Texas has towered as the centre for major Bitcoin and crypto mining. Despite crypto being received with hostility in many parts of the US, Texas opened its home to crypto miners when the great China exodus began. 

The state, found in the South Central region, has long implemented highly crypto-friendly laws. For instance, in 2021, the Texas Department of Bank authorized state-chartered banks to offer crypto custody services.

But what makes Texas a great place for mining crypto? Its three major benefits are cheap electricity, fair regulations, and no income tax. 

General Regulations: What every mining company must know

Regulations on Energy Usage 

Texas’s abundance of energy resources is one of the primary reasons the state thrives as a Bitcoin miner. Reports indicate that Texas controls a hash rate of about 11% of all US crypto mining. Investors and miners must comply with all regional regulations, including getting permits. The registration requirements as per SB 1929 are also crucial to adhere to.

Money transfer regulations

Miners in Texas must also follow any regulations set for money transmission. Creating and supplying digital coins akin to Bitcoin is simply a money transmission activity. Like every other state, Texas sets a framework that defines how money should be transmitted. This framework helps deal with anti-money laundering, fraud, criminal and terrorist financing, etc.

Regulations on Operation zones

Zoning regulations are also a key factor mining companies should consider. Consultations with Texan regulars are vital for building large mining facilities. Part of zoning guidelines aims to deal with people’s and environmental safety issues. 

Of course, every state has its environmental guidelines that everyone must adhere to. With crypto remaining a proven environmental hazard, adhering to the set framework on the environment will bring better results. The environmental conditions set in Texas also apply to mining firms. 

Popular crypto mining recent bills 

The two passed legislations are tagged SB 1929 and HB 591. Reports imply that these two bills are designed to support miners. These two bills are ready and awaiting the signature of Governor Greg Abbott sometime soon. These regulations, once signed, should take effect starting September 1.

SB 1929

The first bill, SB 1929, based on reports, is designed to deal with issues concerning power and energy. By design, the bill requires high energy-consuming miners to register with the public utilities commission (PUC).

The registration requires the miners to register as large load operators with the regulators. Companies consuming more than 75 Megawatts (MW) of power must seek a licence and registration.

Once you register with the PUC, the reports indicate that the Electricity Reliability Council of Texas (ERCOT) can share the data. 

The reports also indicate that the registration is in adherence with the ERCOT’s guidelines and processes. ERCOT has the mandate of managing all major electric loads in the country. 

What does this registration mean? The registration means that the mining company is immediately recognized as a big power consumer, and every regulatory authority is informed. This could better serve the mining company with better electricity and power supply efficiency. 

HB 591

The second bill passed and awaits legislation into law is named HB 591. This bill mainly addresses the issue of tax exemptions for those in the business of mining crypto assets in the region.

Initially, the entirety of the ideology of Bitcoin mining was proven to have serious tax implications. For instance, the miners in the industry would face implications like income tax, property tax, and sales tax options. 

The HB 591 bill offers tax exemptions to companies leveraging wasted energy and gas, including data colocation facilities and miners. While the miner will still need to pay tax due to profits made in mining Bitcoin, the companies will earn exemptions for their role in preserving the environment. If the flare emissions are released, they could be highly destructive to the environment. However, miners can use the recycled flare emissions through this new deal. 

The bill allows the selling of flare emissions to mining companies. It offers tax exemptions for the process of flare recycling. Hence, the cost of leveraging this unique energy form is greatly reduced for the miners.

Senate Bill 1751 and 1752

Crypto miners, companies, and individuals enjoy the great framework set in Texas. This framework brings ten-year tax abatements and credits. This law is, however, currently under contention, as shown below.

In recent months, regulators in Texas and the US Senate committee have been developing new regulations to impact crypto miners. 

SB 1751 is fashioned to limit the participation of miners in grid balancing programs. This bill received criticism from KOL in crypto for not encouraging competition.

Another bill SB 1752, passed the senate committee earlier this year. This was negative as it encouraged the prohibition of tax abatements and credits offered to mining companies. Once all pass through the right houses and get the governor’s signature, they will become law. 

Final Word

The regulation of cryptocurrency worldwide is constantly changing as ombudsmen strive to tighten loopholes driving the industry’s existence. However, some states recognize blockchain even as the Securities and Exchange Commission pulls more malice against crypto.

Texas is one such state. It has been the home of crypto miners and continues implementing laws favouring the crypto industry. The taxing situation remains friendly, and the regulations on energy usage, money transfer, environmental protection, and zoning favour crypto.

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