Key Takeaways
- Cheap electricity and favorable regulations have drawn crypto miners and data centers to Texas.
- Giant data centers have led to a surge in demand for electricity.
- Lawmakers are concerned about the impact on everyday Texans’ energy bills.
In recent years, an abundance of cheap electricity and an accommodating regulatory climate have made Texas a magnet for crypto miners and data centers.
But as these industries start to strain the state’s electrical grid, proposed legislation threatens to cut short Texas’s golden age of industrial computing.
Crypto Mining and Data Centers in Texas
Large crypto mining operations and commercial data centers require the same basic resources: Space and a reliable power source.
As the largest state after Alaska, Texas has plenty of room for building. And thanks to its natural gas resources and more than 16,000 wind turbines, it is also the nation’s leading electricity producer.
While the Texas grid isn’t necessarily the cheapest for consumers (that title goes to North Dakota), the state is especially attractive for industrial applications.
For crypto miners, Texas’s demand response programs have proven especially lucrative. These dynamic pricing schemes let miners buy power at a discounted rate when the general demand is low. During peak times, they can then sell excess power back to the grid.
Such schemes have attracted major Bitcoin (BTC) miners, with the likes of Riot Platforms and Marathon Digital operating huge facilities in the state.
An analysis published in Nature found that between 2021 and 2023, Texas’s share of the U.S.’s total Bitcoin hash rate grew from 8.43% to 28.50%.
Cloud data centers have also boomed in the Lone Star State.
In the year to July 2024, the Austin–San Antonio corridor witnessed a fourfold increase in under-construction data center capacity. The central Texas region is now on track to become the second-largest data center market in the country, behind Northern Virginia.
Texas Grid Under Strain
Across Texas, the Bitcoin mining boom and a Big Tech data center expansion have led to surging demand for electricity, which is predicted to nearly double by 2030.
While the tech industry has often celebrated Texas for having one of the most unregulated energy markets in the country, legislators have suggested that the largest users may require greater oversight.
In March, a bipartisan group of state senators introduced a bill that would create stricter planning standards for power-hungry developments, like data centers.
Lawmakers Question Current Model
Senate Bill 6 (SB6) suggests that even Texas’s famously pro-business approach to industrial computing has its limits.
Proponents of Texas’s demand-response schemes argue they help stabilize the grid. But while Bitcoin miners now generate tens of millions of dollars each month selling power to the Texas electricity board, household bills have risen, creating a bone of contention for many consumers.
Across the U.S., the vast amounts of electricity used to power AI data centers have led to similar concerns about the effect on prices.
In Texas, politicians tend to favor increasing statewide capacity. But at the current rate, new power generation projects will never be able to keep up with demand.
“I think we need to rise to the challenge of getting the needed generation onto the grid,” SB6 sponsor Charles Schwertner remarked. “But there is eventually a prioritization that could be discussed, and obviously Texans—their families, their homes, their businesses — are the most important individuals, the most important clients for electricity.”
Lieutenant Governor Dan Patrick put it even more bluntly.
“Crypto mining may actually make more money selling electricity back to the grid than from their crypto mining operations,” he noted last year, warning that “Texans will ultimately pay the price” under the current model.
“We want data centers, but it can’t be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off,” he stressed.
James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
