Texas lawmakers in the state Senate have approved a bill aimed at largely removing incentives for crypto miners operating under the seemingly friendly regulatory environment. The bill has garnered national attention from crypto advocacy groups, including the Chamber of Digital Commerce and the Satoshi Action Fund. They have called on Texas residents to voice their opposition to the bill through their local representatives but also plan to gather crypto mining supporters at a rally at the Texas State Capitol on April 25.
In a 30-1 vote on the floor of the Texas State Senate on April 12, lawmakers in the 88th legislative session passed Senate Bill 1751, a piece of legislation that would amend sections of the state’s utilities and tax code to add restrictions for crypto mining firms. If passed in the House, Texas Governor Greg Abbott—a self-described “crypto law proposal supporter”—will be able to sign the bill into law.
Under the proposed legislation, crypto mining firms participating in a program intended to compensate them for load reductions on Texas’ power grid would have their incentives capped at 10%. Certain companies operating data centers would also not receive an abatement on state taxes starting in September 2023. Thiel added that should the bill pass in Texas, some mining firms, including Riot Platforms, that participate in the energy grid load reduction program would likely see reduced revenue.
According to the Marathon Digital CEO, all miners operating in the state would be affected by the tax abatement policy, potentially leading to companies reconsidering Texas as a home. Such a move could be interpreted as a part of anti-crypto sentiment at the federal level, causing mining companies to explore other regions or countries that have a more friendly regulatory environment.
“Elected officials only know how to use hammers — they don’t know how to be surgeons,” Fred Thiel, CEO of mining firm Marathon Digital Holdings, told Cointelegraph prior to the Senate vote. “They started whacking at crypto, and Bitcoin mining has gotten caught up in the whacking.” Thiel further added that “what politicians are attempting to do now is push crypto and Bitcoin offshore, which is only going to mean that countries that the U.S. doesn’t want having control of this technology will gain control of it.”
Marathon Digital largely obtains power for its Bitcoin (BTC) mining operations in Texas through a wind farm, and other firms operating in the state include Core Scientific, Riot Platforms, White Rock Management, and Argo Blockchain. Core Scientific filed for bankruptcy in December 2022 but continues to mine in Texas, while Argo announced at roughly the same time it planned to sell its Texas facility to Galaxy Digital. The state’s relatively cheap power and the friendly regulatory environment, coupled with the abundance of natural resources such as wind and natural gas, have made it an attractive location for crypto miners.
While it still remains uncertain whether the passing of this bill will lead to a strong exodus of crypto firms from Texas, it is clear that the proposed legislation will curb the incentives that have made the state an attractive destination for crypto mining. As such, the initiative’s success relies on the commitment of the crypto community to defend their interests and continue advocating for more favourable regulatory conditions.
Moreover, the passage of such a bill could send a negative message to the global crypto community about the US’s regulatory environment. With major economies such as China and Russia pushing forward with their own digital currencies, the US risks falling behind in the race to adopt crypto and may even lose its status as the global leader in innovation if it continues to enact harsher regulations on the sector. Therefore, crypto advocates are hoping that lawmakers in Texas and beyond will take a more positive approach towards the rapidly-evolving crypto industry.
In summary, the Texas Senate’s approval of Senate Bill 1751 and the subsequent passing of the bill into law could have far-reaching consequences for the country’s crypto industry. While the exact impact is still up for debate, it is vital for crypto advocates to continue to engage with lawmakers and stakeholders to ensure that the industry is able to operate in an environment that is conducive to innovation and growth.
