The History of Bitcoin in Texas

Texas did not become the center of gravity for Bitcoin by accident, and not in a single moment. It happened in layers — a regulator's quiet decision, an industrial migration measured in megawatts, and a legislature that kept testing how far a state can lean into hard money. To understand it, you have to follow the stack from the ground up: the law that made room, the energy that drew the machines, and the financial future now being built on top.

2014: The memo that said Bitcoin isn't money

The story starts not with miners but with lawyers. On April 3, 2014, the Texas Department of Banking issued Supervisory Memorandum 1037 — among the first formal positions any U.S. state took on how its money-transmission law applies to virtual currency.^[1] Its core holding was deceptively simple: cryptocurrency is not “money” under the Texas Money Services Act, because it is not legal tender issued by a government.

The consequences were what made Texas friendly. Because Bitcoin wasn't money, exchanging crypto for crypto — or a business selling its own crypto — did not, by itself, require a money-transmission license. A license was triggered only when sovereign (fiat) currency entered in a transmitting capacity.^[2] Texas offered clarity without inventing a custom licensing regime — a sharp contrast with New York's BitLicense, which arrived in 2015 and drove businesses out of the state.

That single distinction — the base-layer asset sits outside the law, fiat-redeemable instruments sit inside it — is the seam everything else in this story runs along. The Department reaffirmed and sharpened it over time: a 2019 revision, and a further update in early 2025 under the new Money Services Modernization Act, made clear that stablecoins redeemable for sovereign currency face closer scrutiny as potential money transmission than Bitcoin itself does.^[3] Texas drew its regulatory line exactly where the technology's own architecture does.

The seam has two edges, and one of Dallas's earliest Bitcoin educators found the other one. Mark Alexander Hopkins had been in Bitcoin since 2011, when a friend paid for his dinner in freshly mined coin. As “Doctor Bitcoin,” a teaching persona he wore online and around north Dallas, he became an early channel of knowledge transfer for the technology — selling personally mined bitcoin peer-to-peer as much to bring people into the network as to profit from it.^[19] Under Texas law — and, by his account, on the assurance of Texas lawmakers he consulted — none of that required a license.^[19]

Federal law read it differently. Hopkins had never registered with FinCEN as a money services business, and when one customer's funds were traced to a lottery scam, what the government charged was the licensure itself: in June 2021 he pleaded guilty in the Northern District of Texas to a single count of operating an unlicensed money-transmitting business — a registration offense, not fraud.^[17] He served federal time, and came out doing what he had always done: educating — warning peer-to-peer traders that, as the statute is currently interpreted, a state's clarity is not the whole map, and pushing for the federal law to change.^[18] His case sharpened the memo rather than contradicting it: Supervisory Memorandum 1037 defines what Texas asks of you — it has never defined what Washington does. Hopkins's full story, told straight from the record, opens our Voices of Texas Bitcoin series.

The cypherpunk base layer

It is worth naming what that memo was, in effect, protecting. Bitcoin descends from the cypherpunk project — the decades-long effort to build money that settles without a trusted intermediary, secured by proof-of-work and held by whoever controls the keys. That ethos — trustless settlement and self-custody — is the soul of the thing. Texas's contribution was to take the part of that vision that touches the physical world most directly — the energy and the machines — and give it the cheapest, most willing home in the country. The lineage itself is kept in Austin: the Satoshi Nakamoto Institute, founded in November 2013 out of a University of Texas reading group, archives every word of Satoshi's and the cypherpunk canon behind it — and wrote the essays that coined “hyperbitcoinization.”

2021: The great migration to Rockdale

The physical chapter opens in Rockdale, a small town in Milam County that had lost roughly 80% of its workforce when its Alcoa aluminum smelter wound down. What a defunct smelter leaves behind is exactly what a Bitcoin mine needs: high-voltage transmission lines and large substations already built. Miners moved into that infrastructure, and the site that became Whinstone grew into the largest single Bitcoin mining operation in North America.^[6] In May 2021, Riot acquired Whinstone US in a roughly $651 million deal, anchoring the town's reinvention around hashrate.^[6]

Then came the accelerant. On May 21, 2021, China moved to ban Bitcoin mining outright, and within weeks more than half of the global network's hashrate went dark.^[4] The displaced machines needed somewhere to go, and Texas — with the cheapest power in the country and a grid willing to enroll them — won the migration.^[5] Rockdale filled with operators; the network's hashrate not only recovered but hit an all-time high by December of the same year.^[8] By late 2021 the town hosted multiple industrial-scale mines.^[7] The full arc of that town — from Alcoa's crucibles to 700 MW of hashrate — is told in the Rockdale story, and every major Texas mine is plotted on the Texas Bitcoin mining map.

The coordination layer arrived alongside the machines. The Texas Blockchain Council, founded in 2019, organized the industry's lobbying with an explicit goal: make Texas the jurisdiction of choice for Bitcoin.^[9] Politicians obliged, and the state comptroller was soon publishing primers on the industry it was courting.^[10]

The grid: friendly, but not unconditionally

What truly distinguishes Texas is that mining collides with the power grid here in a way it does almost nowhere else. ERCOT runs a deregulated, islanded market, and miners pitched themselves as a new kind of asset: flexible, interruptible load that can be paid to power down in seconds when demand spikes. After Winter Storm Uri exposed the grid's fragility in February 2021, that pitch — curtailable load as a stabilizing feature — became central to the industry's welcome.

The pitch paid, literally. In August 2023, during a record heat wave, Riot curtailed its Rockdale operation by more than 95% at peak-demand hours and earned $31.7 million in power credits from ERCOT — $24.2 million in curtailment credits and $7.4 million from demand response — more than triple the roughly $8.9 million value of the 333 bitcoin it mined that month.^[20][21] For one summer month, the largest Bitcoin mine in North America made more money stabilizing the Texas grid than mining Bitcoin on it. No other jurisdiction on earth has produced that sentence.

But Texas friendliness has a ceiling, and 2023 found it. Senate Bill 1751 proposed to cap miners' demand-response participation at 10%, strip their tax abatements, and require large operators to register as flexible loads with ERCOT. It passed the Texas Senate in a lopsided 30–1 vote in April 2023.^[11] And then it died — stopped in a House committee, never becoming law.^[12] The episode is the honest counterweight to the boosterism: Texas welcomes mining as a grid asset, but is wary of it as a subsidy. The friendliness is real, and it is conditional. Every bill, memo, and failed vote in this arc sits on the Texas Bitcoin law timeline.

2025: The money future, in two directions at once

If 2021 was the physical chapter, 2025 was the financial one — and it broke in two directions in the same season. In June 2025, Governor Greg Abbott signed Senate Bill 21, creating the Texas Strategic Bitcoin Reserve: a state-held reserve sitting outside the treasury, managed by the Comptroller, able to hold Bitcoin or any digital asset averaging at least $500 billion in market capitalization over two years — a threshold only Bitcoin currently clears.^[13] Texas became the first state to create a standalone, publicly funded Bitcoin reserve, with companion legislation shielding it from the treasury's periodic fund-sweeps.^[14]

In the same period, Texas advanced the other monetary tradition it has long flirted with: House Bill 1056 directs the state to build a transactional digital currency backed by gold and silver held in the Texas Bullion Depository, redeemable and spendable as legal tender, with a payment system targeted for 2027.^[15][16] Hard money in two flavors — the digital-native kind secured by proof-of-work, and the ancient kind secured by metal in a vault — both written into Texas law within weeks of each other.

By late 2025, the reserve stopped being theoretical. On November 20, 2025, the Comptroller's office made its first purchase — about $5 million in shares of the iShares Bitcoin Trust, a spot Bitcoin ETF, described as a temporary placeholder until a dedicated custodian is contracted.^[22] In May 2026, Acting Comptroller Kelly Hancock named the reserve's advisory committee — among them Cormint CEO Jamie McAvity, SMU law professor Carla Reyes, and CleanSpark CFO Gary Vecchiarelli — and opened a request for proposals for the custody and liquidity partner that will move the state from an ETF proxy into directly held Bitcoin.^[23] On August 1, 2026, Don Huffines — who had proposed a state Bitcoin reserve in his 2022 campaign for governor — was sworn in as Comptroller after Hancock's resignation, inheriting the reserve with its custodian still unnamed.^[24] The distance from the 2014 memo is the whole arc in one line: Texas went from ruling that Bitcoin is not money to buying it for the state's own account.

The people behind the record

Every chapter above has a name attached, and each has its own sourced page: Greg Abbott, the governor who recruited the mines and signed the reserve; Dan Patrick, the lieutenant governor who prioritized the asset and braked the load; Charles Schwertner, the senator who wrote Senate Bill 21; Kelly Hancock, the comptroller who bought the state its first Bitcoin; Don Huffines, the comptroller who holds it now; Ted Cruz, the U.S. senator who led the 2021 floor fight and wrote the CBDC ban into law; and Jimmy Song, the Austin developer who taught a generation of engineers to build the protocol from scratch. Beneath all of them is the merchant layer that took the coin before the state had a position on it – opened by Central Texas Gun Works, the South Austin gun store that went live on Bitcoin in January 2014, ten weeks before Supervisory Memorandum 1037.

The frontier: programmable money on the hardest base

The next chapter is already being drafted, and it resolves the apparent tension between Bitcoin's austere base layer and the world of stablecoins and smart contracts. The frontier isn't a rival chain — it's a set of layers that settle back to Bitcoin: payment rails like Lightning, and asset protocols like Taproot Assets that can issue dollar stablecoins on top of Bitcoin's settlement guarantees. The programmability arrives without abandoning the base.

Texas is the one place where Bitcoin's two frontiers — the physical and the financial — are both happening in the real world at once.

That is the throughline. The base layer is the soul: trustless, self-custodial, anchored in Texas through the energy and the machines. The programmable layer is the frontier: stablecoins and smart contracts pulled onto the hardest money, with the state's own reserve and money law as the legal scaffolding. And Texas is the ground truth that keeps the whole story specific — not an argument about “crypto” in the abstract, but a place where the ledger meets the grid, and the law meets the future.

Frequently asked questions

Sources

Every datable claim above is sourced below. This is a research and reference article, not financial or legal advice.

1. [1] Texas Department of Banking, Supervisory Memorandum 1037 (PDF)
2. [2] Texas Department of Banking — Virtual Currency Guidance
3. [3] National Law Review — Certain Stablecoins Now Subject to Texas Money Services
4. [4] CNBC — China's bitcoin miner exodus, headed to Texas (June 2021)
5. [5] Rest of World — Why China's crypto cowboys are fleeing to Texas
6. [6] Fortune — Inside Whinstone/Riot's Rockdale mine
7. [7] CNBC — Bitcoin mining giants in Rockdale, Texas (Oct 2021)
8. [8] CNBC — Bitcoin hashrate hits all-time high after China ban (Dec 2021)
9. [9] Texas Blockchain Council
10. [10] Texas Comptroller — Cryptocurrency in Texas (Fiscal Notes, 2022)
11. [11] CoinDesk — Texas Senate passes SB 1751 (April 2023)
12. [12] CoinDesk — SB 1751 stopped in House committee (May 2023)
13. [13] Hunton — Texas Establishes Strategic Bitcoin Reserve (SB 21)
14. [14] The Block — Abbott signs strategic Bitcoin reserve bill (June 2025)
15. [15] Texas Legislature — HB 1056 (89R) bill analysis
16. [16] CBS19 — Texas Senate approves gold-backed digital currency bill
17. [17] U.S. Attorney's Office, N.D. Tex. — 'Doctor Bitcoin' Pleads Guilty to Illegal Cash-to-Crypto Scheme (June 2021)
18. [18] Cointelegraph — 'Doctor Bitcoin' sentenced to federal prison, warns P2P traders (2022)
19. [19] Bitcoin Magazine — Doctor Bitcoin, Jailed For Selling P2P, Warns Others They'll Be Next
20. [20] Riot Platforms — August 2023 Production and Operations Update (SEC filing)
21. [21] CNBC — Texas paid Riot $31.7 million to shut down during August heat wave (Sept 2023)
22. [22] The Bond Buyer — Texas makes first purchase for state's Bitcoin reserve: ~$5M in the iShares Bitcoin Trust, November 20, 2025 (placeholder)
23. [23] Texas Comptroller — Acting Comptroller Kelly Hancock Names Strategic Bitcoin Reserve Advisory Committee Members (May 28, 2026)
24. [24] Texas Comptroller — Don Huffines Sworn in as Texas Comptroller, Refuses Salary, Calls for Property Tax Relief (August 1, 2026)