With just a handful of days left until the second inauguration of US President Donald Trump, crypto political 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.
“A few years ago [NABA CEO] Arry Yu and I led an effort to provide more information and sharing of best practices 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 the 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 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 — big companies 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 association’s biggest financial contributors.
The incoming Trump administration is unlikely to affect the TBC or Texas miners in a meaningful way, Bratcher said. In a sense, it will already be a departure from the Biden regime, which considered imposing a 30% tax, called DAME, specifically on bitcoin miners. The Department of Energy similarly attempted to collect proprietary and confidential information from bitcoin miners and make that data publicly available, prompting TBC and Riot Platforms to sue them in federal court.
“All the bitcoin mining industry is asking the Trump administration to do is keep things fair and consistent and apply the rules equally to everyone,” Bratcher said. “We feel optimistic that some of the things that were unfair about the Biden administration will no longer happen.”
Texas and miners
With its favorable tax system, 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 amount of renewable energy projects, and these can generate a lot of electricity when there is little demand for it – think, for example, a wind farm on a windy night when everyone is asleep and consumption is at its lowest. For the most part, electricity must be consumed immediately; It is also difficult to transfer that electricity from one place to another, as energy is lost in the process. In other words, Texas goes through periods of high electricity generation and little demand and periods of high demand but insufficient generation.
Why has Texas’ energy mix evolved in such a way? It all has to do with subsidies from the federal government, which Bratcher says could reach $30 per MW/h and provide a strong incentive for renewable energy companies to develop wind and solar power. Wind farms have been 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 nationwide over five years, Bratcher said.
Get into bitcoin mining. Unlike other types of data centers, which require almost 100% uptime, bitcoin mines can be turned on and off easily. So they are well suited to a grid that sees significant volatility in demand. “You had a period where miners were able to get wholesale energy prices and lock in 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 in Texas,” Bratcher said.
That explains why TBC receives such a large portion of its funding from bitcoin miners. In fact, TBC has hired a number of consultants with a specific focus on ERCOT and energy policy, whereas other types of businesses – crypto exchanges, money transmission – have not had the same need.
Will Texas remain friendly to bitcoin miners for years to come? It remains to be seen, Bratcher said. Mining companies aren’t the only ones who have rushed to take advantage of Texas’ unique grid, and there are now concerns among elected officials that demand could end up being too high. TBC estimates that the web will grow somewhere between 5% and 6% per year for the next 10 years – a fast pace compared to the 1% or 2% per year in the past.
Still, ERCOT is unlikely to specifically discriminate against bitcoin miners; it is simply about the growth rate. New bitcoin mining operations, Bratcher said, are being built alongside new residential and industrial projects and ultimately account for less than 10% of projected growth.
“I think [ERCOT] will impose rules on how all large loads connect to the grid, and it will create some new planning requirements for bitcoin miners and other large loads, including data centers and industrial consumers,” Bratcher said.
