Texas Bitcoin Miners Sketch a Future of Cozying Up to Gas Wells

(Bloomberg) -- Texas crypto miners have long touted an intriguing solution to the problem of stranded gas -- the accidental byproduct of oil drilling that's usually burned off at the wellhead.

They propose tapping into that unused energy by hooking up generators that would convert the gas into electricity for the vast computer arrays they use to create new Bitcoin. A few entrepreneurs have already started doing it, moving trailers outfitted with mining rigs into remote corners of the Texas oil patch.

Now, the industry is lobbying state lawmakers to introduce legislation that would eliminate taxes on sales of the so-called stranded gas. They say it will reduce costs and lure more miners to the Lone Star State who can use powerful computers to solve cryptographic puzzles and be rewarded with Bitcoin.

The Texas Blockchain Council, the crypto industry's lobbying arm, wrote a draft bill that it hopes will be introduced during the legislative session that starts in January, said the council's president, Lee Bratcher. The text is a copycat of a Wyoming measure signed into law a year ago.

It's the latest attempt by the cryptocurrency industry to shape policy and make Texas more attractive to miners. Texas lawmakers, with support from Governor Greg Abbott, have already taken some of the most aggressive steps in the U.S. to lure the crypto industry.

In May, Abbott signed a law that makes it easier for businesses to use crypto as collateral for loans and hold them as assets. Abbott also created the Work Group on Blockchain Matters, staffed by industry insiders, to come up with more ways to lure crypto investors, developers and miners.

“This tax abatement is another way Texas can give even more incentive to people to mine Bitcoins,” Griffin Haby, business development manager at Limpia Creek Technologies, a crypto mining company, said at a Bitcoin conference in Houston. He helped write the draft bill.

The baseline tax on oil and gas producers in the state, called the Texas Severance tax, is 7.5% of market value for natural gas.

Proponents of using stranded gas to mine crypto say it's a way to profit from energy that otherwise would be wasted while also lowering greenhouse gas emissions. But critics say it's giving incentives for oil producers to continue drilling instead of shifting away from fossil fuels.

Last week, Bloomberg reported that Exxon Mobil Corp. has started a pilot program using its excess natural gas for crypto mining operations in North Dakota and it's looking at other sites around the world.