A new bill is making its way to the Texas House of Representatives that could make it harder for crypto mining companies within the state to gain access to the funds and resources they need to stay afloat and function properly.
The new bill would ensure that energy costs for the largest crypto miner in the state rise by up to $30 million each year. Additionally, miners would only be able to provide a limited amount of power to the Electric Reliability Board of Texas (ERCOT), and bitcoin miners would also not be able to access the same property tax breaks currently available to industrial standard power consumers.
Texas Crypto Bill: The Wrong Move
The situation is bizarre, with bitcoin mining profits already down by as much as 60 percent over the past year, largely due to the ongoing crypto winter and crashes many digital asset prices have incurred.
Companies like Riot Blockchain, one of the most prominent crypto mining firms in the country, say the power credits they currently hold make a big difference in how much they pay and how much they earn each year. Representatives of the firm issued the following statement:
“These credits are recognized in power reduction credits in the statements of operations, out of cost of revenue, but they significantly reduce the company’s overall cost of mining bitcoins. By offsetting power outage credits with costs of revenues, net costs as a percentage of mining revenues were 39.7 percent and 24.7 percent for the years ended December 31, 2022 and 2021, respectively.”
The bill has already passed the Senate, though it would have to be signed into law by Texas Gov. Greg Abbott, who has proven himself a fan of bitcoin and crypto in the past. It is therefore unlikely, analysts say, that it will react favorably to the bill, although it is impossible to assume that this could not happen for some reason.
Helping Miners Relocate
Texas has long been a major center for bitcoin and cryptocurrency mining, so it’s surprising that such a bill would find its way through the state’s political spectrum.
The state has been heavily mining for about two years, largely because many miners have been forced to leave their native China. That country made crypto mining illegal in 2021, with several heading to Texas because of the state’s big, vast, open landscapes and its cheap electricity prices.
While the situation hasn’t been perfect, the sudden influx of miners has given the Texas economy a big boost. It has also created jobs and opened windows of opportunity on all sides of the state, so it seems very strange that an anti-crypto bill like this would gain support.
Local Criticism Present
Critics of the local industry in Texas are not very enthusiastic about past legislative moves, which could help explain how and why the new bill has passed.
“From our perspective, what they’re doing here is getting a new stream of value into the industry that would otherwise start to get squeezed out of the market,” Adrian Shelley, director of Public Citizen of Texas, has declared.
Public Citizen Texas is a nonprofit advocacy group that has actively lobbied against coal burning in Texas, as well as the state’s interest in expanding its network of nuclear power plants.
“This is an industry that is not bringing clear or tangible value to a state,” Shelley said. “[While] it has all these exotic mechanisms to extract value from it.”
By Audy Castaneda
