In a major move to regulate the growing cryptocurrency mining industry, the Public Utilities Commission of Texas (PUCT) has adopted a new rule requiring large cryptocurrency mining facilities to register with state authorities.

The decision, made Thursday, aims to ensure the reliability of Texas’ power grid amid rising demand for electricity fueled by the rapid growth of energy-intensive crypto-mining operations, which involve popular cryptocurrencies such as bitcoin, whose value has soared recently.

“This is another example of how PUCT and ERCOT (Electric Reliability Council of Texas) have adapted to support a rapidly changing industry environment,” PUCT Chairman Thomas Gleeson said in a statement. “Most importantly, we will always take the steps necessary to ensure reliable and affordable energy for all Texans.”

Effective immediately, cryptocurrency mining facilities connected to the ERCOT network that consume more than 75 megawatts (MW) of power are required to register with the PUCT and ERCOT.

These facilities must disclose critical information, including their location, ownership structure, projected peak electricity demand for the next five years, and actual energy consumption from the previous year. Existing facilities must comply by February 1 and must renew their registration annually. Failure to register can result in penalties of up to $25,000 per violation per day.

This rule was mandated by House Bill 2023, a Senate bill from 1929 that was passed to address the challenges posed by the significant energy consumption of the crypto mining industry. According to the bill, the registration is intended to help ERCOT manage the network reliably as more virtual currency mining rigs connect to it.

Cryptomining operations are classified as “large flexible loads” by state regulators due to their ability to quickly adjust power consumption. This flexibility allows them to reduce energy consumption during peak periods, potentially helping grid stability.

However, their total energy consumption is considerable. As of July, ERCOT estimated that crypto mining facilities could use up to 2,600 MW of energy, equivalent to the electricity consumption of the entire city of Austin. In addition, new facilities have been approved and are expected to consume an additional 2,600 MW, with more likely to come.

The influx of cryptocurrency miners, along with increasing demand from data centers, hydrogen production facilities and electrification of oil and gas operations, has led ERCOT to predict that electricity demand in Texas could nearly double within six years.

The grid operator expects demand could reach around 150 gigawatts (GW) by 2030, up from a record high of 85 GW last year during the state’s hottest summer on record.

“To ensure that the ERCOT network is reliable and meets the energy needs of all Texans, the PUCT and ERCOT must know the location and energy needs of virtual currency miners,” Gleeson said.

While the new regulations aim to strengthen the reliability of the network, they have raised concerns in the cryptomining community about the confidentiality of proprietary and commercially sensitive information.

The miners demanded that the registration data be explicitly marked as confidential in order to protect their competitive advantage. However, the Commission rejected this change, saying that the information would be collected through an internal online tool that would not be publicly accessible.

“Furthermore, most of the information collected is already publicly available in various places,” the commission said in its order. “Neither the commission nor ERCOT will release competitively sensitive or proprietary information unless required by law.”

The Texas Blockchain Council expressed appreciation for the commission’s approach. “The information the PUC is requesting is appropriate and far less invasive than what the federal government attempted earlier this year,” Lee Bratcher, president of the Texas Blockchain Council, told Utility Dive in an email.

The new Texas rule comes amid a broader national conversation about the regulation of cryptocurrency mining.

Several states, including Montana, Mississippi, Oklahoma, and Arkansas, have enacted “Right-to-Mine” laws aimed at protecting the rights of cryptocurrency miners, prohibiting discriminatory regulations and predatory practices such as overcharging.