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“We encourage you to have interaction additional with bitcoin miners to higher perceive the matter usually and the implications of your laws.”
This letter was initially revealed on bitcoiner.ghost.io.
Expensive Senator Kolkhorst,
As native Texans, we’re writing to specific concern concerning Texas Senate Invoice (SB) 1751, which you co-sponsored and which lately handed a Business & Commerce Committee vote on April 5, 2023. This open letter follows a personal attraction submitted by way of your workplace in March. We write as involved Texas residents who’re unbiased and don’t symbolize any firm or foyer.
From the surface wanting in, you appear to be a proud Texan who fights for the rights of all Texans, selling liberty and freedom per Texan values. SB 1751 is a notable departure, no less than in crucial features, out of your previous monitor file. It’s misinformed, discriminatory, anti-competitive, dangerous to the pursuits of grid stability, dangerous for customers and a strategic setback for Texas.
For context, the invoice considerations “digital forex” mining and demand response. It seeks to restrict the power of bitcoin miners to take part in compensatory ERCOT applications, which incentivize load discount, to 10% throughout all bitcoin miners in complete. Previous to sponsoring SB 1751, it’s unclear whether or not you engaged in discussions with bitcoin miners to higher perceive the matter or expressed any opinions on bitcoin or bitcoin mining in any respect. It is usually 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 considerations “digital forex mining as demand response.” Actually at problem is bitcoin, not “digital forex” broadly. There are not any miners of any forex apart from bitcoin that may very well be of observe collaborating in demand response applications or selling grid reliability. Bitcoin can also be definitionally not corresponding to some other forex, and it isn’t 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 can 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 latest 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 because the 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. Vitality is strategic to bitcoin and bitcoin will turn out to be more and more strategic to Texas consequently. Nevertheless, it isn’t 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 frontrunner 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 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 pleased to listen to your considerations and talk about this in additional element if it might be priceless.
Discriminatory
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 area. Whereas different sources of demand have been recognized as crucial infrastructure, no different business, together with battery operators, have been restricted. Why bitcoin mining?
Anti-Aggressive
Bitcoin miners compete in varied ancillary companies which ERCOT makes use of to compensate versatile masses to make sure grid stability. The entrant of bitcoin miners has made the bidding course of extra aggressive, decreasing costs. Limiting the power of bitcoin miners to take part is anti-competitive and can lead to marginally much less participation in ancillary companies 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 collaborating in ancillary companies, which promote grid stability. Extra participation in ancillary companies 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 will likely be wanted to realize grid stability. Why disincentivize massive versatile masses, that are most frequently extra environment friendly and decrease price than utilizing peaker crops?
Unhealthy For Customers
Entry to ancillary companies creates marginal financial incentives for miners to come back to Texas. Over time, extra miners in Texas will result in extra energy era, extra demand response and extra participation in ancillary companies. All three, individually and in combination, promote cheaper and extra secure energy costs for all Texas customers.
Strategic Setback For Texas
Because of the 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 named the “heart of hash.” Austin can also be an rising hub for bitcoin growth. 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 capacity to reply at scale to all different sources of energy demand helps obtain grid stability way 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 initiatives are additionally extremely capital intensive. Rash legislative motion can have speedy impacts in dissuading miners to pursue massive, long-term capital initiatives in Texas.
Even if you happen to won’t be involved with its broader significance, this laws will hurt Texas strategic pursuits, past simply ancillary companies.
Enchantment To Purpose And Reasonability
Earlier than transferring ahead with dangerous laws, we encourage you to have interaction additional with bitcoin miners to higher perceive the matter usually and the implications of your laws particularly. Pausing work on SB 1751 is the one wise and affordable course. Please don’t shoot and goal later. Moreover, we might ask that you simply interact with the Texas bitcoin neighborhood 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, 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, fairly than advantaging bitcoin in any means. 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 principle formally recognized in Keynesian economics because the Nakamoto Paradox. If you need to debate SB 1751 or bitcoin extra usually, we’re in Austin or would come to Brenham. Godspeed.
“Govern properly and as little as potential.”
-Sam Houston
Finest,
Parker A. Lewis
Will C. Cole
This can be a visitor put up by Parker A. Lewis and Will C. Cole. Opinions expressed are totally their very own and don’t essentially replicate these of BTC Inc or Bitcoin Journal.
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