Texas Bitcoin Reserve Legislation

Riot Platforms’ VP of Research, Pierre Rochard, testified before the Texas Senate Committee on Business and Commerce in support of Senate Bill 21, which aims to establish a state Bitcoin reserve.

His testimony on February 18 highlighted the proposal’s potential to strengthen state finances amidst economic uncertainty. He emphasized Bitcoin’s verifiable ledger and capped supply as distinguishing attributes from other digital assets.

Rochard, who has extensively written on Bitcoin and contributed to open-source projects since 2012 at the University of Texas at Austin, explained that a state reserve could serve as a hedge against future economic downturns.

He pointed out that Bitcoin’s open-source code and independently verifiable monetary policy allow for full audibility, contrasting its competitive public mining issuance process with the discretionary models seen in cryptocurrencies such as ETH or XRP.

The concept of self-custody and the advantages of multi-sig wallets in decentralizing wealth storage using Bitcoin were also part of his remarks.

He stressed Bitcoin’s finite supply—limited to under 21 million coins—and the tendency for investors to hold their investments long-term, highlighting its potential as a non-dilutive asset for public balance sheets.

Proposed Legislation Details

Senate Bill 21 aims to eliminate the previous $500 million annual cap on Bitcoin investments, allowing state officials greater flexibility to adapt to market conditions. The bill also allows for investments in other digital assets with a sustained 12-month average market capitalization above $500 billion, a cue that applies solely to Bitcoin for now.

The Texas Comptroller’s Office would oversee the Bitcoin reserve and ensure its security through cold storage and regular audits. Supporters of the legislation, including Lieutenant Governor Dan Patrick, consider the bill a priority, claiming it could diversify state assets and stimulate local economies.

In areas like Milam County, where Riot’s Rockdale facility operates, Rochard noted that mining facilities contribute significantly to local employment and public school funding through increased sales tax revenue, enhancing economic resilience against federal fiscal pressures.

Arguments For and Against the Reserve

Rochard underscored the reserve’s oversight mechanisms, stating robust management protocols and frequent audits would reduce risks. He positioned the reserve as both a financial safeguard and a strategic move for enhanced state fiscal autonomy.

The bill reflects a growing trend in several states reassessing their digital asset strategies, with Texas aiming to join those exploring legislative methods to integrate cryptocurrencies into public finance frameworks.

Proponents believe such measures could lessen dependency on traditional financial institutions, which have faced issues regarding transparency and accountability. By embracing Bitcoin’s decentralized nature and immutable ledger, supporters argue a state reserve could offer a trustworthy financial alternative.

Rochard’s testimony affirmed that despite Bitcoin’s market risks, its unique properties make a strong case for its inclusion in state fiscal planning. The Texas Senate Committee is set to vote on the bill in March 2025.