New Texas Senate bill seeks to cut incentives for Bitcoin mining

Texas-based Bitcoin mining companies may soon be without the financial incentives that have given the industry a strong competitive advantage in the Lone Star State.

Senate Bill 1751, introduced earlier this month, seeks to protect the state’s electric grid during peak loads, with a proposed measure like the utility scale.

A key provision of the bill is that it would restrict Bitcoin mining companies from participating in a government-run demand response program. This program rewards miners for feeding power back into the grid when demand threatens to overwhelm the system unless the expected demand for electricity “is less than 10 percent of the total load required by all loads in the program,” the bill says.

The bill would also bar “virtual currency mining from tax cuts given that the large growth in virtual currency mining is already projected to occur in the state,” bill sponsor Sen. Lois Kolkhorst said during Tuesday’s testimony, adding that there is no need to subsidize that growth.

The Texas senator insisted that the bill is not a “punitive” one, but rather “entitlements for industry” that doesn’t need that kind of help.

Riot Blockchain, one of the largest Texas-based Bitcoin mining companies that recently changed its name to Riot Platforms, has been a major beneficiary of the current Texas incentives.

Last summer, it earned as much as $9.5 million in power credits after shutting down operations during the heat wave.

Riot’s Rockdale Bitcoin mining facility, believed to be one of the largest in North America, has a total power capacity of 750 MW. The firm has also started development for a large-scale 1 gigawatt (GW) development to expand its Bitcoin mining and hosting capabilities in Navarro County, with the first 400 MW of capacity expected to begin in July 2023.

Bitcoin miners’ power usage is growing

According to a recent Reuters report citing 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 past year.

Also, the latest power consumption metric was nearly triple that of the previous year, Bratcher said.

Data from ERCOT also shows that the Texas Bitcoin mining industry’s power demand accounts for nearly 3.7% of the state’s lowest peak load forecast this year.

Those who opposed the bill and participated in the testimony included Texas Blockchain Council President Lee Bratcher and the organization’s director of business development Kristine Cranley, as well as Riot’s VP Pierre Rochard.

“Bitcoin mining is uniquely able to meet the needs of the web, unlike any other industry, because it is able to shut down in an instant and then come back relatively quickly,” Cranley said.

Lee Bratcher emphasized 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 working closely with ERCOT “to ensure that miners connect responsibly.”

Pierre Rochard also addressed the issue of cutting tax cuts for industry, noting that “these cuts have created hundreds of rural jobs.”

According to Rochard, Riot is currently the number one employer and number one taxpayer in Rockdale.”

Decrypt has reached out to Riot Platforms and the Texas Blockchain Council for comment and will update the article if we hear back.