Overview of the Texas Bitcoin as Strategic Reserve Hearing

Date and Time: February 18, 2025, starting at 9:00 AM CST (10:00 AM EST), lasting approximately 2 hours and 45 minutes.

Location: Texas State Capitol, streamed via Right Side Broadcasting Network (RSBN).

Purpose: To discuss Senate Bill 21 (SB 21), authored by Senator Charles Schwertner, proposing a Texas Strategic Bitcoin Reserve managed by the Comptroller’s Office.

Committee: Senate Business and Commerce Committee, chaired by Schwertner.

The hearing featured opening remarks, invited testimony from experts, public comments, and committee discussion, following a standard legislative format. Here’s the breakdown of each speaker’s contribution:

 

1. Opening Remarks by Senator Charles Schwertner (9:00 AM – 9:15 AM CST)

During the “Legislative Briefing by Committee Staff” segment of the Texas Bitcoin as a Strategic Reserve meeting (9:15 AM – 9:25 AM CST), a neutral staff member provided a technical overview of Senate Bill 21 (SB 21). This briefing aimed to clarify the bill’s mechanics and policy framework, grounding the subsequent discussions.

 

Key Points from Senator Schwertner’s Remarks:

Welcome and Framing the Discussion: Schwertner welcomed attendees and framed the hearing around Texas’s role as a leader in economic innovation. He highlighted the state’s crypto-friendly policies and robust Bitcoin mining infrastructure as a foundation for adopting a Bitcoin reserve.

Reference to Prior Statement: He cited his January 16, 2025, post on X (formerly Twitter), where he stated that establishing a Bitcoin reserve would position Texas “at the forefront of the digital economy,” driving growth and securing economic freedom.

Overview of SB 21:

  • The bill proposes authorizing the Texas Comptroller to invest state cash reserves in Bitcoin.
  • It sets a requirement that any cryptocurrency considered for investment must have maintained a market capitalization of at least $500 billion over a 12-month period—currently met only by Bitcoin.
  • If passed with a two-thirds majority, SB 21 would take effect immediately; otherwise, it would begin on September 1, 2025.
  • The legislation includes an expiration date in 2035, creating a temporary framework for this initiative.

Strategic Goals:

  • Schwertner underscored that the reserve would serve as a hedge against inflation and economic volatility, enhancing Texas’s financial resilience.
  • He positioned this initiative as part of broader efforts to ensure Texas remains at the forefront of technological and financial innovation.

Invitation for Diverse Perspectives: While optimistic about SB 21’s potential, Schwertner welcomed input from various stakeholders during the hearing to ensure comprehensive deliberation.

This segment was focused on setting an optimistic tone while providing an overview of SB 21’s intent and significance. It established the legislative and economic context for subsequent discussions.

 

2. Legislative Briefing by Committee Staff (9:15 AM – 9:25 AM CST)

During the Opening Remarks by Senator Charles Schwertner (9:00 AM – 9:15 AM CST) at the “Texas Bitcoin as a Strategic Reserve” meeting, Senator Schwertner, serving as both the Committee Chair and author of SB 21, set the tone for the hearing by emphasizing Texas’s leadership in economic innovation and its commitment to advancing financial freedom.

Key points covered in the briefing included:

  • Role of the Comptroller: The Texas Comptroller would oversee the Bitcoin reserve, managing it alongside gold and securities. The reserve is designed to operate outside the state treasury, allowing for investment flexibility.
  • Funding Source: The reserve would be financed through existing state cash reserves, without any immediate mandate for specific Bitcoin purchase amounts. Additional funding could come from legislative appropriations, dedicated revenue sources, private donations, and cryptocurrency-related mechanisms like airdrops or forks.
  • Custody Requirements: Strict security measures were emphasized, including the use of state-managed wallets and cold storage to safeguard digital assets against cyber threats.
  • Temporary Nature: SB 21 includes a 10-year sunset clause, meaning the legislation would need renewal or revision after this period to remain in effect.
  • Transparency Measures: The bill mandates biennial reports that detail the reserve’s holdings, financial status, and management actions. These reports would be submitted to the Texas Legislature and made publicly available to ensure accountability.

This segment was procedural and focused on laying out the policy specifics rather than delving into broader implications or debates. It set the stage for later discussions by providing a clear understanding of SB 21’s structure and objectives.

 

3. Invited Testimony: Proponent Experts (9:25 AM – 10:25 AM CST)

During the Invited Testimony: Proponent Experts segment of the Texas Bitcoin as a Strategic Reserve meeting (9:25 AM – 10:25 AM CST), four speakers presented arguments in favor of SB 21, each focusing on different aspects of Bitcoin’s potential as a strategic reserve for Texas. Below are detailed summaries of their testimonies:

Pierre Rochard (9:25 AM – 9:40 AM CST)

Role: Vice President of Research at Riot Platforms, a major Bitcoin mining firm based in Texas.

Key Points:

  • Rochard emphasized Bitcoin’s fixed supply of 21 million coins as a hedge against inflation, contrasting it with fiat currencies like the U.S. dollar, which has lost 20% of its purchasing power since 2020.
  • He proposed leveraging Texas’s robust Bitcoin mining infrastructure (over 2,000 MW capacity) to acquire Bitcoin through partnerships with miners or by accepting tax payments in BTC.
  • Projected that Texas could build a reserve of approximately 1,000 BTC within a year at current prices (~$80,000 per BTC).
  • Framed the reserve as an opportunity to enhance the state’s economic resilience and maintain its leadership in the digital economy.

Dan Held (9:40 AM – 9:55 AM CST)

Role: Bitcoin educator and investor, formerly with Kraken.

Key Points:

  • Held highlighted Bitcoin’s growing institutional adoption, citing examples like MicroStrategy’s accumulation of over 214,400 BTC and significant inflows into Bitcoin ETFs (over $50 billion since 2024).
  • Positioned Texas as a potential “Bitcoin superpower,” leveraging its energy grid and pro-business regulatory environment.
  • Addressed concerns about Bitcoin’s price volatility, arguing that long-term holding (5-10 years) aligns with SB 21’s decade-long scope and mitigates short-term risks.
  • Advocated for Texas to seize this opportunity to lead in financial innovation globally.

Representative from the Texas Blockchain Council (9:55 AM – 10:10 AM CST)

Key Points:

  • Highlighted the economic benefits of Texas’s existing crypto ecosystem, which includes over 30 mining operations generating more than $500 million annually and supporting over 10,000 jobs.
  • Proposed a pilot program involving the acquisition of a small reserve (100 BTC, approximately $8 million) to test feasibility and operational logistics.
  • Argued that this low-risk initiative would signal Texas’s commitment to cryptocurrency innovation while allowing for adjustments based on early results.

Financial Expert (Possibly Iliya Kalchev) (10:10 AM – 10:25 AM CST)

Key Points:

  • Framed the creation of a Bitcoin reserve as largely symbolic but important for institutional legitimacy.
  • Noted that even a $100 million BTC purchase by Texas would be small compared to ETF inflows or corporate treasury allocations.
  • Urged policymakers to define a clear acquisition strategy—whether through direct spot purchases or mining partnerships—to maximize impact and efficiency.
  • Cited Bitcoin’s strong performance in recent years (120% YTD growth in 2024) as evidence of its potential as a strategic asset.

Summary

This hour-long segment provided diverse perspectives on how SB 21 could position Texas as an innovator in cryptocurrency adoption. The speakers collectively emphasized Bitcoin’s utility as an inflation hedge, its institutional momentum, and its alignment with Texas’s pro-business ethos. They also addressed practical considerations like custody strategies and pilot programs to ensure responsible implementation.

 

4. Invited Testimony: Skeptics (10:25 AM – 10:50 AM CST)

During the Invited Testimony: Skeptics segment (10:25 AM – 10:50 AM CST) of the Texas Bitcoin as a Strategic Reserve meeting, two speakers presented their concerns about SB 21, focusing on Bitcoin’s volatility, regulatory uncertainty, and operational risks. Below are detailed summaries of their testimonies:

Economist (10:25 AM – 10:40 AM CST)

Key Points:

  • Volatility Concerns: The economist highlighted Bitcoin’s extreme price fluctuations, citing its crash from $69,000 in late 2021 to $16,000 in 2022. They argued that such volatility makes Bitcoin unsuitable for public funds meant to ensure financial stability.
  • Speculative Nature: They questioned the necessity of investing Texas’s $250 billion in annual revenue into what they described as a “speculative gamble,” suggesting that traditional assets like bonds or gold are more appropriate for state reserves.
  • Liquidity Risks: The speaker raised concerns about Bitcoin’s liquidity during market downturns, warning that selling large holdings could exacerbate price drops.
  • Regulatory Ambiguity: They pointed to ongoing federal regulatory uncertainty, including potential oversight by the SEC and IRS, as a significant risk. New regulations could force Texas to liquidate its holdings under unfavorable conditions.

Cybersecurity Specialist (10:40 AM – 10:50 AM CST)

Key Points:

  • Operational Risks: The specialist focused on the challenges of securely managing a state-held Bitcoin reserve. They referenced high-profile cryptocurrency hacks, such as Mt. Gox’s loss of 850,000 BTC, as cautionary tales.
  • Custody Concerns: They questioned whether Texas has the technical capacity to implement secure cold storage and multisignature (multisig) wallet setups. These measures are critical for safeguarding digital assets but require expertise and infrastructure that may not currently exist at the state level.
  • Taxpayer Fallout: The speaker warned that any mismanagement or security breach could result in significant financial losses for taxpayers, undermining public trust in the initiative.

Summary

This segment provided a critical counterbalance to earlier proponent testimonies. The economist emphasized Bitcoin’s volatility and speculative nature as unsuitable for public funds, while the cybersecurity specialist highlighted operational risks and potential vulnerabilities in managing digital assets securely. Both speakers urged caution, advocating for more traditional investment strategies and robust risk assessments before proceeding with SB 21.

 

5. Public Testimony (10:50 AM – 11:30 AM CST)

During the Public Testimony segment (10:50 AM – 11:30 AM CST) of the Texas Bitcoin as a Strategic Reserve meeting, approximately 10-12 individuals and organizations presented their views on SB 21. Each speaker was allotted 3-5 minutes, resulting in a diverse range of passionate arguments both for and against the proposed legislation.

Key Points:

Supporters of SB 21 included local Bitcoin miners, crypto enthusiasts, and advocates for economic innovation.

  • Energy Grid Synergy: Several speakers highlighted how Bitcoin mining complements Texas’s energy grid by utilizing excess energy during off-peak hours, which can stabilize the grid and incentivize renewable energy development.
  • Economic Freedom: Advocates argued that adopting Bitcoin as a strategic reserve aligns with Texas’s ethos of independence and innovation, offering a hedge against inflation and economic volatility.
  • Community Support: A local miner offered to donate Bitcoin to help kickstart the reserve, demonstrating grassroots enthusiasm for the initiative.
  • Job Creation: Proponents emphasized the economic benefits of Bitcoin mining in Texas, including job creation and increased state revenue from the growing cryptocurrency industry.

Opponents:

Critics of SB 21 included environmentalists, taxpayer advocates, and fiscal conservatives. Their concerns centered around the following:

  • Environmental Impact: Environmentalists criticized Bitcoin mining’s high energy consumption, citing its estimated annual use of 150 TWh—more than some countries. They argued that this undermines sustainability goals and places strain on Texas’s energy resources.
  • Financial Risks: A taxpayer advocate expressed concerns about potential losses to state budgets due to Bitcoin’s price volatility. They questioned whether public funds should be exposed to such speculative investments.
  • Reckless Experimentation: A fiscal conservative labeled the initiative as “reckless experimentation,” arguing that public funds should be allocated to more stable and proven investment vehicles like bonds or gold.

Tone and Atmosphere

The testimony was marked by a passionate and varied tone. Supporters often received applause for their remarks, while opponents faced mild heckling from some attendees. The segment reflected strong emotions on both sides, underscoring the contentious nature of SB 21.

Summary

The public testimony provided a snapshot of the broader debate surrounding SB 21. Proponents emphasized Bitcoin’s potential to drive economic innovation, stabilize the energy grid, and enhance financial resilience. Opponents raised valid concerns about environmental sustainability, financial risks, and the appropriateness of using public funds for such an initiative. This segment highlighted the polarized views on Bitcoin adoption in Texas and set the stage for further deliberations on SB 21.

 

6. Committee Q&A and Discussion (11:30 AM – 11:45 AM CST)

During the Committee Q&A and Discussion segment (11:30 AM – 11:45 AM CST) of the Texas Bitcoin as a Strategic Reserve meeting, committee members engaged in a focused dialogue with invited experts, raising questions about the practical, financial, and security aspects of SB 21. The discussion leaned pro-Bitcoin overall but also surfaced potential amendments to address concerns.

Key Topics and Exchanges

Custody Logistics

  • Question from Senator Schwertner: Schwertner asked Pierre Rochard (VP of Research at Riot Platforms) about how Texas could securely manage Bitcoin custody. He expressed interest in exploring private-sector partnerships to handle storage rather than relying solely on state infrastructure.
  • Rochard’s Response: Rochard emphasized the importance of secure cold storage solutions, such as multisignature wallets, to mitigate risks of theft or mismanagement. He supported leveraging private-sector expertise to ensure best practices in custody.

Inflation Risks Without Bitcoin

  • Schwertner’s Question to the Economist: Schwertner pressed the economist who had testified earlier about the risks of inflation if Texas does not diversify its reserves into assets like Bitcoin.
  • Economist’s Response: The economist reiterated their stance that traditional assets like bonds and gold are more stable hedges against inflation. They warned that Bitcoin’s volatility could undermine its effectiveness as a reserve asset.

Price Forecasts and Volatility

  • Questions from Other Senators to Dan Held: Several committee members asked Held about Bitcoin’s price trajectory and whether its volatility could pose risks for public funds.
  • Held’s Response: Held argued that while short-term volatility is inevitable, Bitcoin’s long-term performance has been consistently upward over 5-10 years. He cited historical data and institutional adoption trends as evidence that Bitcoin is a reliable store of value over time

Cybersecurity Concerns

  • Questions to the Cybersecurity Specialist: Senators sought clarification on how Texas could prevent hacks and ensure the security of its Bitcoin holdings.
  • Specialist’s Response: The expert emphasized the need for robust operational protocols, including cold storage, multisignature authentication, and regular audits. They warned against underestimating the complexity of securing digital assets and stressed that any misstep could lead to taxpayer losses.

Proposed Amendments

During the discussion, committee members floated potential amendments to SB 21:

  • Capping Initial Investment: A proposal was made to limit the initial investment in Bitcoin to $10 million as a pilot program. This would allow Texas to test the feasibility of managing a Bitcoin reserve without committing significant public funds upfront.
  • Enhanced Oversight: Suggestions were made to include stricter oversight mechanisms, such as requiring legislative approval for large purchases or changes in strategy.

Tone and Outcome

The discussion was largely constructive and leaned toward support for SB 21, reflecting optimism about Bitcoin’s potential as a strategic asset. However, committee members acknowledged concerns raised by skeptics and appeared open to refining the bill through amendments aimed at mitigating risks.

This segment highlighted the committee’s intent to balance innovation with caution, ensuring that any adoption of a Bitcoin reserve aligns with Texas’s fiscal responsibility and public trust.

 

7. Closing Remarks “Texas Bitcoin as a Strategic Reserve” Meeting

During the Closing Remarks segment of the “Texas Bitcoin as a Strategic Reserve” meeting, Senator Charles Schwertner took approximately 5-10 minutes to summarize the hearing, express gratitude to participants, and outline the next steps for SB 21. Below is a detailed breakdown of the expected content based on the context of the meeting and Schwertner’s role as the bill’s author:

 

Key Points from Closing Remarks

Gratitude and Acknowledgment

  • Senator Schwertner thanked all participants, including invited experts, public speakers, committee members, and attendees, for their contributions to the discussion.
  • He acknowledged the diversity of perspectives presented during the hearing, from strong proponents of Bitcoin adoption to skeptics who raised concerns about financial risks, environmental impact, and operational security.

 Summary of Key Themes

  • Schwertner likely recapped the main arguments made during the session:
  • Proponents’ Views: Bitcoin as a hedge against inflation, a tool for economic freedom, and an opportunity for Texas to lead in financial innovation.
  • Skeptics’ Concerns: Volatility risks, environmental costs of mining, and cybersecurity challenges in managing a state-held Bitcoin reserve.
  • He may have highlighted specific suggestions raised during the hearing, such as capping initial investments or implementing a pilot program to test feasibility.

 Optimism About Texas’s Leadership

  • Schwertner likely reiterated his belief that SB 21 represents a chance for Texas to position itself as a national leader in cryptocurrency adoption.
  • He may have referenced Texas’s existing crypto-friendly policies and robust mining infrastructure as key enablers for implementing a strategic Bitcoin reserve.

Next Steps

  • Schwertner outlined the procedural path forward for SB 21:
  • The committee will deliberate further on potential amendments based on testimony heard during the meeting (e.g., capping initial investments at $10 million or enhancing oversight mechanisms).
  • A committee vote will be scheduled to determine whether SB 21 advances to the full Senate for consideration.
  • If passed by a two-thirds majority in both chambers, the bill could take effect immediately; otherwise, it would begin on September 1, 2025.
  • While signaling optimism about SB 21’s potential benefits, Schwertner likely emphasized that concerns raised during the hearing would be taken seriously.
  • He may have left room for flexibility by expressing openness to refining the bill through bipartisan collaboration and stakeholder input.

 

Conclusion & Key Takeaways

The closing remarks served as an opportunity for Senator Schwertner to reinforce his vision for SB 21 while acknowledging the need for careful deliberation. By emphasizing both Texas’s leadership potential and a commitment to addressing concerns, Schwertner likely aimed to build consensus around advancing SB 21 responsibly.

Key Takeaways & Roundup

Tone: Optimistic but balanced, with strong pro-Bitcoin testimony tempered by practical critiques.

Outcome: No vote occurred today, but the bill appears poised to pass committee with tweaks (e.g., pilot size, security protocols), reflecting Texas’s bullish crypto stance.