Texas launched the nation's first state-level Bitcoin strategic reserve with a $5 million cryptocurrency purchase in November.
Acting Comptroller Kelly Hancock confirmed the transaction Monday, calling it a "bold mandate" from the state legislature.
The purchase represents half of the $10 million authorized by lawmakers during the 2024 legislative session.
Texas bought the Bitcoin on November 20 at $91,336 per coin, according to the Comptroller's Office.
The state becomes the first to fund a strategic cryptocurrency reserve, though Arizona and New Hampshire have passed similar legislation without making purchases.
Wisconsin and Michigan made pension fund investments in cryptocurrency last year.
What Happened
The Texas Legislature appropriated $10 million for the Strategic Bitcoin Reserve as part of the state's $338 billion annual budget.
"Our goal for implementation is simple: build a secure reserve that strengthens the state's balance sheet," Hancock said.
"Texas is leading the way once again, and we're proud to do it."
The $5 million initial purchase serves as what the Comptroller's office called a "placeholder investment" while developing custody infrastructure.
Bitcoin traded at $89,406 on Friday, slightly below Texas's purchase price.
The cryptocurrency reached an all-time high of $126,080 in early October before declining.
Lee Bratcher, president of the Texas Blockchain Council, defended the investment despite Bitcoin's notorious volatility.
"It's only a 16-year-old asset, so the volatility, both in the up and down direction, will smooth out over time," Bratcher said.
"We still want it to retain some of those volatility characteristics because that's how we could see those upward moves that will benefit the state's finances in the future."
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Why It Matters
The purchase positions Texas at the forefront of state-level cryptocurrency adoption as digital assets gain mainstream acceptance.
Texas has emerged as a global Bitcoin mining hub since China banned the practice in 2021.
Governor Greg Abbott declared "Texas is open for crypto business" on social media, attracting at least 27 Bitcoin facilities to the state.
The two largest cryptocurrency mining facilities in the world operate in Texas.
However, the industry faces criticism over energy consumption.
Bitcoin mines in Texas consumed 2,717 megawatts of power in 2023, enough electricity to power roughly 680,000 homes.
A 2023 Wood Mackenzie study commissioned by The New York Times found Texans' electric bills rose nearly 5%, or $1.8 billion annually, due to increased grid demand from crypto mining.
Ed Hirs, a University of Houston energy economist, questioned the state's investment strategy.
"The ordinary mix in investing is one that goes away from volatility," Hirs said.
"Once the public decides this really has no intrinsic value, then it will be over, and taxpayers will be left holding the bag."
Bratcher argued the timing proves advantageous, believing Bitcoin is unlikely to trade this low again given its historical upward trajectory since launching in 2009.
The Strategic Bitcoin Reserve represents 0.0015% of Texas's annual budget but establishes a precedent for state-level digital asset holdings.
Bitcoin traded at approximately $90,000 at time of writing.
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