Decrypting crypto-policy and money for nothing

How we all pay for bitcoin.  ͏  ͏  ͏ [expressnews.com]( [View in Browser]( [Tomlinson's Take]( A Big Sale. A Great Deal. Get 4 Months for Only 25¢! For a limited time, save on unlimited digital access. [Subscribe Today.](   --------------------------------------------------------------- [Texas Legislature protects crypto-miners]( The Securities and Exchange Commission has launched a crackdown on trading in cryptocurrencies, bringing lawsuits against the two largest exchanges for violating federal law. [The suits against Coinbase and Binance argue the companies did not follow regulations intended to protect U.S. investors.]( Some of the allegations are eerily similar to those leveled against Sam Bankman-Fried, the founder of FTX, the now defunct crypto-exchange that generated [felony fraud charges](. The SEC, the Commodity Futures Trading Commission, an army of Wall Street lawyers and ultimately the Supreme Court will spend years hashing out whether cryptocurrencies are commodities or securities, like stocks and bonds. In the meantime, the crypto industry will survive, especially in Texas, where the Legislature has created a safe space for the miners who mint those currencies. Lawmakers allow the state’s electric grid to force consumers to subsidize crypto. For those who don’t know, cryptocurrencies are digital tokens identified by a unique string of code generated by computer servers. People value the tokens because a ledger shared by thousands of computers keeps track of who owns what and allows secure trading. Bitcoin is the most famous token, with Ethereum and Tether among the most traded. Since buying and selling directly on the blockchain is difficult, most traders use exchanges. FTX, Binance and Coinbase also operate complex financial instruments to make extra money, which prompted the SEC suits. Generating and trading cryptocurrencies requires an enormous amount of computing power, which consumes an enormous amount of energy. Because Texas has cheap wholesale electricity, hundreds of miners have come here, adding demand to the grid. Crypto-advocates, like Gov. Greg Abbott and Sen. Ted Cruz, say not to worry. Crypto-miners do not need to run constantly, so they can shut down when the grid gets into trouble. But what they don’t tell you is that [Texas consumers pay them millions to shut down. They don’t do it for free](. My column and reporting by others caught the attention of lawmakers. State Sen. Lois Kolkhorst introduced Senate Bill 1751 to limit [how much money crypto-miners can make for solving the problem they created](. But the bill died in the House. The [mining companies are exultant]( because their lobbyists protected a key profit center. Now [ERCOT says the mines have plans to create more electricity demand than all of Florida](. The next time someone tells you renewable energy is the Texas grid’s biggest problem, ask who for whom they are lobbying.   [Photo of Chris Tomlinson] Chris Tomlinson, Business Columnist   --------------------------------------------------------------- What Else I'm Writing [In this photo provided by Saudi Press Agency, SPA, Saudi Crown Prince Mohammed bin Salman chairs the Arab summit in Jeddah, Saudi Arabia, Friday, May 19, 2023. (Saudi Press Agency via AP)]( Photo by: Associated Press [Property tax cuts rely on a Saudi dictator]( High oil prices created the Texas budget surplus that made property tax cuts possible.   [Texas Attorney General Ken Paxton defended his record Friday, May, 26, 2023, a day before the state House is scheduled to take up Articles of Impeachment against him. ]( Photo by: Eleanor Dearman/TNS [Oil billionaires finance Ken Paxton's defenders]( Oilmen who back GOP's religious right may have the votes to stop the removal of Ken Paxton, columnist Chris Tomlinson writes.   --------------------------------------------------------------- What I'm Reading Must Read: [What to know about Tony Buzbee, the Houston lawyer representing AG Ken Paxton in impeachment trial]( (Houston Chronicle and San Antonio Express-News) Should Read: [Gov. Greg Abbott says he wants to end property taxes for Texans. Here's what he means by that.]( (Houston Chronicle and San Antonio Express-News) Interesting Read: [What if We’re Thinking About Inflation All Wrong?]( One should always revisit one’s assumptions. (The New Yorker) Technical Read: [Debt Moratoria: Evidence from Student Loan Forbearance]( Relative to borrowers who had to continue paying their loans, borrowers allowed to pause their payments sharply increased mortgage, auto, and credit card borrowing, with little effect on loan delinquencies. (University of Chicago, Becker-Friedman Institute) Fun Read: [All Hail the Alligator Gar, a Giant and Primordial River Monster]( An excerpt from a new book by my old Nairobi poker pal Stefan Lovgren, who has traveled the world finding the largest freshwater fish. (Texas Monthly)   --------------------------------------------------------------- Question of the Week What do you think was the worst law to come out of the Texas Legislature this year? Reply directly to this email and tell me your thoughts.   --------------------------------------------------------------- Mailbag Last Week’s Question: What kind of tax break do you want, a higher homestead exemption, a limit on appraisal increases or lower rates? “Limit appraisals. This housing crisis is to blame for the out-of-control property taxes. People paying triple for what a home is worth is always gonna come back to bite your dumbasses. The rest of us shouldn’t have to pay for it. Schools and infrastructure need our money. Not real estate crooks.” – Sherry Donahe, Missouri City “We need to FINALLY get a (California-style) [Proposition 13]( reprise here in Texas. Yeah, California has its problems, but they ain't confiscatory appraisals. Currently, politicos claim a tax reduction and then backstab the property owners with 40 percent appraisal increases. (California has a maximum) 2 percent per year, no exceptions, UNTIL the property sells. Then, 90 percent of the sales price is the new value (sales price less fees) that will be appraised at a MAXIMUM increase of 2 percent per year.” – James Babb, Friendswood “I want a different method to fund education.” – John Callaghan, San Antonio Editor’s Note: I agree with John; we need an income tax to pay for public schools and trash the property tax.   --------------------------------------------------------------- The Takeaway Harris County Commissioners Court voted this week to [experiment with cash payments to poor people](, testing the economic theory that an ounce of prevention is better than a pound of cure. The county will give a small number of families $500 a month and see whether it improves their lives, particularly their wealth and health. Houston is following in San Antonio’s footsteps. In December 2020, UpTogether enrolled [1,000 families earning less than 150 percent of the federal poverty level to each receive $5,108 over two years.]( The city is awaiting the results to see how well it worked. The idea is not a bad one. If you can keep a family in their home, you don’t have to provide them with expensive homeless services. If a child eats healthy food, they do better in school and require less medical care. Critics, though, see guaranteed income programs as government giveaways that poor people will exploit. Some people do take advantage; there is a certain proportion in every community that will game the system. But experiments have shown that most people use the money wisely to improve conditions for their families. I saw a similar experiment in Africa called the [Millenium Villages Project](. Folks are still arguing over whether that experiment in ending poverty was successful or cost-effective. But one thing is sure: The poor people used the resource wisely. If there were any problems, it was with the implementers. The results from the San Antonio and Houston experiments will be fascinating to analyze, and I am withholding judgment. But I am impressed they are brave enough to try.   --------------------------------------------------------------- Share With Your Friends Do you know someone who would like Tomlinson's Take? For the Houston edition, [send them here to sign up](; for the San Antonio edition, [send them here](.   --------------------------------------------------------------- More Newsletters SA Inc. Get Texas business news updates from behind the scenes. [Sign Up](               [San Antonio Express-News]   A Big Sale. A Great Deal. Get 4 Months for Only 25¢! 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