Texas is putting itself in a position to support the small sector that is blossoming around the nascent technology known as blockchain, despite the fact that many people still don’t fully understand it.
Blockchain is a component of Web3, which some engineers expect to be the next evolution of the internet. A distributed database known as a blockchain holds data in units of time known as blocks. The chains can have individual blocks added to them, but they cannot be changed or taken away. The function of blockchain in cryptocurrencies is one of its most well-known uses.
The state of Texas has already received its first set of recommendations from a group of business executives seeking to make the state a hub for blockchain and associated technology, such as cryptocurrencies.
The group, known as the Texas Workgroup on Blockchain Matters, which includes approximately a dozen representatives from state agencies, Texas universities, and the blockchain sector, presented more than 20 initiatives targeted at bolstering the state’s developing blockchain sector.
Christopher Calicott, managing director of Austin-based early-stage venture capital company Trammell Venture Partners, is a member of the group. The group was founded during the state Legislature’s 2021 session with the goal of assisting Texas in adopting a strategic approach to the sector.
Calicott noted that the group’s recent study, which includes its suggestions, should aid in elucidating to legislators how the technology and sector function, maybe resulting in new legislation that could support the developing blockchain sector.
I believe that this report will assist shed some light on the issues that we considered to be important, he added. The report, which stimulates a great exchange of ideas, is actually the first step.
The paper makes suggestions for the state’s use of technology in areas such as digital identification, business contracts, privacy, and education. Additionally, it proposes ways to control blockchain-related companies like DAOs, or decentralised autonomous organisations, which are internet-based corporations with no central management and member ownership.
Despite the fact that many Texans are still unaware of how the technology or sector function, the Lone Star State currently hosts a sizable amount of blockchain activity, including bitcoin mining. However, Calicott said Texas is increasingly a top location for individuals in the sector to think about opening up shop, particularly since China prohibited bitcoin mining.
It’s still very early, but it’s expanding, according to Calicott. If you’re a real business person and you’re somewhere else and you’re considering taking part in something like protecting the bitcoin network, you’re obviously thinking about your possibilities in Texas.
According to Calicott, the sector is expanding both in Texas’s rural areas and in tech-friendly cities like Austin.
According to him, “the (cryptocurrency) miners started realising that Texas was a stable, favourable regulatory environment, and start-ups also increased their interest in moving here or starting new enterprises here.” “It will ultimately generate a large number of diverse jobs in many locations.”
The workgroup is hopeful that as the new legislative session begins, state legislators will still be thinking about bitcoin and blockchain. As the legislative session gets underway, group members will make themselves available to decision-makers in the hopes that some of their ideas would be taken, although Calicott said that developing technology needed a lot of education.
He noted that Texas has been encouraging businesses to locate here while other states have been pushing some of the activity out, saying “Texas is really well positioned.”
Additionally, the state’s existing substantial technology sector aids in luring businesses and expertise involved in the blockchain. Bitcoin mining is also drawn to its energy assets.
At least on the energy and mining end of the spectrum, Texas will continue to offer a sizable potential, according to Calicott. “And other businesses will establish offices here as well because of all the startup activity in Texas.”
Governor Greg Abbott stated last summer that Texas lawmakers have previously indicated support for cryptocurrencies and blockchain “Texas is open for bitcoin trade. The original and most well-known cryptocurrency, bitcoin, is owned by Texas Senator Ted Cruz, who has also supported them.
Following the Texas Blockchain Council’s gathering at the governor’s home last year, Abbott forecasted that Texas “We’ll soon hold the top spot in blockchain and cryptocurrencies. The Texas Blockchain Council is an organisation that promotes the sector.
Given how power-intensive the industry is and how its thirst for electricity may encourage investment in additional generation, proponents of cryptocurrency mining have argued that the sector might assist stabilise the state’s electricity grid. Crypto miners are able to reduce their own energy use to increase the amount of power available statewide at periods of high general electricity demand and grid stress, according to their claims.
However, other experts worry that Texas’s growing crypto mining industry may have the opposite impact on the grid.
A number of recommendations linked to energy were included in the most recent report from the blockchain working group, including one to establish a tax break to encourage investment in natural gas-fired power facilities.
Additionally, it recommended that the state employ tax breaks to entice heavy electricity consumers like bitcoin miners who can adjust the timing of their demand if they agree to voluntarily reduce their power usage when necessary.
The city of Austin has an interest in developing blockchain-related technology, in addition to the state government.
A variety of measures to position Central Texas as a leader in the field were unveiled in March by city officials and local business leaders. Since then, though, a city-commissioned study on potential uses in local government has cautioned city departments about implementing the new technology, so it’s unlikely Austin citizens will be able to pay their electricity bills with cryptocurrency anytime soon.
The release of the state’s blockchain workgroup’s report coincided with new market volatility for cryptocurrencies and associated sectors. In recent weeks, the value of several significant cryptocurrencies has plummeted, and one of the biggest cryptocurrency exchanges, FTX, has collapsed and filed for bankruptcy.
But despite the setbacks, Calicott claimed that his company is still investing in the Texas blockchain startup sector and that a number of them are moving on full-steam.
He claimed that some of the truly differentiated work was being done in Texas. “Perhaps the rest of the world finds that shocking, but as a native Texan, I find it to be totally predictable. We’re placing some significant bets as a result here in Texas.”