“We encourage you to interact 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 Enterprise & Commerce Committee vote on April 5, 2023. This open letter follows a personal attraction submitted through your workplace in March. We write as involved Texas residents who’re unbiased and don’t signify 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 elements, out of your previous observe 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 forex” 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. It’s also 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.
Misinformed
The invoice issues “digital forex mining as demand response.” Actually at challenge is bitcoin, not “digital forex” broadly. There aren’t any miners of any forex apart from bitcoin that may very well be of observe taking part in demand response packages or selling grid reliability. Bitcoin can also be definitionally not corresponding to some other forex, and it’s not digital. Bitcoin is just not “crypto”. Bitcoin is bitcoin, and if bitcoin is on the coronary heart of your invoice, a greater understanding earlier than legislating could be useful.
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 is just not 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 mounted provide is secured by vitality, particularly energy. Briefly, vitality innovation has at all times been strategic to Texas. Power is strategic to bitcoin and bitcoin will turn out to be more and more strategic to Texas consequently. Nevertheless, it’s not nearly energy era 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 pacesetter in vitality and all Texans want a type of cash that the federal government can not 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 improvement, however 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 glad to listen to your issues and focus on this in additional element if it might be beneficial.
Discriminatory
SB 1751 singles out bitcoin miners from all different industries. Setting the whole lot 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 business, together with battery operators, have been restricted. Why bitcoin mining?
Anti-Aggressive
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, lowering costs. Proscribing the flexibility of bitcoin miners to take part is anti-competitive and can end in marginally much less participation in ancillary providers by bitcoin miners which is able to marginally enhance price for ERCOT to realize its reliability mandate.
Dangerous To Grid Stability
SB 1751 disincentivizes bitcoin miners from taking part in ancillary providers, which promote grid stability. Extra participation in ancillary providers not solely reduces prices but in addition 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 giant versatile hundreds, that are most frequently extra environment friendly and decrease price than utilizing peaker crops?
Dangerous 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 era, 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
Because of the fundamentals of vitality improvement 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 improvement. SB 1751 sends loud alerts that Texas is just not 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 skill to reply at scale to all different sources of energy demand helps obtain grid stability much more successfully and effectively than some 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 giant, long-term capital tasks in Texas.
Even in the event you may not be involved with its broader significance, this laws will hurt Texas strategic pursuits, past simply ancillary providers.
Enchantment To Purpose And Reasonability
Earlier than transferring ahead with dangerous laws, we encourage you to interact 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 purpose later. Moreover, we might ask that you simply have interaction with the Texas bitcoin group to grasp 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, ought to be protected. Home Concurrent Decision (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, quite 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 interact with the citizenry previous to legislating. However relaxation assured, no matter the way you proceed, the whole lot is nice for bitcoin, which is a idea formally recognized in Keynesian economics because the Nakamoto Paradox. If you need 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.”
-Sam Houston
Greatest,
Parker A. Lewis
Will C. Cole
It is a visitor publish by Parker A. Lewis and Will C. Cole. Opinions expressed are fully their very own and don’t essentially replicate these of BTC Inc or Bitcoin Journal.