesk, told the Texas Standard that the state’s approach to regulating energy use in the crypto market could eventually provide a blueprint for such regulation around the world. Listen to the interview above or read the transcript below.

This transcript has been edited lightly for clarity:

Texas Standard: A year or so ago, we here at the Standard reported on crypto miners leaving China and elsewhere, flocking to Texas because of cheap, abundant energy — and, of course, easier regulations than in many other parts of the world. What has changed?

Eliza Gkritsi: A lot has changed in crypto. The price of Bitcoin is not where it was at least six months ago. Much has changed in Texas as well. There is still energy in Texas, but it may not be as readily available. That’s the kind of energy you need to spend more money and time getting to and spending. And I also think just the fact that so many miners went to Texas kind of changed how the grid operator and maybe even the utility commission looks at the industry.

It is my understanding that the Electric Reliability Council of Texas recently wrote some new rules for energy consumption and that may affect the Bitcoin mining industry.

In March, what’s called the Large Flexible Load Task Force installed a temporary process for connecting to the grid. That’s when you want to connect to the grid to get energy for industrial use. But the new permission process meant it’s been just a little bit slower for people to connect to the web, which may be upsetting to someone who was kind of promised a lot. And even when it was introduced, it might not have been expected to move so slowly.

But I think it’s important to understand that it’s not like ERCOT has said “we don’t want mining” or other types of large flexible loads. I think it’s more that they’re trying to figure out exactly how to make that part of the grid useful for everyone. And while they’re figuring out these rules, which don’t exist anywhere in the world, maybe they were like, “OK, we’ve got to slow down,” because their numbers say 33 gigawatts of mining wants to connect to the Texas grid. , which is a lot of energy.

Well, I think when Bitcoin operators first started arriving in Texas in droves, a lot of people—especially government officials—were kind of celebrating, “look what we’ve created here with the costs and the low regulation.” Is mining actually pulling out of Texas because of this new permitting scheme or the rising energy costs, or how do you see it shaking down?

I don’t think people are just pulling out yet. I can see the scenario there, if you had invested money or planned to invest several million dollars to have a 500 megawatt facility and it’s been a year since you applied for interconnection and you still don’t have it, maybe then we would watch people pull out of Texas. But I think generally speaking, people who kind of made those commitments haven’t started to back off. Like everybody else—ERCOT, I think the governor of Texas and the miners—want to make this work because Texas has a lot of energy and a lot of other advantages.

The headline on your story says it’s the end of the Bitcoin mining gold rush in Texas – maybe a bit of an exaggeration, or how do you see it?

I think a lot of people have misunderstood that, and I can see why. But for me, the emphasis is more on the sprint. I think what we’re going to see now is a kind of slower investment, like mature investors being in the space, people who are willing to wait a year, 18 months for their projects to come to fruition and be operational. ERCOT is going to play a big role in figuring out these rules, figuring out how miners can be an asset to the grid, and if they do a good job of it, it will be used as a blueprint for other grids around the world . And it’s very exciting in a way.

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