A new measure before the Texas senate asks for “a master plan for the expansion of the blockchain industry,” which, among other things, could make the state the nation’s capital of cryptocurrencies by offering tax-free Bitcoin purchases. The elected officials must act fast to seize the initiative before it is lost since the Texas legislature only meets in odd-numbered years.
Despite the bill’s uninspired name, it has innovative and intriguing concepts for digital assets. The legislature may come up with something slightly more catchy the next time around than “Relating to the creation of a work group on blockchain matters concerning this state.”
Putting aside the jargon of the government, Carla Reyes, an assistant professor of law at SMU Dedman School of Law, presided over the working group and produced some insightful ideas. The report, which offered innovative and exciting suggestions for digital assets, was presented to the legislature in November.
Texas residents will reap the rewards of a state setting the pace in the blockchain and cryptocurrency industries if the suggestions are put into practice during this legislative session. The elected officials must act fast to seize the initiative before it is lost since the Texas legislature only meets in odd-numbered years.
Zero Sales Tax
A two-year retail sales tax break would be granted for Bitcoin payments made at the point of sale. Everyone likes to save money when they purchase, so this would encourage both customers and retailers to look into virtual currency and set up the necessary equipment.
Innovative thinking Texas businesses are advancing right now rather than waiting for anticipated sales tax reductions. Since August 2022, the NFL football franchise Houston Texans has accepted Bitcoin and other cryptocurrencies as payment for single-game box suites. The Texans are collaborating with a financial technology partner so that they may instantly convert bitcoin payments into dollars, but they are not necessarily hanging onto the digital assets.
Perhaps businesses would be encouraged to keep onto the bitcoin and use it for their own purchasing purposes if Texas did adopt the sale tax holiday. This might be the impetus cryptocurrency needs to take off and become a widely used payment method.
Texas State Gov. Aping In
The working group advocated allowing the state of Texas to make direct bitcoin investments in order to continue the theme of integrating bitcoin with the state’s payment activities. Innovatively allowing Texas to retain bitcoin on its balance sheet and using that bitcoin for payments would probably continue to encourage the growth of the state’s digital asset infrastructure.
Government Bitcoin Mining
In 2022, three donated Ant Miner S9 bitcoin mining rigs were given to the City of Fort Worth Information Technology Department, and the city launched a trial program. The three machines were replaced over the year by more potent and energy-efficient Ant Miner S19 units when the effort became significant enough. Carlo Capua, the city’s director of strategy and innovation, suggested that mining operations continue at the municipal level.
Capua did point out that the pilot project was a chance to explore the consequences and prospects of mining rather than an opportunity for day trading or investing in bitcoin. The working group may have learnt more about possible benefits for bitcoin mining and the energy industry as a result of their endeavor.
Tax Incentives For Mining
The suggestions include a tax break on natural gas that has previously been flared and would be used to mine bitcoins as well as a tax break on the sale of energy to big flexible loads like bitcoin miners.
The reduction in severance taxes encourages the ecologically favorable switch from gas flaring to gas use in a generator. This win-win idea shifts tax incentives from burning gas to consuming it when it can be utilized locally, creating employment and boosting the economy in rural Texas.
Electricity tax incentives are meant to be a part of the answer for building a robust and resilient system. The suggestion is for the miners to cooperate with ERCOT, which manages the electrical grid in Texas, using a controlled or interruptible load approach.
The Texas Work Group also suggested creating a workforce program that would teach students technical knowledge of networking, hardware, software, electrical components, and heating and cooling requirements in order to equip them to contribute to the expanding bitcoin mining environment.
The workforce program has been adopted by Texas State Technical College, which plans to have its first genesis class in Q1 2023. The University of Texas A&M has also stepped up to offer a course titled “The Bitcoin Protocol” in its spring semester of 2023. Mining is not the focus of the A&M, but rather programming.
The Texas Future
The state of Texas is leading the way in the digital asset space and shows no intention to slow down. The acceleration of innovation within this sector has far reaching affects that will drive great benefits to the states citizenry.
The hardworking efforts of Senator Angela Paxton, Senator Tan Parker, and Representative Giovanni Capriglione in getting House Bill 1576 across the finish line and establishing a Work Group to identify how Texas can established a leadership position must be commended. Texans and the world will be watching as they seek to have all twenty-five recommendations agreed in the current Texas legislative session.