New Texas Senate Bill Seeks to Slash Bitcoin Mining Incentives
Texas-based Bitcoin mining companies may soon be without the financial incentives that have let the industry gain a strong competitive advantage in the Lone Star State.
Introduced earlier this month, Senate Bill 1751 seeks to protect the state’s electric grid during peak loads, with one proposed measure being the utility-scale.
A key provision of the bill is that it would restrict Bitcoin mining companies from participating in a state-run demand response program. This program rewards miners for giving power back to the grid when demand threatens to overwhelm the system unless the anticipated demand for electricity “is less than 10 percent of the total load required by all loads in the program,” the bill reads.
The bill would also bar “virtual currency mining from tax abatements given that the large scale of growth in virtual currency mining is already projected to occur in the state,” said the bill’s sponsor Senator Lois Kolkhorst during Tuesday’s testimony, adding that there’s no need to subsidize that growth.
The Texas senator insisted that the bill is not a “punitive” one, but rather “rightsizes for the industry” that doesn’t need that kind of assistance.
Sharing portions of his speech made during the same testimony with Decrypt, U.S. Blockchain Corp.’s chief commercial officer Matt Prusak said that his firm understands “that the goal of SB1751 is to ensure the responsible growth of the bitcoin mining industry in Texas. While we share this goal, we believe that the current proposal may have unintended consequences that could negatively impact both the mining sector and the broader energy market.”
Riot Blockchain, one of the largest Texas-based Bitcoin mining companies that recently rebranded to Riot Platforms, has been a large beneficiary of the current incentives in Texas. Last Summer, it earned as much as $9.5 million in power credits after suspending operations during the heatwave.
Riot’s Rockdale Bitcoin mining facility, which is believed to be one of the largest in North America, has a total power capacity of 750 MW. The firm has also kicked off development for a large-scale 1 gigawatt (GW) development to expand its Bitcoin mining and hosting capabilities in Navarro County, with the initial 400 MW of capacity expected to begin in July 2023.