What is Bitcoin?
A decentralized digital currency that lets people send and receive value directly — without a bank or intermediary
Digital money
A payment network like Visa, and a form of money like dollars or gold. Created in 2009. The network has settled more than $30 trillion in lifetime transaction volume.
Decentralized
No corporation or government runs Bitcoin. Every transaction is verifiable on a public ledger maintained by thousands of independent computers worldwide.
Scarce by design
The supply is fixed at 21 million coins by the network’s own software rules. Cannot be changed without coordinated agreement from every participant. The reason it’s often called “digital gold.”
Bitcoin vs. Traditional Money
How Bitcoin compares to the US Dollar and gold
| US Dollar | Gold | Bitcoin | |
|---|---|---|---|
| Supply | Unlimited — controlled by Federal Reserve | Limited but growing (~2% annually) | Fixed at 21M |
| Issuer | Federal government | Natural occurrence | Decentralized network |
| Transfer Speed | Hours to days | Days to weeks | Minutes |
| Transparency | Limited | No public record | Fully public |
| Inflation | Subject to devaluation | ~2% from new mining | None — fixed supply |
Why states are acting
The federal regulatory framework is taking shape. States that have already done the work attract investment first.
Innovation capital
Wyoming’s blockchain framework pulled Kraken’s bank subsidiary, BitGo, and dozens of fintech firms into a state of 588K people. Rhode Island has roughly twice the population. Wyoming pivoted with sustained policy work; RI’s six 2026 bills are the start of similar work.
Tax clarity
Every Bitcoin transaction currently triggers a capital-gains reportable event in RI — a $5 coffee included. Clarity here costs the state $500K–$2.5M annually (under 0.04% of general revenue) and removes the friction that prevents Bitcoin from working as everyday money.
Digital property rights
A central bank digital currency would let the federal government freeze any citizen’s account programmatically. Wyoming’s 2023 private-key protection law (Senate 31–0) is the model states use to preempt that capacity at the property-rights level.
Energy and grid
Bitcoin mining as flexible load is being used to monetize curtailed wind in Texas and stranded gas in Montana and North Dakota. Rhode Island’s offshore wind buildout creates the same curtailment problem; mining co-location is one of the few demand-response tools available at scale.
How Bitcoin Works
Bitcoin runs on blockchain — a public ledger maintained by thousands of computers worldwide
Wallets
Software that stores your Bitcoin credentials — like a digital bank account you control directly.
Private Keys
Secret codes that prove ownership and authorize transactions — like a PIN, but cryptographically secure.
Blockchain
The public record of all transactions — transparent, permanent, and tamper-proof.
Mining
The process that verifies transactions, secures the network, and creates new Bitcoin through computational work.
Why This Matters for Legislators
Bitcoin's transparent blockchain actually makes it easier to trace transactions than cash. Law enforcement agencies have solved major cases specifically because criminals used Bitcoin, which leaves a permanent public record.
How a Transaction Works
Alice signs the transaction with her private key
Transaction broadcasts to the network
Miners verify the transaction is valid
Recorded on the blockchain permanently
Bob receives Bitcoin — often in minutes
Mining & Energy
How Bitcoin's security model works — and why the energy narrative is changing
Security
Mining’s computational cost is what makes attacking or rewriting the network economically infeasible. Roughly 0.7–0.8% of global electricity, per Cambridge data, secures hundreds of billions in value.
Sustainable energy
52.4% of mining ran on sustainable energy in 2025 (Cambridge Centre for Alternative Finance, April 2025), up from earlier estimates near 38%. Coal share has dropped substantially over the same period.
Grid stability
Texas ERCOT uses miners as flexible load: they shut down during peak demand events and absorb cheap power during surpluses, smoothing the grid for everyone else.
Myth vs. Fact
Addressing the concerns legislators most frequently raise
"Bitcoin is mainly used for crime"
Illicit activity represents less than 1% of Bitcoin transactions. The US dollar remains the dominant currency for money laundering. Bitcoin's transparent ledger actually helps law enforcement — it leaves a permanent public record.
"Bitcoin wastes energy"
52.4% of Bitcoin mining runs on sustainable energy as of early 2025 per the Cambridge Centre for Alternative Finance Digital Mining Industry Report (April 2025) — 42.6% from renewables and 9.8% from nuclear. A significant share of mining uses stranded energy — flared gas, curtailed renewables — that would otherwise be wasted.
"Bitcoin is too volatile"
Bitcoin has produced positive returns over every completed 4-year rolling window in its history, though returns have moderated as the asset has matured. Realized volatility has steadily declined as market cap and adoption have grown — daily 10%+ moves are far less common than a decade ago. Major institutions like BlackRock and Fidelity now offer Bitcoin products.
What Can Rhode Island Do?
Legislative options currently under consideration in the 2026 session
Study Commission
Ten-member commission to study blockchain for government services, tax treatment, and economic development. Senate floor vote June 10, 2026.
Tax de minimis
Exempts small Bitcoin transactions (up to $5,000/month) from state capital gains. Costs less than 0.04% of general revenue. Senate Finance hearing June 8.
Private key protection
Prohibits compelled disclosure of private cryptographic keys when a public key suffices. Modeled on Wyoming’s 2023 law (Senate 31–0).
Sandbox & SPDIs
Special Purpose Depository Institutions (the Wyoming/Nebraska bank charter that pulled Kraken Bank to Cheyenne) plus a regulatory sandbox for digital asset products.
DAO LLC framework
Legal framework for Decentralized Autonomous Organizations to operate as LLCs, with a regulatory sandbox. RI would be the fifth state with a DAO LLC law.
Why Act Now?
Rhode Island ranks 46th on CNBC's 2025 America's Top States for Business (tied with Louisiana) and 40th on the Tax Foundation 2026 State Tax Competitiveness Index. RIPEC projects a five-year structural deficit of $537M. Bitcoin and digital asset policy is one of the few areas where a small state can lead and where Rhode Island already has a head start through the Department of Business Regulation's existing virtual currency licensing.
Further Resources
Trusted sources for learning more about Bitcoin and blockchain policy
Need a 25-minute briefing?
For Rhode Island legislators and staff: Dan walks through whichever 2026 bills are most relevant to your committee. In person at the State House or by phone.