With just a few days left until US President-elect Donald Trump’s second inauguration, crypto policy groups are preparing to ramp things up.
Blockchain associations from eight US states on Tuesday announced the creation of the North American Blockchain Association (NABA), an organization that aims to provide cohesive crypto policy recommendations to the federal government.
“A few years ago [NABA CEO] Arry Yu and I are leading an effort to provide more information and shared best practices among state associations,” Lee Bratcher, president of the Texas Blockchain Council and member of the NABA board of directors, told CoinDesk. “The NABA is the formalization of that process in which each state association is independent and retains agency, but can act in concert with other states when necessary.”
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 Cascadia Blockchain Council of the Industry Association. Washington Tech.
Bratcher, a former political science professor and army officer, founded TBC in 2019. It is a nonprofit 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 annual fees 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 not likely to affect TBC or Texas miners in any significant way, Bratcher said. That, in a certain sense, will already be a deviation from the Biden regime, which contemplated approving a 30% tax, called DAME, specifically on bitcoin miners. Similarly, the Department of Energy attempted to collect confidential and proprietary 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 make things fair and consistent and apply the same rules to everyone,” Bratcher said. “We feel optimistic that some of the things that were unfair regarding the Biden administration will no longer happen.”
Texas and the miners
With its advantageous 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 huge number of renewable energy projects, and they can generate a lot of electricity when demand is low; Think of a wind farm on a windy night, for example, when everyone is asleep and consumption is the lowest. . For the most part, electricity must be consumed immediately; Transmitting that electricity from one place to another is also complicated since energy is lost in the process. In other words, Texas goes through periods of high electricity generation and low demand and periods of high demand but insufficient production.
Why has Texas’ energy mix evolved in such a way? It all has to do with subsidies provided by the federal government, which Bratcher says can reach $30 per MW/h and provide a strong incentive for renewable energy companies to develop wind and solar energy. Wind farms have been built in the West Texas wind corridor; More recently, the number of solar projects has skyrocketed: from about 2,000 megawatts (MW) to 22,000 MW statewide in a matter of five years, Bratcher said.
Enter bitcoin mining. Unlike other types of data centers, which require almost 100% uptime, bitcoin mines can be easily turned on and off. Therefore, they are well suited to a network that sees significant volatility in demand. “There was a period where miners were able to get wholesale power prices and close power purchase agreements for extremely low amounts of money,” Bratcher said.
Bitcoin miners now consume about 3,100 MW in Texas, according to Bratcher: enough energy to power 620,000 homes, according to data from the Electric Reliability Council of Texas (ERCOT), the state’s grid operator. “About half of all bitcoin mining in the United States is done in Texas,” Bratcher said.
That explains why TBC receives such 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 (cryptocurrency 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 that have rushed to take advantage of Texas’ unique network, and there is now concern among elected officials that demand may end up being too high. The TBC estimates that the network will grow between 5% and 6% annually over the next 10 years, a rapid pace compared to 1% or 2% annually in previous times.
Still, ERCOT is unlikely to specifically discriminate against bitcoin miners; he is simply concerned about the growth rate. Bratcher said new bitcoin mining operations are being built along with new residential and industrial projects and ultimately account for less than 10% of projected growth.
“Believe [ERCOT] “It will institute rules for how large loads interconnect to the network, and that will create some new planning requirements for bitcoin miners and other large loads, including data centers and industrial consumers,” Bratcher said.
