“I encourage you to engage more with bitcoin miners to better understand the issue in general and the consequences of the law.”
This letter was originally published in bitcoiner.ghost.io.
Dear Senator Korkhorst,
As a native Texan, I am writing to express my concerns regarding the recently passed Texas Senate Bill (SB) 1751, which you co-sponsored. Business & Commerce Commission Vote April 5, 2023. We write that we are independent Texas citizens and are concerned that we do not represent businesses or lobbying.
From the outside you look like a proud Texan who fights for the rights of all Texans and promotes freedom and liberty in line with Texan values. The SB 1751 deviates significantly from your past performance, at least in important aspects. It’s misinformation, discriminatory, anti-competitive, harmful to grid stability, bad for consumers, and a strategic setback for Texas.
For context, the bill is about “cryptocurrency” mining and demand response. This aims to limit the ability of bitcoin miners to participate in his compensatory ERCOT program, which encourages load reduction, to a total of 10% across all bitcoin miners. It is unclear whether he held discussions with bitcoin miners to better understand the issue before sponsoring SB 1751, or whether he expressed any opinion about bitcoin or bitcoin mining. It’s also unclear if any special interest groups lobbied for this bill, given that you don’t appear to have taken any positions on Bitcoin before, but on merit alone, SB 1751 is a problem. there is.
The bill is about “cryptocurrency mining as a demand response”. It’s Bitcoin that’s really in question, not “virtual currency” in general. No other notable currency miner participates in demand response programs or promotes grid reliability other than Bitcoin. Also, Bitcoin is by definition not comparable to any other currency and is not a virtual currency. Bitcoin is not “crypto”. Bitcoin is Bitcoin, and if Bitcoin is at the center of your bill, it’s beneficial to get a better understanding of it before you legislate it.
Bitcoin is a fixed supply currency, global and permissionless. There are only 21 million Bitcoins. That is the basis of value for the world. You seem to recognize that inflation is a problem, as evidenced by your recent tweets. Inflation is not a political phenomenon. Money is created by the Federal Reserve (“Fed”).The Federal Reserve has increased the money supply $8 trillion, or eight times since the Great Financial Crisis causing inflation and destroying savings. Bitcoin was designed to solve the paper money printing problem, but nothing of value comes without cost. His 21 million fixed supply of Bitcoin is secured by energy, especially electricity. In short, energy innovation has always been strategic for Texas. Energy is strategic to Bitcoin, and Bitcoin will become increasingly strategic to Texas as a result. But it’s not just generation and demand. It’s about the problem of printing money that hurts the interests of all Texans and the State of Texas.
Texas is an energy leader and every Texan needs a form of currency that the government cannot print out of nowhere for free. The power of Texas secures the Bitcoin network. Not only will this promote grid stability and create jobs and economic development, it will also secure the interests of all Texans, including those who have not yet used Bitcoin as the currency of choice. I would be happy to hear from you and discuss this in more detail if it is worthwhile.
SB 1751 singles out Bitcoin miners from all other industries. All else aside, this is discriminatory and creates an unfair playing field. Other sources of demand have been identified as critical infrastructure, but other industries, including battery operators, are not restricted. Why Bitcoin Mining?
Bitcoin miners compete in various ancillary services that ERCOT uses to compensate for flexible loads to ensure grid stability. The entry of Bitcoin miners has made the bidding process more competitive, driving down prices. Restricting the ability of Bitcoin miners to participate is anti-competitive, resulting in slightly less participation by Bitcoin miners in ancillary services and slightly increasing the cost for ERCOT to meet its reliability obligations. .
Harmful to grid stability
SB 1751 does not encourage Bitcoin miners to participate in ancillary services that promote grid stability. Increased participation in ancillary services not only reduces costs, but also frees up more resources for ERCOT to achieve grid stability. As demand for electricity in Texas grows, more flexible resources will be needed to achieve grid stability. What are the reasons for disabling large flexible loads, which are often more efficient and less costly than using peaker plants?
bad for consumers
Access to ancillary services creates a modest economic incentive for miners to come to Texas. Over time, more miners in Texas will lead to more power generation, more demand response, and more participation in ancillary services. All three, individually or collectively, promote cheaper and more stable electricity prices for all Texas consumers.
Texas Strategic Retreat
Due to energy development fundamentals and socialist-leaning states like New York restricting mining, bitcoin mining has shifted heavily to Texas. From a mining point of view, Texas is known as the “hash heart”. Austin is also a new hub for Bitcoin development. SB 1751 sends a big signal that Texas is not the free and deregulated market that everyone believes and that Texas is broadly hostile to Bitcoin.
Bitcoin mining encourages cheap electricity, and its unique ability to meet all other sources of electricity demand at scale makes grid stability far more effective and efficient than any other single resource. help make it happen. The willingness of miners to shut down without mining bitcoin for the sake of grid stability is beneficial to ERCOT and all Texans, leaving them economically disincentivized and disadvantaged compared to other industries. should not be. Mining projects are also very capital intensive. Hasty legislation could have immediate repercussions in discouraging miners from pursuing large, long-term capital projects in Texas.
Even if you don’t care about its broader significance, this law would undermine Texas’ strategic interests beyond just an ancillary service.
appeal to reason and rationality
Before proceeding with any harmful legislation, we recommend working further with Bitcoin miners to understand the issue in general and the ramifications of the legislation specifically. is the only reasonable way to do it. Don’t shoot and aim back. Additionally, we ask that you engage with the Bitcoin community in Texas to understand the importance of Bitcoin and why it is strategic to Texas and all Texans.
Bitcoin doesn’t need a boon or a competitive advantage. You should not be discriminated against by regulation. The rights of Texas Bitcoin holders, including miners, should be protected. House Concurrent Resolution (HCR) 89 The 8th District of the Texas House of Representatives, sponsored by Cody Harris, is a good example. It is meant to protect Texas’ interests in Bitcoin rather than give Bitcoin any advantage. This is all we ask of you and your colleagues.
You are clearly a proud Texan and your values align with the spirit of Bitcoin. Most importantly, we want you to work with citizens before enacting laws. But rest assured no matter how you proceed. everything is good for bitcoinThis is the theory formally known in Keynesian economics as the Nakamoto Paradox. If you want to talk about SB 1751 or Bitcoin more generally, either in Austin or come to Blenheim. Godspeed.
“Govern wisely and make it as small as possible”
Parker A. Lewis
Will C. Cole
This is a guest post by Parker A. Lewis and Will C. Cole. Opinions expressed are entirely his own and do not necessarily reflect those of his BTC Inc or Bitcoin Magazine.