First Purchase Made Through IBIT

Lee Bratcher, president of the Texas Blockchain Council, announced that the state’s first Bitcoin purchase was executed through BlackRock’s IBIT ETF. This method allowed Texas to operate within a compliant and easily implementable framework during the initial phase. According to officials, the state plans to eventually secure its Bitcoin holdings using a self-custody model.

According to Bratcher’s statements, the first transaction amounted to $5 million. Texas has allocated a total budget of $10 million for the Strategic Bitcoin Reserve—though not all of these funds have been deployed yet. Therefore, the $5 million IBIT purchase marks both the first step of the reserve and the first-ever Bitcoin investment made by a U.S. state government.

Texas Bitcoin Reserve Law and SB 21

This purchase was made possible under SB 21, a bill signed in June by Governor Greg Abbott. The legislation authorizes the creation of a state-managed Bitcoin reserve in Texas and delegates its administration to the Texas Treasury Safekeeping Trust Company.

Senator Charles Schwertner, one of the legislative supporters of SB 21, had emphasized that the state “should have the opportunity to benefit from Bitcoin, one of the best-performing assets of the past decade.” This approach underscores Texas’s growing inclination to view Bitcoin as a long-term reserve asset.

A New Era for Digital Asset Policy in Public Institutions

Texas’s Bitcoin purchase marks an important milestone for U.S. public institutions considering crypto assets as part of their strategic reserves. This development is interpreted as the beginning of a broader shift in public treasury management practices.

Additionally, the formal recognition of Bitcoin as a reserve asset indicates that policymakers are adopting an increasingly positive stance toward digital assets. The decision to conduct the first purchase via IBIT reflects a compliant, secure, and regulated approach at the early stage of the reserve program.

Texas Treasury Portfolio and the Role of IBIT

According to the latest reports from the Texas Treasury Safekeeping Trust Company, the portfolio includes:

• Approximately $667 million in SPY
• Approximately $34 million in Janus Henderson funds

If Bratcher’s statements hold true, the $5 million IBIT purchase will become the third asset category listed in the treasury’s portfolio.

Despite being less than two years old, IBIT has quickly become one of the most preferred Bitcoin ETFs among U.S. institutions. Harvard holding nearly 7 million IBIT shares as of September 30 and Abu Dhabi’s sovereign wealth fund increasing its IBIT exposure are strong indicators of the ETF’s rising global acceptance.

Overall Assessment

Texas’s Bitcoin purchase is viewed as a historic step not only for the state’s own crypto asset strategy but also for public-sector adoption of digital assets in the U.S. With this acquisition, Texas has become the first government entity to formally treat Bitcoin as a long-term reserve asset. This move could set a precedent for other states and public institutions, potentially accelerating institutional-level Bitcoin adoption across the country in the long run.

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On May 7, the House Committee on Government Efficiency and Accountability passed Senate Bill 21 (SB 21) in a 9-4 vote, divided along party lines. The bill had previously passed the Texas Senate on March 6 with a 25-5 vote.

Texas Strategic Bitcoin Reserve Taking Shape

SB 21 proposes the creation of a state-run fund called the Texas Strategic Bitcoin Reserve. The reserve would be managed by the state comptroller, currently Glenn Hegar. According to the bill, the fund would be permitted to invest only in digital assets with a market capitalization exceeding $500 billion over the previous 12 months — which, for now, limits it to Bitcoin.

Originally introduced by Senator Charles Schwertner in January, the bill was initially exclusive to Bitcoin. However, a revision in February broadened its scope to potentially include other digital assets in the future.

Julian Fahrer, founder of Bitcoin Laws, noted that the Texas legislative session ends on June 2, meaning a decision on SB 21’s fate is expected before then.

If the bill passes the full House vote, it will be sent to Governor Greg Abbott, who has previously voiced support for making Texas the crypto capital of the United States. Abbott accepted Bitcoin donations during his 2014 campaign and has continued to advocate for pro-crypto policies.

Other U.S. States Join the Crypto Reserve Trend

Texas is not alone in exploring crypto reserves. On the same day SB 21 moved forward, Arizona Governor Katie Hobbs signed a bill allowing the state to hold abandoned crypto assets and create a Digital Asset Reserve Fund. This fund will not rely on taxpayer money and can generate value through staking or airdrops.

Just days earlier, New Hampshire Governor Kelly Ayotte signed a law enabling the state treasury to invest in digital assets with a market cap above $500 billion — again pointing primarily to Bitcoin.

In contrast, Florida withdrew two Bitcoin reserve proposals on May 3, the same day the legislature passed 230 other bills, including those restricting smartphone use in schools and implementing public park protections.

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Bitcoin Mining’s Contributions to Energy Grids

Miners strategically position themselves near renewable energy sources, utilizing excess electricity to enhance the economic sustainability of these resources. This practice increases the financial feasibility of wind and solar energy projects, encouraging further investments in renewable energy. Additionally, Bitcoin mining plays a significant role in strengthening energy infrastructure. 

In the U.S., some politicians emphasize the positive impact of Bitcoin mining on energy grids, advocating for supportive policies. Texas Senator Ted Cruz highlights that miners contribute to grid stability by quickly reducing energy consumption during energy crises. 

Recent developments include former President Trump announcing plans for a national Bitcoin reserve through an executive order. Concurrently, Senator Cynthia Lummis introduced a bill to Congress aiming to establish a strategic Bitcoin reserve. These developments enhance Bitcoin’s influence in the financial system and boost confidence in the mining sector. Clear and consistent regulations create significant opportunities for Bitcoin mining, fostering innovation and attracting new investments. 

A new bill, shaped by the Financial Innovation and Technology for the 21st Century Act (FIT21), is being prepared. This bill aims to eliminate regulatory uncertainties in the crypto sector by clearly delineating the jurisdictions of the SEC and CFTC. FIT21 offers a predictable legal framework, replacing reactive approaches with stability and fostering trust and sustainable growth in the sector. 

Bitcoin Mining and Environmental Concerns 

However, environmental concerns have led to calls for restrictions on mining activities in some regions. In New York, a Bitcoin mining facility faced potential closure due to environmental impacts, but a court allowed it to continue operations. This underscores the need for balanced and informed regulations to address mining’s contributions to energy systems. According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin mining consumed 154.9 billion kWh of electricity in 2023, perpetuating environmental concerns. 

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What the Bill Includes

• A reserve fund made of seized digital assets from criminal proceedings.
• The state treasurer can invest up to 10% of the fund in digital assets per fiscal year.
• Loans can be made from the fund to boost returns, as long as risk remains controlled.

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However, Governor Hobbs has recently vetoed 15 bills in one week and pledged to block all legislation until a disability funding bill is passed.

US States in the Bitcoin Reserve Race

Arizona is also advancing SB 1025, a separate bill focused solely on Bitcoin (BTC), allowing public retirement systems and the treasury to allocate up to 10% in BTC.

Other states like Texas, Utah, and New Hampshire have proposed similar legislation. But according to Bitcoin Laws founder Julian Fahrer, Texas may be the first to succeed due to fewer political hurdles.

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Texas Introduces Second Bitcoin Reserve Bill

On March 11, a document published on the Texas state government website revealed that the second Bitcoin reserve bill, HB 4258, has been introduced. This marks the second BTC reserve bill in the state, following Senate Bill 778. SB 778 has already passed the Senate with a majority vote and is now awaiting review by the House.

Unlike the first bill, HB 4258 would grant the Comptroller of Texas, the state’s chief accountant and financial watchdog, the authority to invest up to $250 million of the state’s economic stabilization fund in BTC or other crypto assets.

Moreover, the bill also allows municipalities or counties to invest in Bitcoin or other cryptocurrencies, with a limit of $10 million of their funds allocated to crypto. The first bill, SB 778, did not specify the amount the state could invest in Bitcoin or crypto, though it outlined plans for the state to begin collecting taxes and accepting donations in cryptocurrency. Additionally, there is a minimum five-year ban on the sale of state-held Bitcoins in Texas.

Texas Approves Bitcoin Investment for Public Funds

Earlier this month, the Texas Senate approved a proposal to allow public funds to be invested in Bitcoin with a 25-2 vote. The Texas House will now review the bill and decide whether to reject or approve it by May 24. According to Dennis Porter, founder of the Satoshi Act Fund, House members may expedite the process, bringing the proposal to the governor’s desk soon.

According to the Bitcoin Reserve Monitor, at least 21 U.S. states are considering strategic reserves for cryptocurrencies. Each state is at different stages of the legislative process, with 19 states still awaiting legislative approval, two states evaluating proposals, and five states rejecting them.

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Rejection of the Bitcoin Reserve Bill!

In Montana, a bill aimed at directing public funds toward Bitcoin and other digital assets was voted down in the House of Representatives by a margin of 41 to 59. The bill sought to diversify the state’s assets and generate higher returns. However, despite Bitcoin being the only digital asset meeting the bill’s criteria, it faced strong opposition from lawmakers.

This rejection increases the number of U.S. states that are unwilling to use public funds for Bitcoin investments. North Dakota, Wyoming, and Pennsylvania are also among the states that have refused similar regulations.

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States Open to Bitcoin Reserves

Some states, on the other hand, are making progress toward legalizing Bitcoin reserves. According to Bitcoin Reserve Tracker, 19 states, including Arizona, Illinois, Kentucky, Maryland, Oklahoma, New Hampshire, and Texas, still have Bitcoin reserve-related bills under consideration.

• Utah: The “Blockchain and Digital Innovation Amendments” bill includes a provision allowing the state treasury to allocate up to 5% of its funds to digital assets. The bill is still pending.
• Arizona: The Senate Finance Committee has approved a bill that would allow public funds (including pension systems) to allocate up to 10% to cryptocurrencies. The bill has been sent to the Senate Rules Committee for further review before moving to the House of Representatives.
• Texas: Two separate bills are under discussion. One proposes allocating 1% of the general revenue fund to Bitcoin, while the other covers Bitcoin donations and crypto payment conversions.

Other Countries Are Also Considering Bitcoin

As some U.S. states explore the legalization of Bitcoin reserves, the topic is gaining traction globally. Countries like Switzerland, Brazil, Japan, and Russia are evaluating the inclusion of Bitcoin in their national reserve strategies.

With the growing debate over the role of cryptocurrencies in public finance, new legislative proposals and regulatory changes are expected in the coming months.

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This bill would allow Michigan to invest in cryptocurrencies through the general fund and economic stabilization fund, with a maximum allocation of 10%. However, it does not impose specific restrictions on which cryptocurrencies can be purchased. Additionally, the bill includes a provision allowing the state to lend cryptocurrencies to generate additional returns.

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Representative Bryan Posthumus stated that this bill would position Michigan alongside Texas as a leading state in crypto policy. Texas recently proposed similar legislation allowing the state to invest in digital assets.

Furthermore, on February 13, Posthumus suggested the idea of “MichCoin”, a stablecoin backed by Michigan’s gold and silver reserves. He believes this could add real value to the state’s economy.

Michigan’s state pension fund already holds exposure to Bitcoin and Ethereum exchange-traded funds (ETFs). Currently, 20 U.S. states have introduced crypto reserve bills. North Dakota remains the only state to have rejected legislation related to crypto investments.

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Bitcoin Mining is Getting Harder!

The difficulty of the Bitcoin network surged to 110 trillion, making it harder for miners to produce new blocks. With the increased computation power required, miners had to upgrade their equipment. Riot Platforms managed to overcome these challenges by launching a new mining facility, boosting its production.

Riot Platforms opened a massive new mining facility in Texas, allowing them to ramp up production. CEO Jason Les stated, “The Corsicana Facility reached a hash rate of 15.7 EH/s by the end of the month, and we saw significant improvements in our operational hash rate with newly deployed miners.” Riot’s move stands out as a success in the face of tough market conditions.

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Among the leading miners, Hut 8 saw a 27% drop in production in January, while Mara and Bitfarms experienced decreases of 12.5% and 4.7%, respectively. Miners are taking steps to upgrade infrastructure and improve equipment to handle the rising difficulty.

In the last week of January, Bitcoin mining difficulty decreased to 108 trillion, providing some relief. However, with the Bitcoin network’s high hashrate (832 EH/s) and declining hardware demand, miners are preparing for new strategies that could shape future operations. Miners will adapt their approaches in the coming months based on these developments.

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On December 13, 2024, Riot Platforms, Inc. (the company) announced that it had purchased approximately 5,117 Bitcoin between December 10, 2024, and December 12, 2024, for a total of around $510 million.

The acquisitions were made at an average price of $99,669 USD/BTC, inclusive of transaction fees and expenses.

As of December 12, 2024, the company’s total Bitcoin holdings have increased to 16,728 BTC.

The Bitcoin purchases were funded through a portion of the net proceeds from the issuance of 0.75% convertible senior notes maturing in 2030, as well as existing cash reserves.

What Is Riot Platforms (RIOT)?

Riot’s sision is to become the world’s leading Bitcoin-Focused infrastructure platform Riot is a Bitcoin mining and digital infrastructure company dedicated to a vertically integrated strategy.

The company operates Bitcoin mining data centers located in Texas and Kentucky, along with power switchgear engineering and manufacturing operations based in Denver, Colorado.

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Speaking on November 21 at the North American Blockchain Summit in Texas, Porter stated that this legislation would be an important step for Texas. “Texas moving forward with a strategic Bitcoin reserve law will have an impact that cannot be underestimated,” he said.

Texas has the eighth largest economy in the world with a GDP of $2.4 trillion by 2022. This suggests that a Bitcoin reserve could provide a huge strategic advantage for Texas. The idea comes as an extension of a bill to create a national Bitcoin strategic reserve, previously introduced by US Senator Cynthia Lummis in July. If passed, this bill aims to create a Bitcoin fund for the US and provide a hedge against the national debt.

Porter said that strategic Bitcoin reserves would not only be a hedge against inflation, but would also secure Bitcoin mining in the US. Since Bitcoin mining operates on tight margins, there is a risk that external factors could negatively impact the sector. “The strategic Bitcoin reserve is essential to prevent external actors, such as Russia or China, from suppressing Bitcoin prices and destroying American mining,” he said.

Porter compared the Bitcoin reserve to important strategic decisions in US history, such as the Louisiana Purchase and the acquisition of Florida and Alaska. He also recalled that during the US presidential elections, Donald Trump made cryptocurrency promises during his campaign, such as the “creation of a strategic stockpile of Bitcoin”.

This idea has gained momentum in recent years, with many state and national governments discussing the creation of strategic Bitcoin reserves. In Pennsylvania, the legislature has also introduced a bill giving the state the right to hold Bitcoin in its treasury funds.

Internationally, Polish presidential candidate Sławomir Mentzen also pledged on November 17 to create a Bitcoin reserve in his country if elected.

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