Regulation
“Right to Mine” Crypto Laws Making Way in the US
If you drive 45 miles north of Little Rock, Arkansas, you’ll encounter a facility filled with thousands of computers trying to “mine” the next bitcoin.
The value of the popular cryptocurrency recently surpassed $60,000 per bitcoin. Mining these bitcoins is a lucrative operation, and several cryptocurrency mining companies have moved to the state since the law was passed. Arkansas Data Center Law last year, also known as the “right to exploit” bill. Similar bills granting protections to crypto mining operations from local regulations have appeared in a few states.
But it turns out that residents don’t particularly like many of these operations. And Arkansas recently changed course and gave municipalities back the ability to regulate crypto miners.
Marketplace’s Lily Jamali recently spoke with Gabriel Dance, deputy investigative editor at The New York Times, on the crypto mining situation in Arkansas. He explained what the most important complaints have been since the arrival of these mining operations.
The following is an edited transcript of their conversation
Gabriel Dance: The biggest concern I heard in Arkansas in particular – and I’ve also visited mines in Texas and North Dakota – was noise. It’s probably hard to understand how loud these mines are, but in general, they basically ship crates full of thousands of computers, and each of those computers has a fan. And the fans are spinning, and thousands of these fans working together can create a very loud noise similar to an airplane in slow motion. So this is the main concern for many Arkansas residents. I mean, they live in primarily rural communities, and they intentionally moved to these communities for peace and to get away from busy cities. So the arrival of these mines and the destruction of the atmosphere is incredibly disruptive, not only to the people who live there, but also to the wildlife. And things like hunters are also very concerned about this. But there are also concerns about rising energy prices, excessive water consumption to cool machines and, of course, the associated pollution. Another thing that worries them is who exactly owns all of these mines, because they appear to be connected to a network of shell companies, some of which have ties to the Chinese government.
Lily Jamali: I found this very interesting and actually very new in your reporting. I hadn’t seen this in many cases, it appears that it is Chinese nationals who own and operate these facilities.
Dance: Yes, and it’s not just in Arkansas, but certainly in Arkansas, there is this network of shell companies that I described, one of which has direct ties to the Chinese government. And then several of the people involved in this mine seem to have positions in several other mines. But it’s not just a problem in Arkansas, it’s linked to a larger influx of Chinese holdings across the United States, some of which have attracted national security scrutiny. For example, an active mine in Wyoming is just less than a mile from an Air Force base that controls nuclear-armed intercontinental ballistic missiles. Microsoft, the technology company that operates a nearby data center, sent a report to the US government warning that it could be used for intelligence gathering operations. Other Chinese-owned Bitcoin mines are located directly next to large substations which, if taken offline, could wreak havoc on the areas where they are located.
Jamali: Electrical substations.
Dance: Yes yes. In total, we identified Chinese-owned or operated Bitcoin mines in at least a dozen states.
Jamali: I want to sort of look at the forces behind this legislation that we’re seeing in Arkansas and elsewhere. You write that the Satoshi Action Fund helped draft these laws. Can you explain what the Satoshi Action Fund is and who is behind it?
Dance: Of course, the Satoshi Action Fund is a non-profit advocacy group that primarily advocates for Bitcoin mining. The company is based in Mississippi, and its co-founder actually worked in the Trump administration, rolling back Obama-era climate policies. It was actually founded five years ago as the Energy 45 Fund. And its founder, Mandy Gunasekara, had spent the previous two years at the Environmental Protection Agency, where she played a key role in the decision to withdraw the United States from the Paris climate agreement and helped repeal the Clean Power Plan.
Jamali: And she worked with former EPA Director Scott Pruitt, who listeners may remember from that era of the Trump administration.
Dance: That’s right. In fact, she credited Scott Pruitt with introducing her to bitcoin and bitcoin mining.
Jamali: Oh wow.
Dance: Yeah, that was an interesting thing she said in a podcast that Mr. Pruitt had originally suggested that they even go into business together selling electricity to Bitcoin miners.
Jamali: I had no idea. Well, we contacted the Satoshi Action Fund for this segment and did not receive a response. Let me ask you this, Gabriel, how is this law in Arkansas part of a larger trend? Where else have these laws to deregulate the crypto mining industry been attempted and everywhere have they been successful?
Dance: Yes, the Satoshi Action Group is very ambitious. So in addition to the Arkansas bill, a very similar law took effect in Montana last year, and the Satoshi Fund said it plans to pass several more this year. The Louisiana House recently unanimously passed a similar bill. A bill is also being developed in Missouri. But there are other places where the bills face stronger headwinds. In Indiana and Georgia, I think the bills are unlikely to pass, or at least considered unlikely to pass. And in North Carolina, there is also strong reluctance. And the reactions are usually along the lines of: why would we proactively protect this industry over any other industry? Which I think is a smart question to ask.
Jamali: So Gabriel, what’s next? Are we going to see more of these bills?
Dance: I think most of the bills that were supposed to be introduced were introduced. That said, the Satoshi Action Fund continues to lobby lawmakers at the federal and state levels on the issue, using many of the same arguments that, at least in Arkansas, have either failed, such as jobs, or caused quite serious consequences. problems for local communities.
More about this
Although the Satoshi Action Fund did not respond to our request for comment, we reached out to the nonprofit Earthjustice, which has represented community groups across the country pursuing cryptocurrency mining operations. We spoke with Mandy DeRoche, Deputy General Counsel for the Clean Energy Program. Here is his statement:
We’ve seen across the United States how energy-intensive cryptocurrency mining is straining power grids, restarting and decommissioning dirty coal and gas plants, raising electricity rates for thousands of years. others, increases local air and water pollution and is as noisy as planes about to take off. Crypto miners do not need incentives, special rights or special protections at the expense of real people in affected communities. Crypto miners already face virtually no oversight or regulation. The Arkansas Legislature and Arkansas residents learned this the hard way. Policymakers in other states should understand the true impacts and externalities of this industry, local communities and the environment and not fall into the same trap.
Mandy DeRoche, deputy general counsel for Earthjustice’s Clean Energy Program
Even though Arkansas has rolled back some of its protections against cryptocurrency mining, Oklahoma recently passed its own right to mine bill which will come into force next November. The law provides cryptocurrency miners with similar protections against local restrictions.
Meanwhile, the Biden administration issued an order demanding MineOne, the owners of this Wyoming crypto mining data center, Gabriel mentioned, close and sell the mine. MineOne is majority owned by Chinese nationals.