Ted Cruz Introduces FLARE Act to Incentivize Bitcoin Mining with Waste Gas

U.S. Senator Ted Cruz has introduced a new bill aimed at incentivizing Bitcoin mining operations that use flared natural gas to power their operations, a move he believes will help Texas solidify its position as the leading hub for Bitcoin mining.

In an April 1 announcement, Cruz unveiled the Facilitating Lower Atmospheric Released Emissions Act (FLARE Act), which seeks to modify the U.S. tax code to offer tax incentives for companies that capture and repurpose flared natural gas. Flaring is the process of burning off excess natural gas during oil extraction, which is typically wasted. Under the FLARE Act, companies would be able to permanently deduct the full cost of systems designed to mitigate flaring and venting, starting in 2026.

Key Provisions of the FLARE Act

The bill’s most notable feature is its provision for 100% tax expensing for flaring and venting mitigation systems. These systems are designed to capture natural gas that would otherwise be flared or vented and convert it into useful forms such as electricity, liquid fuels, or even computational power for Bitcoin mining.

This tax break could significantly benefit Bitcoin miners who operate in areas rich in natural gas, allowing them to use the captured energy to power mining rigs instead of allowing it to be wasted. Additionally, the bill specifies that the systems could also be used for other purposes, including compressing or liquefying gas for transport, producing petrochemicals, or powering oilfield equipment and the electrical grid.

Environmental and Economic Benefits

Cruz and supporters of the bill argue that the FLARE Act presents a unique opportunity to reduce greenhouse gas emissions while stimulating energy innovation. By turning stranded natural gas into usable energy, the bill could help mitigate methane emissions that would otherwise contribute to climate change. Furthermore, it could strengthen grid resilience, particularly during periods of high energy demand or extreme weather events, by utilizing a previously wasted energy source.

Cruz emphasized that Texas, with its abundant energy resources, is in a prime position to benefit from this legislation, which would not only support Bitcoin mining but also enhance the state’s broader energy landscape. He called for swift action in Congress to advance the bill, which he believes could make Texas “the number one place for Bitcoin mining.”

Securing U.S. Energy Independence

The bill includes an important provision that blocks foreign entities from benefiting from the tax incentives. Specifically, it prohibits companies tied to countries of concern, including China, Russia, Iran, and North Korea, from receiving the incentives. This clause is intended to ensure that the benefits of the tax break remain exclusive to U.S.-aligned operators, aligning with national interests to strengthen domestic energy independence.

Industry Support and Backing

The FLARE Act has already garnered support from various industry players, particularly those involved in energy production and Bitcoin mining. For example, MARA Holdings, a Bitcoin mining company, endorsed the legislation, calling it a win-win for both the energy sector and environmental efforts. MARA recently partnered with NGON to launch a 25-megawatt micro data center that uses excess natural gas from oil wells in Texas and North Dakota to power its mining operations.

Under the provisions of the FLARE Act, such operations would qualify for tax deductions for the full cost of their flaring and venting mitigation systems, potentially unlocking additional resources for Bitcoin mining and methane reduction.

Cruz’s Vision for Bitcoin Mining

Senator Cruz has long advocated for the use of excess energy from oil and gas operations to power Bitcoin mining. At the 2021 Texas Blockchain Summit, he noted that Bitcoin mining could serve as a productive use for natural gas, turning what would otherwise be a waste product into a valuable resource for both energy production and environmental sustainability.

By offering financial incentives to capture and repurpose flared gas, the FLARE Act aims to further cement Texas’s role as a global leader in Bitcoin mining, while simultaneously addressing environmental concerns and boosting energy efficiency across the state.

As the bill moves through Congress, it has the potential to reshape the intersection of energy production and cryptocurrency mining, making it an attractive proposition for miners and energy producers alike.