Houston superconductor tech manufacturer raises $25M

fresh funding

A Houston company has raised funding. Photo via Getty Images

A Houston company has closed its series B extension at $25 million.

MetOx International, which develops and manufactures high-temperature superconducting (HTS) wire, announced it closed a $25 million series B extension. Centaurus Capital, an energy-focused family office, and New System Ventures, a climate and energy transition-focused venture firm, led the round with participation from other investors.

"MetOx has developed a robust and highly scalable operation, and we are thrilled to partner with the Company as it enters this pivotal growth stage," says John Arnold, founder of Centaurus, in a news release. "The market for HTS is expanding at an unprecedented pace, with demand for HTS far outweighing supply. MetOx is poised to be the leading U.S. HTS producer, closing the supply gap and bringing dramatic capacity to high power innovations and applications. Their progress and potential are unmatched in the field, and we are proud to support their growth."

The fresh funding will go toward advancing the company's Xeus HTS wire technology for key energy transition applications by expanding MetOx's U.S.-based manufacturing capabilities to meet demand.

"This funding marks a pivotal step in our mission to revolutionize the energy and technology sectors with our advanced power delivery technology and accelerate delivery for our customers and partners. HTS is critical to enhancing the efficiency of our electric grid and enabling technological developments that, in many cases, would not be viable or even possible without superconductor technology," adds Bud Vos, CEO of MetOx. "Support from investors such as Centaurus and NSV not only provides the financial resources and strategic support required for accelerated scaleup, but also validates the broad reach of our technology across energy, data center, medical, and defense industries."

HTS wire technology is critical for the energy transition, especially amid rising data center growth, and for next generation wind turbines and interconnections.

MetOx's technology originated out of the University of Houston and was founded in 1998 by Alex Ignatiev, UH professor emeritus of physics and a fellow of the National Academy of Inventors. Last year, the company secured $3 million in funding from the U.S. Department of Energy to support the advancement of its proprietary manufacturing technology for its HTS wire.

"MetOx's HTS technology aligns with our systems-level research and offers a unique opportunity to dramatically accelerate the energy transition," says Ian Samuels, founder and managing partner at NSV. "MetOx's Xeus wire stands to be a force multiplier in clean energy generation and high-power transmission and distribution, enabling load growth and the deployment of power-dense data centers. NSV is excited to support MetOx as it scales domestic manufacturing capacity."

The fresh funding will go toward advancing the company's Xeus HTS wire technology. Photo via metoxtech.com

U.S. Congressman Jake Ellzey made the announcement in Dallas last week. Photo courtesy of Google

Google to invest $1B in data center tech, clean energy in Texas

coming in hot

Google is making a big investment in Texas to the tune of $1 billion.

According to a news release from the company, the tech giant will spend more than $1 billion to support its cloud and data center infrastructure and expand its commitment to clean energy.

The $1 billion will be spent on data center campuses in Midlothian and Red Oak to help meet growing demand for Google Cloud, AI innovations, and other digital products and services such as Search, Maps, and Workspace.

In addition to its data center investment, Google has also forged long-term power purchase agreements with Houston-based Engie, as well as Madrid-based entities Elawan, Grupo Cobra, and X-ELIO for solar energy based in Texas. Together, these new agreements are expected to provide 375 MW of carbon-free energy capacity, which will help support Google’s operations in Texas.

These agreements were facilitated through LEAP (LevelTen Energy’s Accelerated Process), which was co-developed by Google and LevelTen Energy to make sourcing and executing clean energy PPAs more efficient, and contributes to the company’s ambitious 2030 goal to run on 24/7 carbon-free energy on every grid where it operates.

The company has contracted with energy partners to bring more than 2,800 megawatts (MW) of new wind and solar projects to the state. Google’s CFE percentage in the ERCOT grid region, which powers its Texas data centers, nearly doubled from 41 percent in 2022 to 79 percent in 2023.

The initiatives were announced at a conference in Midlothian on August 15, attended by business leaders and politicians including U.S. Congressman Jake Ellzey, c, Ted Cruz, and Citi CIO Shadman Zafar.

The Dallas cloud region is part of Google Cloud's global network of 40 regions that delivers services to large enterprises, startups, and public sector organizations.

In a statement, Piazza said that "expanding our cloud and data center infrastructure in Midlothian and Red Oak reflects our confidence in the state's ability to lead in the digital economy."

Data centers are the engines behind the growing digital economy. Google has helped train more than 1 million residents in digital skills through partnerships with 590 local organizations, including public libraries, chambers of commerce, and community colleges.

In addition to its cloud region and Midlothian data center, Google has offices in Austin, Dallas, and Houston. The new Google’s total investment in Texas to more than $2.7 billion.

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This article originally ran on CultureMap.

Venture Houston is back next month. Here's what you need to know about this year's changes. Photo via LinkedIn

Houston VC conference returns to prioritize decarbonization, curated connections

can't miss event

In two weeks, hundreds of investors, corporate partners, and startups will convene to tackle topics of decarbonization, innovation, and investment. The annual event is also prioritizing something this year — connections.

In its third year, Venture Houston — taking place on Rice University's campus on September 7 — has a theme of "decarbonization in a digital world," but that's not the only thing different this year. The one-day conference has added on a unique event on September 6 to help engage around 50 investors with over 100 Houston startups.

The new activation is called Capital Connect, and HX Venture Fund will matchmake investors and startups for one-on-one meetings meant to spur collisions and collaboration.

"It's not a pitch competition — it doesn't have the stress of that," Sandy Guitar, general partner of HX Venture Fund, tells InnovationMap. "It's really just a way of connecting with a longer term horizon. We didn't want to limit it just to those who are currently raising, but actually include people who maybe just raised six months ago or are not going to raise for 12 more months, but might still want to be in the room."

The official day of the conference will also feature networking opportunities, including a breakfast hosted by DivInc, as well as networking breaks throughout the day.

"Based on feedback we received last year, networking was one of the things that was most celebrated about Venture Houston 2022," Guitar says. "All that space and time — the opportunity to allow people just to connect with one another. So, we're making sure that's a key part of this year as well."

Last year's keynote panel featured Gwyneth Paltrow, who shared her own founder's journey on the Venture Houston stage. This year's keynote address will be with Carmichael Roberts, investment committee co-lead of Breakthrough Energy Ventures, which was founded by Bill Gates to support climate change innovation.

While the topic of decarbonization might sound narrow, Guitar emphasizes that this event will not just be for the energy industry. Business everywhere — but especially in Houston — has an increased calling to decarbonization.

"I do think it's important to see the decarbonization not as a hard tech event, but as everything that touches carbon, which is basically everything in our planet in just the coal previously," she says. "Everything we make and use touches the climate."

Guitar adds that HXVF expects a crowd of around 1,000 people to attend the event this year, which would make it one of the largest VC-focused events ever to be held in the region. InnovationMap and EnergyCapital are media partners for the event.

BiVACOR has received fresh funding from its investors to further develop its artificial heart. Photo courtesy of BiVACOR

Houston med device startup raises $18M, prepares to hire

money moves

A Houston medical device company that is developing an artificial heart announced it has received investment funding to the tune of $18 million.

BiVACOR's investment round was led by Boston-based Cormorant Asset Management and Australia's OneVentures's Healthcare Fund III. According to the company, the funding will be deployed to continue research and development, hiring executives, and support the path to first in human trials.

“We are extremely grateful for the ongoing support from our core investors," says Thomas Vassiliades, who was named CEO of BiVACOR last year, in a news release. "This additional commitment further validates our technology and the need for improved options to treat end-stage biventricular heart failure.

“With this financing, we will be able to double the size of our organization and add key positions from the C-suite to research and development. We are well positioned to advance our preclinical activities and aim to conduct our First in Human early feasibility study planned for the end of the year,” he continues.

Billed as the first long-term treatment for patients with severe biventricular heart failure, the BiVACOR Total Artificial Heart is an implantable artificial heart that utilizes rotary blood pump technology. This technology includes magnetic levitation and is a "durable, reliable, and biocompatible heart replacement," per the company's release. It's about the size of a fist and can be used in a wide range of patients including some children and women and up to adult males.

“Under the leadership of its expert management team, the company has developed a credible strategy for growth as they march toward first in human studies,” says Jeannie Joughin, board chair and principal at One Ventures, in the release. “There is a huge gap in care for patients waiting for a heart transplant, and we are confident that BiVACOR will continue to execute its strategy to swiftly get the Total Artificial Heart into the patients who need it most.”

The company raised its $22 million series B round in early 2021, which was also led by Cormorant Asset Management and OneVentures. To date, BiVACOR has raised $60 million.

“BiVACOR continues to execute on its strategy, and there was no question that we would jump in to lead this funding,” says Bihua Chen, CEO and founder of Cormorant Asset Management. “We are impressed by BiVACOR’s world-class team and continued dedication to push the technology in the clinic. We’re excited to support their growth and vision to transform the treatment of biventricular heart failure with the world’s first fully MAGLEV total artificial heart.”

Founded in 2008, BiVACOR maintains offices in Cerritos, California, and Brisbane, Australia. The company is affiliated with Houston's Texas Heart Institute, where the world's first artificial heart was implanted. BiVACOR's headquarters is at the Texas Medical Center complex.

Here are 11 Houston startups that together have raised over $140 million in venture capital investment so far this year. Photo via Getty Images

These 11 Houston startups closed funding rounds so far this year

following the money

Venture capital investment is moving and grooving in Houston this year so far, which really is a continuation of the leap in VC investment from 2021.

According to a recent report from Houston Exponential, Houston’s average early-stage deal size of $18 million represents a 68 percent growth rate since 2019. Compared with the national growth rate of 23 percent, “this demonstrates the broader expansion and maturities within the Houston ecosystem,” the analysis says.

Last year, local startups collected $2.02 billion in VC funding, according to PitchBook data. That’s up 175 percent from the $734.2 million raised in 2020.

“That VC-backed companies were able to generate such enormous value in 2021 during a time characterized by great uncertainty and extraordinary circumstances highlights the continued importance of VC-backed companies to the resilience of Houston’s economy,” says Serafina Lalany, executive director of Houston Exponential.

In continuance with last year, 2022 has started with a flurry of VC activity. In case you missed some of these first quarter deals, InnovationMap has rounded up all its coverage of funding rounds closed between January and March based on previous reporting. Scroll through to see which Houston startups are catching the eyes — and cashing the checks — of investors.

P97 Networks has raised $40M of venture debt financing

P97 Networks, a Houston-based mobile payments company, has fresh funds to scale its operations. Photo via Getty Images

A Houston company that has created a mobile commerce platform for the convenience retail, fuels marketing, and automotive industries has fresh funding to support its growth.

P97 Networks has raised $40 million of venture debt financing from an affiliate of Peak Rock Capital, a leading middle-market private investment firm, according to a news release from the company.

“We will use this new capital to fund P97’s high growth initiatives, which include accelerating user adoption across our Consumer Engagement platform, Energy Transition programs for our clients, and our Mobility Services platform,” said Donald Frieden, president and CEO of P97, in the release. Click here to continue reading.

Zeta Energy close $23M series A

Houston-based Zeta Energy has raised fresh funding to grow its Houston operations and further commercialize the company's innovative batteries for electric vehicles and energy storage. Photo via Getty Images

Houston-based Zeta Energy announced this month that it has closed a $23 million series A round led by New York VC firm Moore Strategic Ventures.

The funding will be used to expand Zeta's lab facility in the Houston area and further commercialize the company's innovative batteries for electric vehicles and energy storage.

"We are delighted to have Moore Strategic Ventures join Zeta Energy. Moore's focus on transportation, advanced materials, energy, and clean tech aligns perfectly with Zeta's strategic objectives," Charles Maslin, founder and CEO of Zeta Energy, said in a statement. "We are so excited to work together to help the world transition to clean energy and build a more sustainable future." Click here to continue reading.

DECISIO raises $18.5M, appoints new leadership

DECISIO has fresh funding and a new board member. Photo via decisiohealth.com

A Houston-based digital health startup has officially closed its latest funding round and has a new member to its leadership to support the company's next phase.

DECISIO has appointed Major General Elder Granger to the company's board of directors. Dr. Granger is currently president and CEO of The 5Ps LLC, a healthcare, education, and leadership consulting organization.

"Dr. Granger joining our board provides enormous value and validation for our company moving forward," says Dr. John Holcomb, co-CEO and co-founder of DECISIO, says in a news release. "His expertise and leadership in the healthcare industry is a welcome addition to our esteemed group of Board of Directors." Click here to continue reading.

Vivante Health raises $16M series A round

Vivante Health closed a fresh round of funding. Photo via Getty Images

A Houston-based digital health startup that's targeting solutions for digestive diseases has closed its latest round of funding.

Vivante Health closed a $16 million series A funding round led by Chicago-based 7wireVentures with contribution from new investors, including Human Capital, Intermountain Ventures, SemperVirens, Elements Health Ventures, and Leaps by Bayer. Additionally, the round saw participation from returning investors FCA Venture Partners, NFP Ventures, Lifeforce Capital, and Big Pi Ventures.

The fresh funding will support commercial scaling and growth of the company, which is based in Houston's JLABS @ TMC space.

"The Series A financing round represents another pivotal milestone in our mission to improve our member's digestive health and provide outcomes at scale for our enterprise partners," says Bill Snyder, Vivante Health CEO, in a news release. "We are thrilled to partner with premier investors in this latest round of funding that will enable us to continue our rapid growth trajectory and further establish ourselves as the leader in digestive health." Click here to continue reading.

SiteAware closes $15M in funding round

Houston-based SiteAware has raised $15 million in its latest round of funding. Photo courtesy of SiteAware

A Houston startup that provides artificial intelligence-enabled verification software to the construction industry has closed its series B round.

SiteAware raised $15 million in the round, which was led by Singapore-based Vertex Ventures Israel. Existing investors Robert Bosch Venture Capital GmbH, Axon Ventures, Oryzn Capital, The Flying Object, and lool Ventures also contributed to the round.

The company's digital construction verification, or DCV, platform uses AI and digital twin technology to provide real-time verification of construction fieldwork. According to a press release from SiteAware, the construction industry represents a $1.3 trillion market share of the United States economy. Click here to continue reading.

Codenotary raises $12.5M series B

Codenotary's software enables tools for notarization and verification of the software development life cycle. Photo via Getty Images

Houston-based Codenotary, whose technology helps secure software supply chains, has raised $12.5 million in a series B round. Investors in the round include Swiss venture capital firm Bluwat and French venture capital firm Elaia.

The $12.5 million round follows a series A round that was announced in 2020, with total funding now at $18 million.

Codenotary, formerly known as vChain, says the fresh round of money will be used to accelerate product development, and expand marketing and sales worldwide. Today, the startup has 100-plus customers, including some of the world’s largest banks. Click here to continue reading.

Rugged Robotics raises $9.4M series A

The tech solution provides construction customers with an automated layout-as-a-service tool. Image via rugged-robotics.com

A Houston robotics startup working in the commercial construction field has closed its latest round of funding.

Rugged Robotics Inc. announced last week that it's raised $9.4 million in its series A round led by BOLD Capital Partners and Brick & Mortar Ventures. Riot Ventures, Morpheus, and Embark — all investors in the company's 2019 seed round — also contributed, as did Consigli Construction Company and Suffolk Technologies. To date, Rugged Robotics has raised $12 million.

“We are thrilled to be part of the Rugged team,” says Maxx Bricklin, partner at BOLD Capital, in a news release. “We looked at a number of companies in the space and became convinced that the Rugged team, technology and partner ecosystem would allow Rugged to dominate and capitalize on this significant and disruptive market opportunity.” Click here to continue reading.

Koda Health raises $3.5 million in seed funding to expand nationally

Tatiana Fofanova, co-founder and CEO of Koda, closed recent funding for the digital health startup. Image via LinkedIn

Houston-based Koda Health announced this month that it raised $3.5 million in its latest seed round.

The round was led by Austin-based Ecliptic Capital, which focuses on emergent and early-stage investments. Sigmas Capital, Headwater Ventures, CRCM, and a number of angel investors also participated in the round.

The funding will be used to help the digital advanced care planning company double the size of its team in the next six months.

"Koda Health helps vulnerable people navigate and communicate difficult decisions about their health care journey. So, when hiring, we look for empathetic people who are phenomenal communicators," Tatiana Fofanova, Koda co-founder and CEO, says in a statement. Click here to continue reading.

INOVUES raises $2.75M to make buildings more energy efficient

Window-retrofitting climatetech company has raised its first round of funding. Photo via inovues.com

A Houston startup that retrofits windows with smart glass innovations to reduce energy use has raised its first round of funding.

INOVUES closed its seed round at $2.75 million last month. The oversubscribed round was led by Dallas-based Paulos Holdings with participation from new and existing investors, including Houston-based VC Fuel, Saint-Gobain NOVA, Fund4SE, Momentum Glass, Lateral Capital, E8 Angels, and the Central Texas Angel Network.

"Our mission is to help cities achieve their energy efficiency and emissions-reduction targets by increasing the rate of window upgrades in existing buildings," says INOVUES founder and CEO, Anas Al Kassas, in a news release. "To achieve that, we have developed a low-carbon, high-ROI retrofit solution that makes upgrading building windows a financially attractive energy conservation measure instead of a massive capital upgrade associated with business disruptions and prohibitive payback periods." Click here to continue reading.

Roboze closed a multimillion-dollar round of funding

Roboze has closed its latest round of funding. Photo courtesy of Roboze

Roboze — an Italian high-performance 3D printing company with its U.S. headquarters in Houston — closed a multimillion-dollar round of funding this month with investments from an international group of leaders from diverse backgrounds.

Investors include Nova Capital, Lagfin, Andrea Guerra, Luigi De Vecchi, Roberto Ferraresi, Luca Giacometti, Denis Faccioli and others, according to a statement.

“We are honored to have a group of investors of this caliber, who strongly believe in the vision of Roboze and in the change of production paradigm that our technology is enabling by replacing metals and producing parts without wasting raw materials," Alessio Lorusso, founder and CEO of Roboze, said in a statement. Click here to continue reading.

Tekmetric closes recent fundraising round

A Houston software company has raised an undisclosed amount of funding. Photo via tekmetric.com

Tekmetric, a cloud-based shop management system for automotive repair shops, announced the close of its growth investment from California-based Susquehanna Growth Equity. The details of the round were not disclosed, but, according to a news release, the fresh funds will go toward growing Tekmetric's engineering and technical teams and expansion across the United States.

Launched three years ago by Prasanth Chilukuri and Sunil Patel, co-founders and co-CEOs, Tekmetric's SaaS solution provides shop owners with digital inspections, integrated payments, and more of their business needs. Click here to continue reading.

Octopus Energy's valuation is now at $5 billion. Image via octopus.energy

Energy company with US HQ in Houston secures $300M in investment

money moves

Renewable energy retailer Octopus Energy Group, whose U.S. headquarters is in Houston, has landed a $300 million investment from the Canada Pension Plan Investment Board that will further propel the company’s global expansion.

The deal with the Canada Pension Plan Investment Board (CPP Investments), one of the world’s largest pension funds, follows a recent $600 million funding round from Al Gore’s Generation Investment Management and boosts Octopus Energy Group’s estimated valuation to $5 billion.

CPP Investments now owns a 6 percent stake in Octopus Energy Group. Generation Investment Management controls a 13 percent stake.

The infusion of cash will enable Octopus to grow its Kraken technology platform and to activate 30 more wind turbines, among other activities. Octopus aims to have 100 million energy accounts on Kraken, the company’s proprietary smart grid technology platform for customer service, by 2027. Today, the Kraken platform has about 17 million accounts.

The CPP Investments deal caps a busy 2021 for London-based Octopus. Earlier this year, for instance, the company established its U.S. headquarters in Houston.

“This investment delivers a huge boost to our mission of expanding access to renewable energy and delivering exceptional customer service across all markets, ” Michael Lee, CEO of Octopus Energy U.S., says in a news release. “Octopus Energy has turned energy on its head — thrown away the call centers, confusing bills, and tired systems — to create a better customer experience for everyone that takes into consideration how consumers interact with their energy and smart home devices, while making the experience more enjoyable, visually appealing and understandable.”

Octopus’ renewable energy investment arm, Octopus Energy Generation, is one of Europe’s largest renewable energy investors and manages assets exceeding $4.5 billion.

“Octopus has pioneered the technology that allows citizens to benefit from cheaper energy as it gets greener,” says Greg Jackson, founder and CEO of Octopus Energy Group.

Octopus serves more than 3 million customers in the United Kingdom, and also supplies energy in the U.S., Germany, Spain, Italy, New Zealand, and Japan. Octopus is on track to supply enough wind and solar energy to power 2 million more homes by 2025.

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Baylor center receives $10M NIH grant to continue rare disease research

NIH funding

Baylor College of Medicine’s Center for Precision Medicine Models received a $10 million, five-year grant from the National Institutes of Health last month that will allow it to continue its work studying rare genetic diseases.

The Center for Precision Medicine Models creates customized cell, fly and mouse models that mimic specific genetic variations found in patients, helping scientists to better understand how genetic changes cause disease and explore potential treatments.

The center was originally funded by an NIH grant, and its models have contributed to the discovery of several new rare disease genes and new symptoms caused by known disease genes. It hosts an online portal that allows physicians, families and advocacy groups to nominate genetic variants or rare diseases that need further investigation or new treatments.

Since its founding in 2020, it has received 156 disease/variant nominations, accepted 63 for modeling and produced more than 200 precision models, according to Baylor.

The center plans to use the latest round of funding to bring together more experts in rare disease research, animal modeling and bioinformatics, and to expand its focus and model more complex diseases.

Dr. Jason Heaney, associate professor in the Department of Molecular and Human Genetics at BCM, serves as the lead principal investigator of the center.

“The Department of Molecular and Human Genetics is uniquely equipped to bring together the diverse expertise needed to connect clinical human genetics, animal research and advanced bioinformatics tools,” Heaney added in the release. “This integration allows us to drive personalized medicine forward using precision animal models and to turn those discoveries into better care for patients.”

Houston institutions launch Project Metis to position region as global leader in brain health

brain trust

Leaders in Houston's health care and innovation sectors have joined the Center for Houston’s Future to launch an initiative that aims to make the Greater Houston Area "the global leader of brain health."

The multi-year Project Metis, named after the Greek goddess of wisdom and deep thought, will be led by the newly formed Rice Brain Institute, The University of Texas Medical Branch's Moody Brain Health Institute and Memorial Hermann’s comprehensive neurology care department. The initiative comes on the heels of Texas voters overwhelmingly approving a ballot measure to launch the $3 billion, state-funded Dementia Prevention and Research Institute of Texas (DPRIT).

According to organizers, initial plans for Project Metis include:

  • Creating working teams focused on brain health across all life stages, science and medical advances, and innovation and commercialization
  • Developing a regional Brain Health Index to track progress and equity
  • Implanting pilot projects in areas such as clinical care, education and workplace wellness
  • Sharing Houston’s progress and learnings at major international forums, including Davos and the UN General Assembly

The initiative will be chaired by:

  • Founding Chair: Dr. Jochen Reiser, President of UTMB and CEO of the UTMB Health System
  • Project Chair: Amy Dittmar, Howard R. Hughes Provost and Executive Vice President of Rice University
  • Project Chair: Dr. David L. Callender, President and CEO of Memorial Hermann Health System

The leaders will work with David Gow, Center for Houston’s Future president and CEO. Gow is the founder and chairman of Gow Media, InnovationMap's parent company.

“Now is exactly the right time for Project Metis and the Houston-Galveston Region is exactly the right place,” Gow said in a news release. “Texas voters, by approving the state-funded Dementia Prevention Institute, have shown a strong commitment to brain health, as scientific advances continue daily. The initiative aims to harness the Houston’s regions unique strengths: its concentration of leading medical and academic institutions, a vibrant innovation ecosystem, and a history of entrepreneurial leadership in health and life sciences.”

Lime Rock Resources, BP and The University of Texas MD Anderson Cancer Center served as early steering members for Project Metis. HKS, Houston Methodist and the American Psychiatric Association Foundation have also supported the project.

An estimated 460,000 Texans are living with dementia, according to the Alzheimer’s Association, and more than one million caregivers support them.

“Through our work, we see both the immense human toll of brain-related illness and the tremendous potential of early intervention, coordinated care and long-term prevention," Callender added in the release. "That’s why this bold new initiative matters so much."

Texas launches cryptocurrency reserve with $5 million Bitcoin purchase

Money Talks

Texas has launched its new cryptocurrency reserve with a $5 million purchase of Bitcoin as the state continues to embrace the volatile and controversial digital currency.

The Texas Comptroller’s Office confirmed the purchase was made last month as a “placeholder investment” while the office works to contract with a cryptocurrency bank to manage its portfolio.

The purchase is one of the first of its kind by a state government, made during a year where the price of Bitcoin has exploded amid the embrace of the digital currency by President Donald Trump’s administration and the rapid expansion of crypto mines in Texas.

“The Texas Legislature passed a bold mandate to create the nation’s first Strategic Bitcoin Reserve,” acting Comptroller Kelly Hancock wrote in a statement. “Our goal for implementation is simple: build a secure reserve that strengthens the state’s balance sheet. Texas is leading the way once again, and we’re proud to do it.”

The purchase represents half of the $10 million the Legislature appropriated for the strategic reserve during this year’s legislative session, but just a sliver of the state’s $338 billion budget.

However, the purchase is still significant, making Texas the first state to fund a strategic cryptocurrency reserve. Arizona and New Hampshire have also passed laws to create similar strategic funds but have not yet purchased cryptocurrency.

Wisconsin and Michigan made pension fund investments in cryptocurrency last year.

The Comptroller’s office purchased the Bitcoin the morning of Nov. 20 when the price of a single bitcoin was $91,336, according to the Comptroller’s office. As of Friday afternoon, Bitcoin was worth slightly less than the price Texas paid, trading for $89,406.

University of Houston energy economist Ed Hirs questioned the state’s investment, pointing to Bitcoin’s volatility. That makes it a bad investment of taxpayer dollars when compared to more common investments in the stock and bond markets, he said.

“The ordinary mix [in investing] is one that goes away from volatility,” Hirs said. “The goal is to not lose to the market. Once the public decides this really has no intrinsic value, then it will be over, and taxpayers will be left holding the bag.”

The price of Bitcoin is down significantly from an all-time high of $126,080 in early October.

Lee Bratcher, president of the Texas Blockchain Council, argued the state is making a good investment because the price of Bitcoin has trended upward ever since it first launched in early 2009.

“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.”

Bratcher said the timing of the state’s investment was shrewd because he believes it is unlikely to be valued this low again.

The investment comes at a time that the crypto industry has found a home in Texas.

Rural counties have become magnets for crypto mines ever since China banned crypto mining in 2021 and Gov. Greg Abbott declared “Texas is open for crypto business” in a post on social media.

The state is home to at least 27 Bitcoin facilities, according to the Texas Blockchain Council, making it the world’s top crypto mining spot. The two largest crypto mining facilities in the world call Texas home.

The industry has also come under criticism as it expands.

Critics point to the industry’s significant energy usage, with crypto mines in the state consuming 2,717 megawatts of power in 2023, according to the comptroller’s office. That is enough electricity to power roughly 680,000 homes.

Crypto mines use large amounts of electricity to run computers that run constantly to produce cryptocurrencies, which are decentralized digital currencies used as alternatives to government-backed traditional currencies.

A 2023 study by energy research and consulting firm Wood Mackenzie commissioned by The New York Times found that Texans’ electric bills had risen nearly 5%, or $1.8 billion per year, due to the increase in demand on the state power grid created by crypto mines.

Residents living near crypto mines have also complained that the amount of job creation promised by the facilities has not materialized and the noise of their operation is a nuisance.

“Texas should be reinvesting Texan’s tax money in things that truly bolster the economy long term, living wage, access to quality healthcare, world class public schools,” said state Sen. Molly Cook, D-Houston, who voted against the creation of the strategic fund. “Instead it feels like they’re almost gambling our money on something that is known to be really volatile and has not shown to be a tide that raises all boats.”

State Sen. Charles Schwertner, R-Georgetown, who authored the bill that created the fund, said at the time it passed that it will allow Texas to “lead and compete in the digital economy.”

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This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.

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