“Right-to-mine” crypto laws are making their way across the U.S.
If you drive 45 miles north of Little Rock, Arkansas, you’ll come across a facility packed with thousands of computers trying to “mine” the next bitcoin.
The popular cryptocurrency’s value recently shot past $60,000 per bitcoin. Mining those bitcoins is a lucrative operation, and several crypto mining outfits have moved to the state since the passage of the Arkansas Data Centers Act last year, also known as the “right-to-mine” bill. Similar bills giving crypto mining operations protections from local regulations have popped up in a couple of states.
But it turns out residents don’t particularly welcome many of these operations. And Arkansas recently changed course and restored to municipalities the ability to regulate crypto miners.
Marketplace’s Lily Jamali recently spoke with Gabriel Dance, senior deputy investigations editor at The New York Times, about the crypto mining situation in Arkansas. He explained what the biggest complaints have been since these mining operations moved in.
The following is an edited transcript of their conversation
Gabriel Dance: The biggest concern I heard in Arkansas specifically — and I visited mines in Texas and North Dakota as well — was the noise concerns. It’s difficult to understand probably just how noisy these mines are, but typically, they’re essentially shipping crates filled with thousands of computers, and each of these computers has a fan. And the fans whir, and thousands of these fans working together can create a very loud noise akin to kind of an idling airplane. And so that’s the primary concern that many of the people in Arkansas have. I mean, they live in primarily rural communities, and they moved to those communities intentionally for the peace and to be away from bustling cities. So to have these mines come in and essentially ruin the atmosphere is incredibly disruptive not only to the people living there, but to wildlife. And things like hunters are very concerned about that as well. But there are also concerns about rising energy prices, using lots of water to cool the machines, and yes, associated pollution. One other thing that they’re concerned about is just exactly who owns all of these mines, because they seem to be connected to a web of shell companies, some of which have ties to the Chinese government.
Lily Jamali: This I found very interesting and actually very new about your reporting. I hadn’t seen that in many cases, it seems to be Chinese nationals that own and operate these facilities.
Dance: Yes, and that’s not only in Arkansas, but certainly in Arkansas, there is this web of shell companies that I described, one of which has direct ties to the Chinese government. And then several of the people involved in that mine seem to be holding roles at several of the other mines. But this is not just an issue in Arkansas, this is connected to a larger influx of Chinese ownership across the United States, some of which has drawn national security scrutiny. For example, one mine operating in Wyoming is just under a mile away from an Air Force base that controls nuclear-armed intercontinental ballistic missiles. Microsoft, the tech company, which operates a nearby data center, sent a report to the U.S. government warning that that operation could be used for intelligence-gathering operations. Other Chinese-owned bitcoin mines are located directly adjacent to large substations, which, if taken offline, could wreak havoc in the areas that they’re located.
Jamali: Electrical substations.
Dance: Yes, yes. In all, we’ve identified Chinese-owned or operated bitcoin mines in at least a dozen states.
Jamali: I do want to look at sort of the forces behind this legislation that we’re seeing in Arkansas and elsewhere. You write that the Satoshi Action Fund has had a hand in writing these laws. Can you explain what the Satoshi Action Fund is and who’s behind it?
Dance: Sure, the Satoshi Action Fund is a nonprofit advocacy group that primarily advocates for bitcoin mining. It’s 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 something called the Energy 45 Fund. And its founder, Mandy Gunasekara, had spent the previous two years at the Environmental Protection Agency, where she was a key player in the decision to pull the U.S. out of the Paris climate accord and helped repeal the Clean Power Plan.
Jamali: And she worked with former EPA head Scott Pruitt, who listeners might remember from that era from 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 originally, Mr. Pruitt had suggested they even go into business together selling power to bitcoin miners.
Jamali: I had no idea. Well, we did reach out to the Satoshi Action Fund for this segment and did not hear back. Let me ask you this, Gabriel, how is this law in Arkansas part of a bigger trend? Where else are these laws sort of deregulating the crypto mining industry being attempted and wherever they succeeded?
Dance: Yes, the Satoshi Action Group is very ambitious. So in addition to the Arkansas bill, a very similar law went into effect in Montana last year, and the Satoshi Fund had said it expects to pass several more this year. The Louisiana House recently unanimously passed a similar bill. There’s a bill working its way through Missouri as well. But there are other places where the bills are running into stronger headwinds. In Indiana and Georgia, I believe the bills are unlikely to pass or at least seen as unlikely to pass. And in North Carolina, there’s also strong pushback. And the pushback is generally along the lines of: Why would we proactively protect this industry as opposed to 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 that most of the bills that were set to be introduced have been. That said, the Satoshi Action Fund continues to press lawmakers at the federal and state level on the issue, using many of the same arguments that, at least in Arkansas, have either not come to pass, such as jobs, or have caused pretty serious problems for the local communities.
While the Satoshi Action Fund didn’t respond to our request for comment, we did reach out to the nonprofit Earthjustice, which has represented community groups across the country suing crypto mining operations. We spoke with Mandy DeRoche, deputy managing attorney in the Clean Energy Program there. Here’s her statement:
We have seen across the U.S. how energy-intensive crypto mining strains electric grids, restarts and unretires dirty coal and gas plants, raises electricity rates for others, increases local air and water pollution and is as noisy as planes about to take off. Crypto miners don’t need incentives or especially carved out rights or special protections at the expense of real people in impacted communities. Crypto miners already face virtually no oversight or regulation. The Arkansas Legislature and Arkansas residents have learned this the hard way. Other states policymakers should understand the true impacts and the externalities of this industry and local communities and the environment and not fall into the same trap.
Mandy DeRoche, deputy managing attorney at Earthjustice’s Clean Energy Program
Even as Arkansas has rolled back a few of its crypto mining protections, Oklahoma recently passed its own right-to-mine bill that will go into effect this November. The law gives crypto miners similar protections from local restrictions.
Meanwhile, the Biden administration has issued an order requiring MineOne, the owners of that Wyoming crypto mining data center Gabriel mentioned, to shut down and sell the mine. MineOne is majority owned by Chinese nationals.
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