With just days left until the second inauguration of US President-elect Donald Trump, crypto policy groups are ready to kick things into high gear.
Blockchain associations from eight US states announced on Tuesday the creation of the North American Blockchain Association (NABA), an organization that aims to provide coherent crypto policy recommendations to the federal government.
“Several years ago (NABA CEO) Arry Yu and I led the effort to provide more information and best practices sharing between state associations,” Lee Bratcher, president of the Texas Blockchain Council and a member of NABA’s board of directors, told CoinDesk. “NABA is the formalization of that process where each state association is independent and maintains agency but can act with other states as needed.”
Members include the Texas Blockchain Council, the Alabama Blockchain Alliance, the California Blockchain Advocacy Coalition, the Florida Blockchain Business Association, the Ohio Blockchain Council, the Pennsylvania Blockchain Coalition, the Virginia Blockchain Council and the Washington Technology Industry Association Cascadia Blockchain Council.
A former political science professor and Army officer, Bratcher founded TBC in 2019. It’s a non-profit trade association, meaning the organization gets its funding through memberships — large corporations like Coinbase ( COIN) and Galaxy Digital Holdings (GLXY), as well as law firms and banks, pay an annual fee 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 of the association.
The incoming Trump administration is unlikely to affect TBC or Texas miners in a significant way, Bratcher said. That, in a sense, is a departure from the Biden regime, which is considering passing a 30% tax, called DAME, specifically on bitcoin miners. Both the Department of Energy 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 from the Trump administration is to keep things fair and consistent and apply the rules equally for everyone,” Bratcher said. “We feel hopeful that some of the unfair things about the Biden administration will not happen again.”
Texas and Miners
Due to its favorable tax regime, massive economy and abundant energy, Texas has become one of the most popular jurisdictions in the world for bitcoin miners.
Texas is home to many renewable energy projects, and they can generate a lot of electricity when there is little demand for it — think of a wind farm on a windy night, for example, when everyone is asleep, and consumption is at the lowest . For the most part, the power should drain immediately; Sending electricity from one place to another is also tricky because energy is lost in the process. In other words, Texas undergoes periods of good power generation and little demand and periods of great demand but insufficient production.
Why has Texas’ energy mix changed in such a way? All of this has to do with subsidies provided by the federal government, which Bratcher says could reach $30 per MW/h and provide strong incentives for renewable energy companies to develop wind and solar power. . Wind farms are being built in the West Texas wind corridor; 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 are easy to turn on and off. They are therefore well adapted to a grid that sees significant volatility in demand. “You had a period where miners got wholesale power prices and were locked into power purchase agreements for very low amounts of money,” Bratcher said.
Bitcoin miners now consume about 3,100 MW in Texas, according to Bratcher — enough energy to provide 620,000 housesper data from the Electric Reliability Council of Texas (ERCOT), the state’s grid operator. “Almost half of all bitcoin mining in the US is in Texas,” Bratcher said.
That explains why TBC receives a large portion of its funding from bitcoin miners. In fact, TBC has hired several consultants with a specific focus on ERCOT and energy policy, while other types of businesses — crypto exchanges, money transmission — have not had the same need.
Will Texas remain friendly to bitcoin miners in the coming years? That remains to be seen, Bratcher said. Mining companies aren’t the only ones rushing to take advantage of Texas’ unique grid, and there’s now concern among elected officials that demand could be too high. TBC estimates the grid will grow somewhere between 5% and 6% per year for the next 10 years — a brisk pace compared to the 1% or 2% per year of previous periods.
However, ERCOT is unlikely to discriminate against bitcoin miners specifically; it is only concerned with the growth rate. New bitcoin mining operations, Bratcher said, are being built alongside new residential and industrial projects, and will ultimately account for less than 10% of projected growth.
“I think (ERCOT) is going to implement rules for how any large loads are connected to the grid, and that’s going to create some new planning requirements for bitcoin miners and other large loads, including data centers and industrial consumers,” Bratcher said.
