“We encourage you to have interaction additional with bitcoin miners to raised perceive the matter typically and the implications of your laws.”
This letter was initially revealed on bitcoiner.ghost.io.
Pricey Senator Kolkhorst,
As native Texans, we’re writing to specific concern relating to Texas Senate Invoice (SB) 1751, which you co-sponsored and which not too long ago handed a Business & Commerce Committee vote on April 5, 2023. This open letter follows a non-public enchantment submitted by way of your workplace in March. We write as involved Texas residents who’re impartial and don’t symbolize any firm or foyer.
From the skin trying in, you appear to be a proud Texan who fights for the rights of all Texans, selling liberty and freedom in line with Texan values. SB 1751 is a notable departure, at the least in important features, out of your previous monitor file. It’s misinformed, discriminatory, anti-competitive, dangerous to the pursuits of grid stability, unhealthy for customers and a strategic setback for Texas.
For context, the invoice issues “digital foreign money” mining and demand response. It seeks to restrict the flexibility of bitcoin miners to take part in compensatory ERCOT packages, which incentivize load discount, to 10% throughout all bitcoin miners in whole. Previous to sponsoring SB 1751, it’s unclear whether or not you engaged in discussions with bitcoin miners to raised perceive the matter or expressed any opinions on bitcoin or bitcoin mining in any respect. Additionally it is unclear whether or not particular pursuits lobbied for this invoice, given you don’t seem to have beforehand taken any positions on bitcoin, however on the deserves alone, SB 1751 is problematic.
The invoice issues “digital foreign money mining as demand response.” Actually at situation is bitcoin, not “digital foreign money” broadly. There are not any miners of any foreign money apart from bitcoin that could possibly be of observe collaborating in demand response packages or selling grid reliability. Bitcoin can also be definitionally not corresponding to every other foreign money, and it isn’t digital. Bitcoin isn’t “crypto”. Bitcoin is bitcoin, and if bitcoin is on the coronary heart of your invoice, a greater understanding earlier than legislating could be helpful.
Bitcoin is a type of cash with a set provide, which is international and permissionless. There’ll solely ever be 21 million bitcoin. That’s the foundation of its worth to the world. As was obvious from a current tweet, you appear to acknowledge that inflation is an issue. Inflation isn’t a political phenomenon. Cash is created by the Federal Reserve (“Fed”). The Fed has elevated the cash provide by $8 trillion, or 8x for the reason that Nice Monetary Disaster, which causes inflation and destroys financial savings. Bitcoin is designed to repair the issue of cash printing, however nothing of worth comes with out price. Bitcoin’s 21 million fastened provide is secured by vitality, particularly energy. In brief, vitality innovation has all the time been strategic to Texas. Vitality is strategic to bitcoin and bitcoin will develop into more and more strategic to Texas because of this. Nevertheless, it isn’t nearly energy technology and demand. It’s concerning the issues of printing cash, which undermine the pursuits of all Texans and the state of Texas.
Texas is a frontrunner in vitality and all Texans want a type of cash that the federal government can’t print out of skinny air and without charge. Texas energy is securing the bitcoin community, which not solely promotes grid stability and creates jobs and financial growth, nevertheless it additionally secures the pursuits of all Texans, even those that don’t but use bitcoin as a superior type of cash. We’d be comfortable to listen to your issues and focus on this in additional element if it will be useful.
SB 1751 singles out bitcoin miners from all different industries. Setting every part else apart, that is discriminatory and creates an unlevel taking part in discipline. Whereas different sources of demand have been recognized as important infrastructure, no different trade, together with battery operators, have been restricted. Why bitcoin mining?
Bitcoin miners compete in numerous ancillary providers which ERCOT makes use of to compensate versatile hundreds to make sure grid stability. The entrant of bitcoin miners has made the bidding course of extra aggressive, decreasing costs. Proscribing the flexibility of bitcoin miners to take part is anti-competitive and can lead to marginally much less participation in ancillary providers by bitcoin miners which is able to marginally improve price for ERCOT to realize its reliability mandate.
Dangerous To Grid Stability
SB 1751 disincentivizes bitcoin miners from collaborating in ancillary providers, which promote grid stability. Extra participation in ancillary providers not solely reduces prices but additionally permits for ERCOT to have extra sources at its disposal to realize grid stability. As Texas energy demand grows, extra versatile sources can be wanted to realize grid stability. Why disincentivize massive versatile hundreds, that are most frequently extra environment friendly and decrease price than utilizing peaker crops?
Unhealthy For Customers
Entry to ancillary providers creates marginal financial incentives for miners to return to Texas. Over time, extra miners in Texas will result in extra energy technology, extra demand response and extra participation in ancillary providers. All three, individually and in mixture, promote cheaper and extra secure energy costs for all Texas customers.
Strategic Setback For Texas
As a result of fundamentals of vitality growth and as socialist-leaning states like New York have restricted mining, there was a big shift of bitcoin mining to Texas. From a mining perspective, Texas is called the “middle of hash.” Austin can also be an rising hub for bitcoin growth. SB 1751 sends loud indicators that Texas isn’t the free, deregulated market everybody believes it to be and that the state of Texas is antagonistic to bitcoin broadly.
Bitcoin mining incentivizes low-cost energy and its distinctive potential to reply at scale to all different sources of energy demand helps obtain grid stability way more successfully and effectively than every other single useful resource. Willingness by miners to close down and NOT mine bitcoin within the curiosity of grid stability is a profit to ERCOT and all Texans, which shouldn’t be economically disincentivized or deprived relative to different industries. Mining tasks are additionally extremely capital intensive. Rash legislative motion can have instant impacts in dissuading miners to pursue massive, long-term capital tasks in Texas.
Even when you won’t be involved with its broader significance, this laws will hurt Texas strategic pursuits, past simply ancillary providers.
Attraction To Motive And Reasonability
Earlier than shifting ahead with dangerous laws, we encourage you to have interaction additional with bitcoin miners to raised perceive the matter typically and the implications of your laws particularly. Pausing work on SB 1751 is the one smart and affordable course. Please don’t shoot and intention later. Moreover, we might ask that you simply have interaction with the Texas bitcoin neighborhood to know the significance of bitcoin and why it’s strategic to Texas and all Texans.
Bitcoin wants no favors nor aggressive benefits. It simply shouldn’t be topic to regulatory discrimination. The rights of Texan bitcoin holders, together with miners, must be protected. House Concurrent Resolution (HCR) 89 sponsored by Cody Harris, Texas Home of Representatives, District 8 is a superb instance. It goals to guard the rights of Texan pursuits in bitcoin, moderately than advantaging bitcoin in any method. That’s all we ask of you and your colleagues.
It’s clear you’re a proud Texan and your values align with the ethos of bitcoin. Most significantly, we merely want you to have interaction with the citizenry previous to legislating. However relaxation assured, no matter the way you proceed, every part is nice for bitcoin, which is a concept formally identified in Keynesian economics because the Nakamoto Paradox. If you want to debate SB 1751 or bitcoin extra typically, we’re in Austin or would come to Brenham. Godspeed.
“Govern properly and as little as potential.”
Parker A. Lewis
Will C. Cole
This can be a visitor submit by Parker A. Lewis and Will C. Cole. Opinions expressed are completely their very own and don’t essentially mirror these of BTC Inc or Bitcoin Journal.