With just days until the second inauguration of US President-elect Donald Trump, crypto policy groups are preparing to shift into high gear.
Blockchain associations from eight U.S. states announced Tuesday the creation of the North American Blockchain Association (NABA), an organization aimed at providing consistent crypto policy recommendations to the federal government.
“A few years ago (NABA CEO) Arry Yu and I led an effort to provide more information and sharing of best practices among state associations,” said Lee Bratcher, president of Texas Blockchain Council and NABA Board Member, at CoinDesk. “NABA is the formalization of this process in which each state association is independent and retains its authority to act, but can act in concert with other states if necessary. »
Members include the Texas Blockchain Council, Alabama Blockchain Alliance, California Blockchain Advocacy Coalition, Florida Blockchain Business Association, Ohio Blockchain Council, Pennsylvania Blockchain Coalition, Virginia Blockchain Council, and Washington Technology’s Cascadia Blockchain Council Industry Association.
A former political science professor and Army officer, Bratcher founded the TBC in 2019. It is a nonprofit trade association, meaning the organization gets its funding through memberships from large corporations such as Coinbase (COIN) and Galaxy Digital Holdings (GLXY), as well as law firms and banks pay annual dues to be part of the association.
More than half of TBC’s funding comes from bitcoin (BTC) miners: MARA Holdings (MARA), Riot Platforms (RIOT), Core Scientific (CORZ), Bitmain and Cipher Mining (CIFR) are among the largest financial contributors to the association.
The new Trump administration is unlikely to have a significant impact on TBC or Texas miners, Bratcher said. In a sense, this would already be a departure from the Biden regime, which was considering adopting a 30% tax, called DAME, specifically on Bitcoin miners. The Department of Energy also attempted to collect proprietary and confidential information from Bitcoin miners and make that data publicly available, leading TBC and Riot Platforms to sue them in federal court.
“The only thing the Bitcoin mining industry is asking of the Trump administration is to keep things fair and consistent and apply the same rules for everyone,” Bratcher said. “We are optimistic that some of the things that were unfair about the Biden administration will not happen again. »
Texas and the miners
With its favorable tax regime, huge economy, and abundant energy, Texas has become one of the most popular jurisdictions in the world for Bitcoin miners.
Texas is home to a considerable number of renewable energy projects, and these can generate a lot of electricity when there is little demand – think of a wind farm on a windy night, for example, when everyone is sleeping and consumption is at its lowest. . For the most part, electricity must be consumed immediately; transmitting this electricity from one location to another is also tricky because energy is lost in the process. In other words, Texas experiences periods of high electricity production and low demand, as well as periods of high demand but insufficient production.
Why has Texas’ energy mix evolved this way? This is all due to subsidies provided by the federal government, which Bratcher says can be as high as $30 per MW/h and provide a strong incentive for renewable energy companies to expand wind and solar power. Wind farms have been built in the West Texas Wind Corridor; more recently, the number of solar projects has exploded from about 2,000 megawatts (MW) to 22,000 MW statewide in five years, Bratcher said.
Enter Bitcoin mining. Unlike other types of data centers, which require almost 100% uptime, Bitcoin mines can be turned on and off easily. They are therefore well suited to a network that experiences high volatility in demand. “There was a period where miners were able to get wholesale prices for electricity and enter into power purchase agreements for extremely small amounts of money,” Bratcher said.
According to Bratcher, Bitcoin miners now consume about 3,100 MW in Texas, enough energy to power 620,000 homes, according to data from the Electric Reliability Council of Texas (ERCOT), the network operator of the State. “About half of all bitcoin mining in the United States is done in Texas,” Bratcher said.
This explains why TBC receives so much of its funding from Bitcoin miners. In fact, the TBC has hired a number of consultants specializing in ERCOT and energy policy, while other types of businesses – crypto exchanges, money transmission – have not had the same needs .
Will Texas Remain Bitcoin Miner Friendly in the Years to Come? That remains to be seen, Bratcher said. Mining companies aren’t the only ones rushing to take advantage of Texas’ unique grid, and elected officials now fear demand is becoming too high. The TBC estimates that the network will grow between 5 and 6 percent per year over the next 10 years – a rapid pace compared to the 1 or 2 percent per year in previous periods.
Even so, ERCOT likely won’t discriminate specifically against Bitcoin miners; it is simply the growth rate. According to Bratcher, new Bitcoin mining operations are being built alongside new residential and industrial projects and ultimately represent less than 10% of projected growth.
“I believe (ERCOT) will institute rules for how large loads interconnect to the grid, which will create new planning requirements for Bitcoin miners and other large loads, including data centers and industrial consumers,” Bratcher said.
