Large Bitcoin miners operating in Texas, such as Riot Platforms and Lancium, can breathe a sigh of relief after one bill, which would have eliminated energy credit incentives for the industry, is effectively dead.
"We are thrilled that the Texas House saw fit to ensure that SB 1751 did not make it to the Governor's desk," Lee Bratcher, President of the Texas Blockchain Council, told Decrypt.
Riot's head of public policy also took to Twitter on Tuesday to "report an excellent outcome for Bitcoin mining."
The 2023 #txlege regular session has ended, & we're proud to report an excellent outcome for #Bitcoin mining.
First, SB 1751 did not pass. We will continue to use our unique flexibility to balance & stabilize the grid. TX will remain the best jurisdiction for doing business.
— Brian Morgenstern (@MorgensternNJ) May 30, 2023
In Texas, proposed bills must be passed by both the state Senate and House before they are sent to the Governor's desk. Texas Senate Bill (SB) 1751 passed the Senate, but never made it to the voting floor in the House.
Confirming that SB 1751 is effectively dead, Olivier Beaufils, the market lead for ERCOT at Aurora Energy Research told Decrypt that "any bill that hasn't cleared committees and got to the House at this point […] has almost no chance of passing." As a leader in energy market intelligence, Aurora Energy Research works with several Bitcoin miners in Texas.
SB 1751, which Bitcoin advocates labeled an “anti-mining” bill, took aim at miners' participation in the Lone Star state’s "demand response program" through the Electric Reliability Council of Texas (ERCOT).
When the Texas energy grid is under demand stress, such as during heat waves or severe winter storms, Bitcoin miners and other industrial energy users are asked to curtail operations to free up much-needed power for residents and essential services. ERCOT incentivizes cooperation through its demand response program. Compensation differs depending on individual energy contracts, but many Bitcoin miners are compensated with energy credits that can be used to cover future power bills. Energy credits are a form of non-cash remuneration that can be used specifically for buying energy at a later date.
With the bill now dead, several miners will continue to rake in lucrative energy credits to set up shop in Texas. "Lancium collected $17 million in 2020," the Director of Public Citizen Adrian Shelley said, advocating for the bill during the latest hearing. “As much as 10% of the value proposition for one of these facilities is its participation in [energy credit] programs."
For some, those incentives have even outweighed their primary business on occasion.
Riot Platforms, for example, received $9.5 million in energy credits in July 2022 for powering down during a heatwave. In the same month, the firm mined 318 bitcoin and earned $5.6 million in Bitcoin sales, according to the company's press release.
According to the company's 2022 earnings report, it earned $27.3 million in energy credit payouts that year.
With a new gigawatt factory under construction near Corsicana, Texas, and SB 1751 off the table, Riot is well-positioned to earn even more energy credits going forward.
Riot and Lancium did not immediately respond to Decrypt’s request for comment.