Is Texas Still “Very Open To Business” For Bitcoin Mining?

Until recently, Texas was “very open to bitcoin mining deals, so to speak.” That’s how Jaime Leverton, CEO of Canadian bitcoin miner Hut 8, put it in the latest episode of decrypt‘s gm podcast.

“You have a lot of renewable assets, particularly in West Texas, that are looking for stable baseloads like a bitcoin miner can provide,” she said. “So I think it was just a really, really good match between the needs of the state and what a bitcoin miner can uniquely offer as an industrial-scale battery.”

This symbiotic relationship worked because unlike data centers, whose always-on customer agreements make voluntary shutdowns impossible, bitcoin miners can reduce their power consumption when the network is under heavy load. (“We regularly scale up and down in minutes based on network needs,” Leverton said.) And so far, the Electric Reliability Council of Texas (ERCOT) has been willing to incentivize miners who do.

But a bill introduced in March Texas Senate Bill of 1751seeks to limit the benefits granted to bitcoin miners who lower their power consumption when Texas, which has an independent power grid from the rest of the US, experiences high demand.

On Tuesday, the bill passed unanimously in a Senate committee vote.

It still needs to get approval from the entire Senate before heading to the state’s House of Representatives and then Gov. Greg Abbott’s desk. But Texas Blockchain Council President Lee Bratcher sees the bill as a cause for concern.

He said decrypt in an email that he expects it can win approval in the Senate but not in the Texas House.

“SB-1751 is a concerted effort by established industry groups on the ERCOT marketplace to tilt the playing field in their favor as they cannot compete with bitcoin miners in terms of load flexibility,” Bratcher said.

On twitterSatoshi Act Fund CEO and co-founder Dennis Porter said he and Pierre Rochard, vice president of research at Riot Platforms, spent 8 hours in the Texas capital on Tuesday “to share our Senate rejection of the anti-Bitcoin mining bill .”

Me and @BitcoinPierre spent 8 hours at the Capitol in Austin today. We have joined forces with 18 agencies, including the Speaker of the House and House State Affairs, to share our opposition to the anti-bitcoin mining bill in the Senate. pic.twitter.com/wF38441DAQ

— Dennis Porter (@Dennis_Porter_) April 4, 2023

Meanwhile, Hut told 8 decrypt in an email Wednesday that the company will soon be operating in the state once it completes its forthcoming merger with US Bitcoinit will not comment on the bill at the moment as it is not currently mined in Texas.

Despite that fact, Hut 8, which trades under the HUT ticker on both the Nasdaq and the Toronto Stock Exchange, was among the publicly traded miners that took a tumble the day after the SB-1751 vote. Shares ended Wednesday’s trading down 6%.

Likewise, Marathon Digital (MARA) declined 7%; Riot Platforms (RIOT) down 4%; and Canaan (CAN) fell 2%.

Andrew Asmakov contributed to the coverage of this story.

Listen to the whole episode and subscribe to the gm podcast.

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