Watch crypto leaders on the future of bitcoin mining and energy innovation in Texas

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Crypto business leaders made a case for continued support for blockchain technology in Texas at a Texas Tribune event on Tuesday — and they backed legislation to better regulate large power users, such as crypto mines, to protect the state’s power grid.

Jamie McAvity, CEO and founder of Texas-based bitcoin company Cormint Data Systems, and Carol Haines, head of power and policy at digital infrastructure company Core Scientific, emphasized in a conversation with Tribune Editor-in-Chief Matthew Watkins that crypto empowers people to take charge of their banking and participate in a decentralized digital monetary system.

“We want to have a common infrastructure that is hopefully not controlled by anyone, where we can exchange value, we can trade stocks, we can pay people,” said Cesare Fracassi, director of the Blockchain Initiative at the McCombs School of Business at University of Texas at Austin. “All 8 billion people in the world can interact with each other, transact, offer services — all in a single platform. That’s the idea. And I think crypto is one way to get there.

Texas has been a haven for emerging industries like crypto and artificial intelligence, largely due to its business-friendly regulatory environment and flexible energy market.

The crypto industry invested $4 billion and represented 12,000 employees in Texas alone last year, making the state the home to around 40% of crypto’s investments nationwide, Haines said.

The Electric Reliability Council of Texas, the state’s main grid operator, estimates that power demand will nearly double by 2030, driven by an influx of large users such as crypto mining facilities, data centers and electrifying oil and gas operations — in addition to population growth and more severe weather.

Crypto mining, which consumes vast amounts of power to run and cool its computers, makes up the bulk of new power demand in Texas, according to ERCOT. State regulators adopted a rule in November requiring crypto facilities to share more information about their location, ownership and energy demand.

As of July, ERCOT estimated that crypto facilities on the main grid could use up to 2,600 megawatts of power — about the same amount of power used by the city of Austin. The state recently approved crypto facilities that are expected to use another 2,600 megawatts of electricity, and more are expected to locate in Texas soon.

The expansion of electricity-hungry industries in Texas has raised the specter of insufficient power on the grid and higher costs for everyday consumers — even as policymakers look to address the challenge and the state’s top Republicans say that new industrial needs should not compromise reliability for Texans.

McAvity emphasized that crypto mines’ profits are “very dependent” on the price of energy, making them likely to shut off their operations when grid conditions are tight and prices are high.

“With bitcoin, you don’t need to pay us to turn off,” he said. “Bitcoin miners do not want to consume electricity uneconomically.”

Crypto mining facilities came under fire for making millions of dollars in the ERCOT market during grid emergencies in which everyday Texans saw outages or sky-high electricity bills.

McAvity defended the premise, in which ERCOT pays facilities to shut down and sell extra power to the grid when it’s in crisis, as a basic function of the market. Companies can hedge on energy prices in buying electricity before they need it — and either get paid when the grid needs extra supply, or lose money if power is plentiful.

“Everyone’s all upset because for whatever reason, people have lots of opinions about bitcoin,” he said. “But this is a functioning commodity market, and it’s not free money.”

McAvity added that concerns about climate change driven by carbon emissions from ballooning energy use should not prompt lower energy consumption, which he said was correlated with a lower quality of life. Instead, he urged the state and companies to continue investing in developing nuclear energy.

McAvity and Haines said that they supported Texas Senate Bill 6 to more fairly allocate the costs of building out transmission infrastructure needed to meet increased demand and to ensure that existing power sources are not taken off the grid by large industrial users.

“I actually love this bill,” McAvity said. “It’s going to cost my company money, but I think it’ll be really good for the state.”

Haines echoed concerns raised at a Senate committee hearing last week about ambiguities in the bill related to backup generation and urged lawmakers to clear that up.

“If the rules aren't clear, people won't come and they won't build because they won't understand the economics of their project,” she said.

And while state leaders have welcomed the crypto industry for years, McAvity noted that support from the Trump administration now offered a broader opportunity for crypto development.

“Texas was an early leader and a pioneer in getting that framework done, and now we have the presidency,” he said. “It’s a good time to be a cryptocurrency company in Texas, and in the U.S.”

Disclosure: University of Texas at Austin, University of Texas at Austin - McCombs School of Business and University of Texas at Austin - Texas Enterprise - McCombs School of Business have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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