Missoula County’s cryptocurrency mining regulation could become a national model
New law in Missoula County could help write the future of cryptocurrency regulation in the United States In February, county officials passed what they believe is the first permanent zoning policy for cryptocurrency mining operations, forcing them to generate renewable energy and stay away from residential areas.
Jason Vaughan was the site manager for Hyperblock, a Bitcoin mining company in Bonner, MT, which closed last year. He says stepping into the 250,000 square foot building was almost like stepping into a giant assembly line.
“Most of them are, you know, steel and metal. There’s a lot of noise from fans of all the machines and things, but it’s just like there are hundreds of thousands of little flashing lights and so on.
The flashing lights belonged to computers mining Bitcoin cryptocurrency. They do this by solving complex mathematical problems that require intense computing power. The first computer to solve the problem is rewarded by the network with Bitcoin.
Vaughan says western Montana was a great place for growing mining, because like your home computer, mining machines can heat up and the cool climate keeps costs down.
Electricity is also cheaper in Montana than in most countries, and cryptocurrency mining consumes a lot of energy.
Hyperblock’s giant data center opened in 2016 and has quadrupled in size. According to county officials, Hyperblock’s energy use at its peak was comparable to the energy use of about a third of all households in the county.
Vaughan says plans were in place for the business to continue to grow when 2020 arrives.
“You know, it was some kind of perfect storm of circumstances that ultimately led to bankruptcy.”
The price of Bitcoin has been hit hard by the epidemic The coronavirus pandemic and the size of digital mining have caught the county’s attention.
Missoula County Sustainability Program Manager Diana Maneta said: “It turned out that the cooling fans on the roof of the facility were generating this loud, constant hum that really bothered some of the neighbors.”
In February of this year, Missoula County implemented new zoning policies that require cryptocurrency mining operations to take place outside of residential areas.
The new rule also states that companies must dispose of electronic waste through recycling companies approved by the Montana Department of the Environment and generate new renewable energy to make up for the energy they have removed. of the market.
Most of Hyperblock’s existing data center would have been exempt from the regulations, but anything it added would not have been.
“We have given this a lot of thought, not wanting to ban this industry in the county, but wanting to know how to make it compatible with the county’s values and the county’s goals – especially the climate change goal,” Maneta says. .
The energy required to mine cryptocurrency is a growing point of debate in the new industry.
Nikhilesh De, Editor-in-Chief of Global Policy and Regulation at CoinDesk, says Missoula County regulations are at the forefront of how local governments might respond to digital mining operations.
“I haven’t seen anything like it yet, but it wouldn’t surprise me if this pattern is followed. “You know, these companies use a lot of electricity and they need a lot of energy from the nearby power plants.”
De says the figures on Bitcoin’s energy consumption are striking and putting the onus on businesses to reduce their energy demand could alleviate the problem.
Still, he says it’s a complicated debate. Many in the industry say digital currency miners are distinguished in the wide world of high-power technological advancements.
“I think part of the reason Bitcoin and other cryptocurrencies are getting this attention so much is that it’s a little easier to estimate how much energy they are using compared to tech companies. or other systems. “
Alex de Vries is a data scientist for the Dutch Central Bank and the founder of Digiconomist, a financial medium that covers digital trends. He says that global Bitcoin mining only uses around 40% renewable energy and that the renewable energy it uses could displace other customers, pushing them to higher fossil fuel use.
He also says that the total carbon footprint of bitcoin is equal to that of the country of Hungary, while generating electronic waste equivalent to that of Luxembourg. He says that with the bitcoin price spike, these impacts are unlikely to diminish. When Hyperblock in Missoula County closed in Missoula County in May 2020, a bitcoin cost around $ 9,000. Now it’s worth it approximately $ 55,000.
“If cryptocurrency mining becomes more profitable, people will add more machines as long as it is profitable,” de Vries says. “The only bottleneck is that the production of these machines takes a while.”
Bitcoin could one day join several other cryptocurrencies to switch to greener mining methods, but de Vries says that’s difficult to achieve.
“It’s a distributed network. No one is in charge, which means no one can say ‘from tomorrow we will use this new green version’ ”.
Bonner’s data center infrastructure has been completely dismantled and another tenant is using a fraction of the building. Meanwhile, Missoula County’s Diana Maneta says she has already heard from residents in other parts of the country who want to advocate for similar cryptocurrency mining rules in their own communities.