Eco-Friendly Bitcoin Mining: Is Texas the New Crypto Capital? (feat. Lee Bratcher)

Is eco-friendly Bitcoin mining the future of the industry, and is Texas becoming the new global crypto capital?

In this forward-looking episode, we sit down with Lee Bratcher, President of the Texas Blockchain Council, to explore how the Lone Star State is shaping the future of crypto.

From land registries and state-level legislation to the real-world application of sustainable mining, Lee breaks down the serious infrastructure moves Texas is making.

If you're an investor or innovator curious about how policy, property rights, and decentralization collide, this episode delivers the insights.

Timestamps:

00:00 – Introduction to Blockchain Advocacy
01:34 – The Vision for Texas as a Blockchain Hub
03:06 – Understanding Blockchain Basics
05:41 – Misconceptions and Clarifications about Blockchain
08:07 – Blockchain in Real Estate and Land Registries
10:54 – Practical Steps to Enter the Blockchain Space
12:12 – Regulatory Landscape for Bitcoin Mining in Texas
15:20 – Eco-Friendly Solutions in Bitcoin Mining
18:34 – Impact of Texas Policies on Global Blockchain Trends
20:40 – Learning Resources for Bitcoin and Mining
22:15 – Getting Involved with the Texas Blockchain Council
24:24 – The Future of Blockchain Technology
26:14 – Property Rights and Blockchain Innovations
28:15 – Caution Against Speculation in Cryptocurrency
30:10 – Closing Thoughts and Future Events

Guest:

Lee Bratcher
President, Texas Blockchain Council | Bitcoin & Blockchain Policy Advocate

Host:

Melissa Aarskaug

Executive Connect: https://www.executiveconnectpodcast.com
YouTube: https://www.youtube.com/@ExecutiveConnect

Connect With Us:

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Episode Transcript

(00:00):
When the Bitcoin blockchain paper was published, this was 2009.

(00:03):
That was the first time in history where you could transfer value on the rails of the internet.
Have the ledger updated in real time.
Without any intermediaries,
revolutionary about this technology,
it is valued, transfer, at its very core.
Whether that's transferring Bitcoin, stablecoins,
the tokenization of real-world assets, even money market funds.

(00:23):
We're using stranded power.
We don't want to go into a major metropolitan area and use expensive power because that power
was high in demand.
And we would see tokenization in the real estate sector and other real-world assets
on the business side.
And so what I mean by that is in the structuring of these financial instruments that people

(00:46):
syndicate in order to buy property.
I think what's here and now and what people can refuse to learn to get up to speed on how
the asset transfer mechanisms work in the digital asset world is to open a wallet by Bitcoin.
[MUSIC]
Welcome to the Executive Connect podcast.

(01:07):
I'm Alyssa Arskog and today I'm excited to welcome
Lee Bratcher, founder and president of Texas Blockchain Council.
Welcome Lee and thank you for being here today.
Thanks for having me, Melissa.
Looking forward to the conversation.
I'm so excited to talk to you.

(01:28):
You built the Texas Blockchain Council into a powerhouse for blockchain advocacy.
What inspired you to focus on making Texas a hub for blockchain and Bitcoin?
And how has this vision evolved?
Yeah, no several years ago, 2019, I saw a report from the Brookings Institute that said that

(01:52):
that Texas was reactionary and eloquit and unprepared in the realm of blockchain policy.
And so there were other states that were leading the charge that were winning business,
that were winning entrepreneurs and capital allocators to move to those states.
And I was disappointed that Texas hadn't taken a lead because Texas is a jurisdiction that

(02:18):
prides itself in being pretty business-friendly and also being at the forefront of innovation, right?
And especially now with DFW earning the moniker Yel Street,
there's more finance professionals in Texas on a per capita basis than anywhere else in the world,
or anywhere else in the United States except for New York City.

(02:42):
I think the digital asset and crypto ecosystem is realizing that over the last couple years,
it's starting to make their home in places like Houston, Dallas, and Austin.
I love it. I'm so excited to talk about this today.
Now let's start with the basics and the essentials for those that are new to blockchain.
Can you share a little bit about what it is and some foundational knowledge before we get started?

(03:07):
Sure. Yeah, it is at its core, just a ledger.
So, Debellinger Accounting, it's the way that we tracked value transfer for centuries since the 1500s.
Debellinger Accounting is a great system but it doesn't work without a significant

(03:27):
structure of intermediaries and databases and ledgers.
And so, when the Bitcoin blockchain paper was published, it's the first time in history,
this was 2009, the white people were published in GDAS-Nate, the first Bitcoin transaction was 2009.
That was the first time in history where you could transfer value on the rails of the internet,

(03:49):
have the ledger updated in real time without any intermediaries and the counter parties did not
necessarily need to know each other or be in the same geographic area. And so,
that's really what's revolutionary about this technology. It is value transfer at its very core.

(04:11):
So, whether that's transferring Bitcoin, stablecoins, the tokenization of real-world assets,
even money market funds, are being tokenized by BlackRock and other large behemoths of the
French services industry. Pretty much all assets will run on the rails of blockchain,
just like all information today runs on the rails of the internet, right? So, 30 years ago,

(04:37):
very little of the information that we had ran on the rails of the internet. It still was
in Encyclopedias and in the brains of very intelligent figures, thought leaders. But over the last
couple several decades, pretty much all of that information has migrated to the internet. And
culminating now in this A.I.G.M. where that information is being able to be aggregated and queried

(05:02):
at an increasingly rapid pace, the same is happening with asset transfer. So, anytime we're recording
asset ownership, asset transfer, updating ledgers about who owns what, whether that's
any asset released from stocks to bonds to real estate, that will all one day happen.

(05:25):
On on blockchain rails. I'm curious, what are some of the misconceptions about
blockchain that you've encountered and how can we kind of reframe those concerns?
Yeah, I'll start with the terminology. It's pretty complicated because when we use the term
blockchain, it's a very broad overarching term, similar to the term Web3, there's a lot of things

(05:50):
that fall under it. Of course, the biggest bucket under blockchain is Bitcoin. Bitcoin is the
premier digital asset is the first instance of blockchain technology. And there are other
verticals of digital assets within the blockchain, kind of digital asset umbrella. You also have
other cryptocurrencies like Ethereum and Salana. Those are considered to be more of the programmable

(06:16):
blockchain, like smart contract platforms where you can program business logic into the chains.
You can also program business logic into Bitcoin, but it's less frequently used for that. Bitcoin is
kind of the asset, the currency, the store of value, whereas Ethereum, Salana, and so these other

(06:38):
chains are serving different purposes. And then you've got other components within digital assets,
like tokenization of real-world assets. That could be the tokenization of dollars that's stable coins.
You know, stable coins did more transaction volume last year globally than the Visa credit card network.
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(07:29):
Getting started. So I think Visa actually has a dashboard that tracks this. Visa, a master card are
both getting involved in stable coins because they realize that money should move at the speed of the
internet, not at the speed of 3% transaction fees and, you know, T plus 2 transaction time and lack of

(07:50):
financial, not lack of finality. You know, ACH transactions can be clawed back 90 days after the
transaction has been made. So we're getting there, I think, in a lot of ways in the traditional
finance world, but blockchain and digital assets is going to get us there a lot faster.
Yeah, that's unbelievable. They hear with Visa and MasterCard and I'm excited to see what's

(08:15):
going to happen in Texas. Now, we hear research on blockchain and land registries. How can businesses
and individuals benefit long term? Yeah, my PhD research was on the property rights,
blockchain for land administration. My thesis was essentially the technology is there to do this,

(08:36):
but the institutions and particularly like the land registry offices, the county clerks offices,
they're very, very little incentive to innovate. So I predicted that it would,
that it would lag from a records land administration standpoint because that is a function
administered by governments, but that we would see tokenization in the real estate sector and

(09:01):
other real world assets on the business side. And so what I mean by that is in the structuring of
these financial instruments that, you know, people syndicate in order to buy properties, right? So
take the typical structure Melissa that you guys are very familiar with, like the general partner,
limited partner structure, that is where you can tokenize some of that limited partner ownership

(09:27):
and even general partner ownership doesn't matter. And those assets can trade with greater liquidity,
24/7, you know, should there, right now, they're not 24/7 because you have to trade them on
alternative trading systems, ATSs, which are regulated, you know, securities exchanges

(09:48):
for these kinds of assets, you know, but I think in the future we'll see those trade like crypto trades,
24/7. Now, there has to be an amalgamation of that, you have to have a marketplace with clear
information, enough liquidity, enough buyers and sellers. And so, you know, you may not see like one

(10:10):
individual building being tokenized and trading with that kind of liquidity in the near term, but
I think all of that is coming. And it goes back to the original conversation we had at the top of the
call, which is we're transferring, we're democratizing asset ownership and we're making it faster and

(10:31):
cheaper for the asset owners to acquire more of the asset, sell the asset, and do whatever they want,
exercise their property rights over the asset. Ready to lead smarter and invest wiser? On the executive
connect podcast, we unpack executive strategies for wealth and influence, hit the subscribe button now,

(10:56):
don't just watch, act. Seems a lot easier, right, than historically in other areas. And so I love first,
you know, I've had a lot of these conversations recently with people that are learning about it,
are, you know, concerned about it, but they're watching from afar. So from someone that's looking to

(11:16):
invest in or adopt blockchain, what is one kind of practical first step that they can take from your
experience? I think the easiest way to get into it, you know, there are real estate assets that are
trading that are tokenized right now and you can go find those, but that use case has got a few more

(11:41):
years left in it before it's ubiquitous and before like all real estate deals are syndicated in that
way. I think that's several more years away. I think what's here now and what people can use to
learn to get up to speed on how the asset transfer mechanisms work in the digital asset world is just
to open a wallet and buy Bitcoin. By Bitcoin, you stablecoins anytime you have to send money over

(12:06):
C's or send money where you are going to have $30 wire transfer fee, just use stablecoins and Bitcoin.
I mean, stablecoins, you can send a million dollar to stablecoins for just a few cents transaction fee
and it'll clear in moments, right? And then opening a Bitcoin, a wallet,

(12:29):
it binds in Bitcoin, Ethereum or some other digital asset and playing around with that and understanding
how the custody works, you know, understand the difference between self-custody and institutional
custody. I think that's the best way to get into it right now. I love it. Now in Texas, shifting to a
really hot topic right now is Bitcoin mining and their regulatory environments are trending right now

(12:56):
in Texas. With your focus in this area, what's your take on where we're headed from a regulatory standpoint?
Yeah, we've got some great things happening both at Texas and at the federal level. Obviously,
federally, we expect to see market structure legislation and stablecoin legislation this year.
I think that's, it's not a foregone conclusion, but extremely likely is what I would say.

(13:24):
In Texas, we are, in fact, just yesterday, Senate Bill 21, the Texas Strategic Reserve Bill,
just one that we've been working on for a long time, past the Senate Business and Commerce Committee
unanimously. It will be through the floor of the Senate soon and over to the Texas House.
We expect over the next 45 days it will move through the House in past, maybe not unanimously,

(13:48):
but it will pass. And it's likely that the governor will sign that in the law in the coming months.
Of course, you also have Bitcoin mining in Texas, about 45% of all, US Bitcoin mining takes place in
Texas. And there are a couple of bills that we're watching closely like Senate Bill 6 related to

(14:08):
energy consumption, data centers, large loads, like Bitcoin mining and AI, data centers.
And we do a lot of advocacy on the policy front, but I don't want to bore your audience too much with
the nuances of grid policy and data center policy, but we're happy to dive into that off line.

(14:29):
Yeah, that's a good point. Is there anything that they should be aware of and for what's coming or
just let it flow as it comes out? You know, I think it's interesting for people to realize that the
state of Texas is actually going to put Bitcoin in the balance sheet. The comptroller's office is going to
have Bitcoin in a strategic Bitcoin reserve likely this year. This is exciting. And I think people,

(14:58):
when they see that Texas is moving in this direction, of course, we have the Texas stock exchange.
It's opening up here in Dallas. The New York Stock Exchange just announced that it's moving all
there, like Chicago, Sub-Exchange is to Texas. Really Texas is the place to be for financial services.
And we're already a powerhouse in energy. We produce more energy than any other state,

(15:23):
more energy than California by a long shot, even though they have about 30% more people than we do.
And we're also going to be a leader in financial services. And innovation too, I think innovators are
pouring out of California and into Texas by the day. And so Austin is a little bit stronger than Dallas

(15:45):
in Houston on that front, I think it's known as Silicon Hills versus Silicon Valley. So we're
excited about all those developments. It's so true. With South by Southwest coming up here,
I'm excited to see how things shake out with that. There is a ton of buzz on YouTube about
sustainable mining practices. I'm curious from your perspective, how does Texas blockchain,

(16:11):
council, promote eco-friendly solutions? Sure. Yeah, mining does use a lot of energy. And
depending on the day, on a nice beautiful day like today, it would use about 5% of all power
produced in the state of Texas. And other data centers are using, you know, double that, probably

(16:32):
about 10%. And that could be a scary number if someone doesn't understand the way in which the
power is used, right? So the first thing that I'd say is we're using stranded power. We don't want to
go into a major metropolitan area and use expensive power because that means that power is high in the

(16:56):
man. If power is expensive, it's in high demand and if power is cheap, it's in low demand. So we go into
the rural areas using excess wind and solar, excess power that was never going to make it to a
population center anyways. There wasn't enough transmission capacity to get it there. I think what
a lot of people don't know is a good bit of the power that we produce globally is actually

(17:19):
unused and wasted. Just because you can't get that power to the point of use, there's not
enough transmission and it's not the right time of day. You know, you have to use, produce power
and use it within the same, you know, a few seconds of time. And so that's just how the game goes. So we
locate the industry locates Bitcoin mining operations far from population centers using excess and stranded,

(17:45):
typically renewable energy in West Texas. And another thing that we have worked on is a piece of
legislation that clarifies that flared gas. So gas that is, this is natural gas that's
what's called associated gas that comes up out of the ground when you're drilling for oil,
typically in order to not vent that gas in the environment, which is much worse for the atmosphere,

(18:12):
they burn it, you know, producing CO2, but that's way less than like the methane that was just
venting. So they'll flare it, they call that flaring. So we actually authored some legislation that
clarified that it is not a taxable event, not a severance taxable event, to redirect that flared

(18:32):
stack from the flared to a generator for onsite production for a mobile data center in Bitcoin
mining AI or otherwise. And so what that does is actually create a 67% reduction in the carbon footprint
of a flared that was previously just flaring that gas in the environment. So a couple of different

(18:56):
ways where Bitcoin is really driving clean energy innovation, driving investments in renewables
and nuclear power, and also reducing some flared gas. That's great to hear. I'm, you know, I know
global interest in cryptocurrency. There's so much interest around the world to invest in

(19:17):
cryptocurrency. How do you, I'm curious, how do you think Texas policies and legislation changes
are going to affect the other states or other countries around the world?
Well, it is a concept called game theory that I think many of your listeners will be familiar with
that if there's no jurisdictions or sovereign entities that are giving an industry any time of day

(19:45):
or any interest, then there is no game theory pressure for other jurisdictions or sovereigns to
take interest. But the theory goes or kind of the process or the logic goes that as countries do
start taking interest in passing things like strategic Bitcoin reserves and realizing that digital

(20:09):
assets are the future of value transfer and the future of finance, they will start taking notice.
And so the faster they start to pile in, the more pressure there is on the ones that have yet
to pile in. And so right now we're kind of still in that early adoption phase. And we still probably

(20:29):
have 20 more years to go before we get to the point where these assets are ubiquitous and used by
all 8 billion people across the world right now only about 500 million people globally have a wallet
or transact in digital assets, stablecoin, script or otherwise. So long ways to go, still early days.

(20:52):
That's interesting, that's not a lot, right? Given I'm curious how that stacks up against other
investments around the world, but 500,000 is not a lot. So get in early, five hundred million.
Five hundred million. Okay, there we go. But still that's only one sixteenth of a global population.
It's less than 10%. Yeah, that's so get in early, I hear. Get in before everybody then.

(21:20):
We like to ask our listeners, I know Bitcoin has been something that has been of interest to our
listeners to submit questions about Bitcoin. So we have one, how do I start learning about Bitcoin
and Bitcoin mining? Do you have any recommendations on where to start?
Yeah, for Bitcoin and digital assets, I would go to one of the exchanges. They have really good

(21:45):
quality educational content, exchanges like river, Coinbase, Kraken, crypto.com, blockchain.com.
These are all great places that have really good content for folks to learn.
And then on Bitcoin mining, they can go to our website. The Texas blockchain council does a lot of

(22:06):
education about Bitcoin mining in particular. If they want to learn about the academic side of it,
understanding how it interacts with the grid, why it's good for the grid, why it's good for the United
States. If they actually want to mine Bitcoin, they want to learn about them actually purchasing a

(22:27):
Bitcoin mining machine. We don't do that, but one of our member companies does that for individuals.
Compass mining is the name of that company. And so if they want to actually purchase a mining
machine, have it shipped to a warehouse, a data center where it will mine Bitcoin into their wallet,
they can do that through companies like Compass.
I'm curious too. Now, how can listeners or people get involved or become a member of the Texas

(22:55):
blockchain council? Is there a way that they could connect with you and your team?
Yeah, just a Texas blockchain council.org. We have a page on membership. It's probably not for everybody
because it does have a cost to it. But for those that are in the industry or wanting to
network in the industry, looking for clients in the industry, we're typically well equipped to

(23:20):
help there. If it's people who are really just wanting to learn more about it, I suggest they just go
like our YouTube channel, YELLS YouTube channel. There's so much free content out there for people
who are just wanting to learn. I wouldn't pay for anything that's just content. We give content
away for free, y'all give content away for free, and many other folks do as well. And there's a lot

(23:42):
of great content there. It does take about some people say a thousand hours to really become,
deeply versed in this industry. But I'd say if somebody spent 15, 20 hours reading and watching
videos, they could get pretty up to speed. The best book I think that's only 75 pages is called

(24:09):
"Inventing Bitcoin by Yance Pritzker." There's another book called "The Bitcoin Standard by
Safety and Amos." It gets a little bit more theoretical. Safety is an academic like myself. He's an
economist, so it's a little bit more heady, but still a great read. And then there's similar ones
for other assets. I think if you understand Bitcoin first, then you can understand more easily

(24:35):
understand some of the other assets like Ethereum. That's great. As we wrap up, I always like to look
at the future, your teaching, experience, and summit hosting. You clearly have a passion for education.
How do you see blockchain evolving in the future?

(24:56):
You know, I think it will become like the internet where we don't all know how the internet works,
but we all use it every day. So when we educate people about it, we don't want to educate everyone
about the entire ecosystem. It's impossible to learn. I think specialization is key. That's a principle

(25:16):
that Adam Smith and the Wealth of Nations beautifully elucidated centuries ago that we thrive as
communities when we specialize. And to specialize in the digital assets ecosystem means to go narrow
and to understand if you're a finance person or maybe you're an accountant, then you can specialize

(25:39):
in the tracking, understand the software mechanisms and understand the reporting requirements and
the FASB stuff. If you're in the energy industry, then of course you're going to go into data centers,
Bitcoin, mining, AI, GPU, high performance compute. If you're in real estate, you're probably going to
want to learn about the tokenization of real estate. So there's all these different angles, and I wouldn't

(25:59):
suggest anyone try to learn the whole industry, just like no one's going to learn everything about
the internet, right? You're not going to learn everything related to TCP/IP, crypto protocols or the
email, how email works and different packets or sit over the internet. You're going to learn how the
internet impacts your industry and your business. And so that's what I would suggest to folks is

(26:23):
just find that niche and make sure that niche is adjacent to where you already are from a business
perspective. Yeah, that makes me think, with your research through PhD research on blockchain,
land registries, I'm curious from my perspective, how this technology might change property rights

(26:45):
in the next five years? Do you have any thoughts on that? Yeah, I do think it gets people closer to
property ownership. It makes them better able to utilize assets that they own to provide
more value to them and their families, right? So what do I mean by that? I mean, if you, so let's take

(27:06):
a pretty simple example, like money market funds. Imagine if you could take your money market funds
that's earning like a kind of treasury, like a T-bill rate of return and use that as collateral to
get some tokens with it, some stablecoin tokens or money market tokens that are redeemable for

(27:30):
that money market fund or a stablecoin or back to the US dollar in kind of in the original sense.
And you collateralize that and you use that to invest in real estate. Or if you're able to
kind of exercise your property rights over your rental houses that you own or over an asset, maybe

(27:52):
you own multiple cars and like there's a decentralized tour of that comes up where you're able to
exercise your property rights and ownership over those cars by renting them out in a decentralized way
where Turo is not taking a cut. There's any number of things, anything of any asset that you own,
how do you put it to productive use? And there's probably a more efficient way to do that with

(28:15):
in the digital asset realm because what you're doing is you're increasing speed, you're cutting out
middlemen, you're cutting out fees and that means that you're accruing more value to the asset owner.
Yeah, that's great. I know I've got all these questions. I'm curious to ask you. I'm curious,

(28:36):
just looking back on your journey from professor to blockchain advocate. What is one message that you
hope that carries forward in this industry? I think right now it's important to let people know that
speculation is really not what this industry exists for although there is a lot of that going on right

(29:00):
now. So I would caution people against the meme coin frenzy. I would make sure to use reputable partners,
do not get scammed. I mean it can happen to anyone so be very vigilant. Not even with necessarily
with crypto just in general, anytime you're dealing with financial services, you know you want to use

(29:23):
reputable service providers and connect with reputable actors. And so I would just make sure people
you got to understand the asset, right? You want to understand what a wallet is and how to send
a transaction and even professionals get, you know, buybit was hacked for $1.5 billion just days ago.

(29:48):
So even professionals can fall, fall victim to some of this stuff. So education is the washroom of the day
and using reputable service providers. And you know if you want to play the lottery, you can buy
meme coins. That's fine, but it is like penny stocks. There is a, it is very similar. So meme coin
behave like penny stocks and they behave like slot machines. And that's really good advice,

(30:13):
paying attention to some of these scams or these emails or click here for this or some of the,
you know, bait that we have and be smart. I think that's really good advice, be smart and wise and
pay attention to it because it is your currency, it is your money and it can, you know, just be lost
the same as any other investment. I want to get in kind of closing any final thoughts or anything

(30:37):
you want to share with our listeners about the things we may or may not have covered today
during our time. You know, the last thought I have is said we'd love to connect with your listeners
in person. We have the North American blockchain summit that we host every year in the fall.
It will be at the Bush Presidential Center in Dallas, Texas next to SMU, beautiful venue,

(31:01):
very high class. And it's not going to be 50,000 people. It's not like, you know, a huge conference. We
typically have anywhere from 700 to 1000 people. But they're business professionals, they're people
that are on the kind of that institutional side of things. And it's a good place for folks to safely

(31:25):
come and network with, you know, traditional finance people who are interested in blockchain,
digital assets and also crypto folks who are native to the industry, but are a little bit less
crypto bro-esque in their, you know, the way they they carry themselves.
That's great. What an insightful conversation. Thank you so much. You're a busy, busy man. I know

(31:51):
you have a lot of places to be. We've covered so much about blockchain, the future, education.
Lee, I want to thank you for sharing your expertise and time. Where can listeners connect best with you?
Sure. I mean, our website is one we listed that earlier. I'm also on Twitter at Lee_Bratcher.
Thank you so much for sharing that to our listeners, stage challenge. Make sure you like and

(32:18):
connect with us. And until next time, that's the Executive Connect podcast.