U.S. Senator Ted Cruz Introduces FLARE Act to Repurpose Wasted Gas for Bitcoin Mining

U.S. Senator Ted Cruz has introduced the Facilitate Lower Atmospheric Released Emissions (FLARE) Act, a bill aimed at repurposing flared natural gas

U.S. Senator Ted Cruz has introduced the Facilitate Lower Atmospheric Released Emissions (FLARE) Act, a bill designed to repurpose flared natural gas for Bitcoin mining and other energy-intensive applications.

Senator Cruz, a Republican from Texas, announced the bill on Saturday via Twitter. The legislation proposes a new Section 43A of the Internal Revenue Code, introducing a tax credit for businesses that build and operate Schedule C energy-efficient modular reactors or deploy flared natural gas to heat modular reactors or other energy-intensive applications.

The bill specifies that these benefits would apply to operations commencing in 2026 and later, and they would be available to businesses with less than $100 million in annual gross receipts.

The FLARE Act aims to reduce emissions by reducing the burning of flared gas, which occurs at oil and gas production sites due to economic or logistical constraints, ultimately heating the atmosphere and contributing to climate change.

Instead, the bill suggests redirecting this stranded energy to productive uses, such as Bitcoin mining, which is known for its high energy consumption. This move would also enhance the efficiency of Bitcoin mining, which is currently performed predominantly in China using coal-fired power plants.

“Bitcoin miners are uniquely positioned to quickly deploy modular reactors and other energy-intensive applications to consume this stranded energy,″ the bill's text states.

The bill does not disclose the exact magnitude of the tax benefits but mentions that they would be determined by the Treasury Secretary in consultation with the Energy Secretary, taking into account factors like the energy output and modular reactor technology used by the business.

Moreover, the FLARE Act includes provisions to restrict access to the proposed tax benefits for foreign adversaries, including China, Iran, North Korea, and Russia, aligning with broader initiatives in the U.S. to reduce foreign influence in essential infrastructure industries.

Senator Cruz has been a supporter of Bitcoin and blockchain technology, previously introducing the No Federal Reserve Central Bank Digital Currency Act in March to prevent the Federal Reserve from issuing a central bank digital currency.

The new bill further contributes to creating a crypto-friendly regulatory environment, especially as the industry faces increasing scrutiny for its environmental footprint.

Recently, several large Bitcoin miners have been transitioning to cleaner energy sources, leading to a significant decline in coal usage. According to a report by the University of Cambridge, the share of Bitcoin miners using coal-fired electricity dropped to 18% in April 2023, down from 50% in November 2022.

The FLARE Act's introduction comes at a pivotal moment for Bitcoin mining and its integration into broader energy policies.