By Michael Scott
The sudden death of Senate Bill 1751 offers a breather for bitcoin miners in Texas as they retain the lucrative energy incentives.
Anti-mining Bills Aimed to Terminate Energy Incentives
The proposals dabbed as an anti-mining bill sought to terminate the energy incentives accorded Bitcoin mining firms registered and operating in Texas.
The failed bid to enact Senate Bill 1751 implies that the Texas-based bitcoin miners, including Riot Platforms and Lancium, are ultimate beneficiaries.
The rejection of Senate Bill 1751 offers relief as the bill targeted eliminating the energy credit incentives.
The head of the Texas Blockchain Council, Lee Bratcher, lauded the decision by the Texas House to shoot down SB 1751, thereby preventing it from reaching the Governor’s desk.
Shooting Down Anti-Mining Bill Regarded as Excellent Outcome
The public policy head at Riot’s Mining revealed in a Tuesday tweet that the lawmaker’s decision to drop the bill was an excellent outcome for crypto mining.
The executive commended the Texas process for enacting proposed bills in a duo approach featuring Senate and House input before sending them before the Governor’s desk. SB 1751 was not an exemption, with the Senate passing it only for the Texas House to shoot down.
The head of marketing at the Electric Reliability Council of Texas (ERCOT) within Aurora Energy Research, Olivier Beaufils, confirmed the effective death of SB 1751. He indicated that all bills unable to secure clearance at the committee’s level have zero chances of House passing.
Bitcoin Mining Firms Laud the Termination of SB 1751
Beaufils restated that the death of the bill is set to benefit Bitcoin mining firms in Texas. As a provider of market intelligence in the energy sector, Aurora Energy Research admitted that its clients would continue drawing lucrative credits from the Texas state.
SB 1751, labeled anti-mining, targeted reviewing the miner’s involvement within the Lone Star demand response initiative via the Electric Reliability Council of Texas (ERCOT).
When Texas suffers energy demand stress during winter storms and heat waves, Bitcoin mining firms, alongside other industrial energy firms, are obligated to minimize operations and free the power that residents and providers of essential services need.
Crypto Mining Firms Receive Energy Credits to Settle Future Bills
The ERCOT incentives offer varying compensation for the Bitcoin mining companies relative to the energy contracts. The demand response initiative compensates most miners with prepaid energy credits they can claim to settle future bills. Consequently, the energy credit is a non-cash remuneration.
With the bill proceedings ending, crypto miners will earn generous energy perks to establish operations in Texas. The Public Citizen director Adrian Shelley cited the $17 million collection by Lancium in 2020 to signify the lucrative nature of the credits.
Incentives Outweighing Revenue from Primary Business
Shelley supported the bill as it would save the State million-dollar claims by the miners even though it constitutes 10% of the value proposition in the energy credit program. The executive argued that the incentives awarded occasionally outweigh the primary business.
Riot Platforms is among miners with significant claims. The Texas-based miner earned $9.5 million in July 2022 for suspending intense energy usage during the heatwave. The same month saw Riot earn 318 bitcoin to realize $5.6 million in Bitcoin sales, as illustrated by the firm’s press release.
The firm’s earnings report for 2022 indicated it realized $27.3 million in annual credit payouts. Riot is destined to draw higher credits when the Corsicana-based gigawatt factory is complete. The death of SB 1751 makes the project a reality.
Is SB 1751 an Expensive Project?
Pierre Rochard, who serves as the vice president of Riot Platforms, considers the proposal captured within SB 1751 will eliminate the competitive bids. He added that the presence of competitive bids enabled the Ancillary Services by ERCOT to lower the cost, thereby overcoming the energy inflation.
Rochard held that the approval of SB 1751 would have raised the costs by $100M to $300 m annually. The Texas rate-payers would have to bear the cost since it would limit the competition posed by Bitcoin miners.
The Riot executive laments that increased energy cost erodes the grid reliability. He argued that the death of SB 1751 was a positive development considering that its single achievement was being an anti-bitcoin policy.