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  • Texas buys $5mn BTC ETF, pushes for Bitcoin reserve plan

    Texas buys $5mn BTC ETF, pushes for Bitcoin reserve plan

    Texas pushes crypto strategy with new Bitcoin reserve plan

    • The state legislation sets aside $10 million for Bitcoin accumulation.
    • Texas is preparing a formal tender to choose a custodian for the reserve.
    • New Hampshire authorised a Bitcoin reserve and approved a $100 million Bitcoin bond.

    Texas is moving ahead with one of the most ambitious state-level crypto strategies in the country as it begins shaping the framework for a government Bitcoin reserve.

    The state has now taken its first formal step by acquiring $5 million in shares of BlackRock’s iShares Bitcoin Trust.

    The purchase is part of a wider plan triggered by legislation passed earlier this year, which allocated $10 million for future Bitcoin accumulation.

    The early activity positions Texas to become the first US state to hold a dedicated cryptocurrency reserve, giving it a lead in a growing competition among states exploring digital asset policies.

    Texas builds foundation for Bitcoin reserve

    The state has been gathering information from the cryptocurrency industry to help design how its reserve will operate.

    The review began after Texas issued a request for information in September seeking guidance on best practices for storage, security, and management.

    Industry groups sent detailed submissions covering custody models, investment structures, governance frameworks, and security systems.

    The process is part of a wider effort to ensure the reserve can be managed with clear procedures once it transitions from planning to execution.

    Texas officials are expected to follow this phase with a formal request for proposal.

    The tender will be used to select a custodian and determine the final operational rules for the programme.

    The recent $5 million allocation acts as a temporary measure rather than direct Bitcoin ownership while the state completes its selection process, according to a CoinDesk report.

    States explore government crypto strategies

    Other states have also gained exposure to Bitcoin, though through different channels.

    Michigan and Wisconsin accessed cryptocurrency markets through public-employee retirement funds.

    Wisconsin sold a $350 million allocation in May, according to public records.

    These moves reflect growing institutional interest at the state level, even in cases where governments have not yet adopted dedicated reserves.

    Several states are actively studying the idea of holding Bitcoin for strategic purposes.

    New Hampshire has authorised the creation of a government Bitcoin reserve, although it has not yet made any purchases.

    Last week, the New Hampshire Business Finance Authority approved a $100 million Bitcoin bond designed to support an economic development fund backed by cryptocurrency.

    The structure relies on private sector activity rather than direct state accumulation.

    Early development continues nationwide

    Arizona is also taking steps toward a government-level reserve.

    Its legislation directs unclaimed cryptocurrency assets held by the state into a dedicated reserve.

    The plan creates an initial legal foundation that could support future accumulation, although the full reserve framework is still in development.

    These early efforts reflect a rising interest among states in integrating digital assets into long-term financial planning.

    The state-level activity is unfolding alongside federal discussions.

    President Donald Trump has publicly supported the idea of a national Bitcoin investment strategy.

    The administration has issued an executive order directing officials to begin planning for a federal reserve structure.

    Government teams working on the project are now waiting for congressional approval before advancing to the next stage.

    Texas sets the pace in state crypto adoption

    Texas remains the most advanced of the state-level initiatives due to its legislative backing and its first confirmed investment.

    The move signals a shift from exploratory interest to practical implementation, with a structured plan for selecting custodians and defining reserve operations.

    The next steps will determine how the state transitions from temporary allocations to direct Bitcoin ownership once contracts and governance systems are finalised.

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  • Texas approves debtor-in-possession financing plan for BTC miner Rhodium

    Texas approves debtor-in-possession financing plan for BTC miner Rhodium

    Texas approves debtor-in-possession financing plan for BTC miner Rhodium
    • Rhodium filed for Chapter 11 with debts of up to $100M and assets of up to $500M.
    • The debtor-in-possession financing plan is offered by Galaxy Digital.
    • Galaxy Digital offers Rhodium a $30M loan or 500 BTC with a 9.5%-14.5% interest.

    Rhodium Enterprises, a Texas-based Bitcoin mining firm, has recently garnered significant attention following its Chapter 11 bankruptcy filing on August 24, 2024.

    With liabilities ranging between $50 million and $100 million, and assets valued between $100 million and $500 million, Rhodium’s financial struggles have highlighted the growing challenges within the cryptocurrency mining sector.

    Riot Platforms claims Rhodium owes it $26M

    At the heart of Rhodium’s financial distress is its strained relationship with its landlord and power supplier, Whinstone.

    This tension contributed to Rhodium defaulting on a $54 million loan in July, shortly before the company raised $78 million in additional lending. The strain has culminated in the filing of a lawsuit by rival mining firm Riot Platforms, which claims Rhodium owes over $26 million in unpaid fees.

    Texas approves debtor-in-possession financing plan for Rhodium

    Despite these setbacks, Rhodium has secured an unusual debtor-in-possession financing plan approved by a Texas court.

    This plan, offered by Galaxy Digital — a blockchain firm led by Mike Novogratz — provides Rhodium with a choice between a $30 million loan with a 14.5% annual interest rate or a 500 Bitcoin loan with a 9.5% interest rate.

    Notably, the Bitcoin miner has the option to repay the Bitcoin loan in US dollars, based on market prices at the time of repayment.

    The approval of this financing plan is particularly striking given the volatility of Bitcoin price, which adds a layer of uncertainty to Rhodium’s repayment obligations. Over the last month, Bitcoin has seen a nearly 11% decline, reflecting broader market instability.

    Rhodium’s struggles are not isolated; they are emblematic of the broader challenges facing the cryptocurrency mining industry. The recent Bitcoin halving has reduced mining rewards while rising electricity costs have eroded profit margins.

    As Rhodium endeavours to reorganize and recover, its journey underscores the precarious state of the crypto-mining sector in an increasingly volatile market.

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  • Riot Platforms and Texas Blockchain Council challenge EIA’s Bitcoin Mining data demands

    Riot Platforms and Texas Blockchain Council challenge EIA’s Bitcoin Mining data demands

    • TBC and Riot Platforms sue EIA over Bitcoin data demands, alleging intrusion.
    • Senator Warren’s involvement is seen as part of a broader political strategy.
    • Bitcoin mining faces scrutiny for energy consumption, environmental impact.

    In a bold move against the US Energy Information Administration (EIA), the Texas Blockchain Council (TBC) and crypto miner Riot Platforms have filed a lawsuit, alleging unlawful data collection demands targeting the Bitcoin mining sector.

    EIA’s data collection plan 

    Last month, the EIA announced plans to collect data on electricity consumption by certain US-based crypto miners, effective from early February. Commercial miners were mandated to disclose intricate details, including the types of machines used and the locations of their mining operations. The controversial move followed an emergency approval from the Office of Management and Budget on January 26.

    TBC, a non-profit association, expressed concerns over the sensitive nature of the information requested, fearing potential public disclosure. The council sees this as a direct assault on private businesses, characterizing it as a political manoeuvre under the guise of an emergency.

    The TBC points fingers at Senator Elizabeth Warren and the Biden administration, accusing them of orchestrating a targeted effort against the digital asset industry. The EIA’s push for oversight is viewed as an intrusion and a worrying escalation in monitoring and regulating the cryptocurrency sector.

    As part of a broader strategy, Senator Warren and other Democratic lawmakers had previously urged major US crypto mining companies to disclose their energy usage. The current legal action represents a firm industry backlash against what is perceived as increased regulatory scrutiny.

    Bitcoin Mining realities and environmental considerations

    The EIA, in a report dated February 1, highlighted a significant jump in annual electricity consumption by crypto miners, from 0.6% to 2.3%. Despite the benefits of Bitcoin mining, such as network decentralization and profit opportunities, the industry faces growing scrutiny due to its environmental impact.

    The Rocky Mountain Institute estimates global Bitcoin mining consumes around 127 terawatt-hours annually. This has sparked debates about the environmental sustainability of the industry. Proponents argue that compared to traditional sectors like banking, Bitcoin’s energy usage is relatively lower, but critics remain concerned about its contribution to global energy consumption.

    As the legal battle unfolds, the cryptocurrency industry finds itself at the crossroads of regulatory pressures and environmental accountability, navigating the delicate balance between innovation and responsibility.

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