States debate whether to restrict — or invite — crypto mining

SEATTLE — As cryptocurrency mining draws increased scrutiny on Capitol Hill in Washington, D.C., some state legislatures are considering proposals to restrict the industry over growing concerns about its energy use. Other states, though, are advancing bills to protect cryptocurrency miners from such crackdowns, citing the economic potential of hosting mining operations.

Last year, New York became the first state to limit cryptocurrency mining based on energy usage. Lawmakers passed a two-year moratorium on new mining operations that use electricity directly supplied from fossil fuel plants. The bill was drafted in response to mining companies that repurposed aging coal and gas plants to power their operations.


Bitcoin mining machines in a warehouse at the Whinstone US Bitcoin mining facility Oct. 10, 2021, in Rockdale, Texas.

“Can we reach our climate goals while adding cryptocurrency mining onto our grid?” asked Assemblymember Anna Kelles, a Democrat who sponsored the bill. “That’s an important question.”

The measure also ordered a study, conducted by the New York Department of Environmental Conservation, to look into the industry’s environmental impacts. Kelles said it will examine air and water pollution, as well as the potential for cryptocurrency mining to divert renewable energy resources from existing demands and increase the strain on the state’s transmission infrastructure. The study could guide future legislation and regulation, she said.

Now, some lawmakers in Washington and Oregon want to extend emissions and clean energy standards to cryptocurrency mining operations that are currently exempt.

Cryptocurrency mining is the process by which bitcoin and other types of digital money verify transactions and generate new coins. “Miners” operate the computers that contribute processing power to a decentralized network that verifies virtual ledgers by solving complex equations generated by the currency’s protocol. The miners who are first to process those equations are rewarded with newly minted coins, or cryptocurrency.

Mining operations require powerful computers, often in specialized facilities that use large amounts of electricity. Last year, the Biden administration published a fact sheet estimating that cryptocurrency consumes 0.9% to 1.7% of the nation’s electricity usage. The industry’s rapid growth, the White House said, “could potentially hinder broader efforts to achieve U.S. climate commitments to reach net-zero carbon pollution.”

But lawmakers in many states see the industry’s growth as a good thing.

“We need to plant our flag now as a pro-crypto state,” said Missouri state Rep. Phil Christofanelli, a Republican, in an interview with Stateline. “It’s going to continue to grow, and we want Missouri to be open and welcoming to this new form of innovation and industry.”

Christofanelli has sponsored “right to mine” legislation that would prohibit local governments from restricting cryptocurrency mining. The bill also would exempt cryptocurrencies from property taxes and specify that digital currencies don’t need the same licensing required for banks.

The bill, which passed out of committee earlier this month, is similar to measures proposed in Montana and Mississippi this year. The Montana bill, which passed the state Senate last month and awaits a hearing in the House, would prohibit zoning restrictions that target cryptocurrency miners. It also would direct the state Public Service Commission to offer electricity rates to miners that are consistent with other industrial customers.

“We just want to make sure the rules are known and fair, so if companies want to invest in Montana, they know what they are,” said state Sen. Daniel Zolnikov, the Republican who sponsored the bill. “Maybe something big happens, maybe not, but why wouldn’t we open the door and see?”

While some see promise in cryptocurrency’s economic potential, others think its growth could slow the path to reaching states’ clean energy goals.

“There’s only so many green electrons right now,” said Mandy DeRoche, deputy managing attorney for clean energy with Earthjustice, a nonprofit environmental law group. “We’re not going to meet our emissions targets with this extra load.”

DeRoche raised concerns about electricity rates in areas that have to build new infrastructure to meet the demands of cryptocurrency mining, adding that the jobs created by the industry rarely live up to initial promises.

But industry advocates say their operations could be an asset, rather than a liability, for the electrical grid. They claim cryptocurrency mining operations will create demand that will help developers build more wind and solar, creating a key “offtake” for that power when generation outstrips the demand from homes and businesses.

“It’s an alternate funding stream for these companies, so they’re going to be incentivized to build out renewable clean energy,” said Tom Mapes, director of energy policy with the Chamber of Digital Commerce, a blockchain advocacy group. “In areas where there’s excess energy capacity, this really fits in.”

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The measure also ordered a study, conducted by the New York Department of Environmental Conservation, to look into the industry’s environmental impacts. Kelles said it will examine air and water pollution, as well as the potential for cryptocurrency mining to divert renewable energy resources from existing demands and increase the strain on the state’s transmission infrastructure. The study could guide future legislation and regulation, she said.


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