Missoula County clamps down on Crypto mining; requires 100% new renewable power

MISSOULA — Saying it consumed a “grotesque” amount of energy, Missoula County this week unanimously adopted permanent zoning that regulates where the mining of cryptocurrency can take place, and the type of energy it can use to power the process.

Citing a moral imperative to address the climate crisis, the new regulations require any cryptocurrency mining operation within the county to either purchase or develop enough new renewable energy to offset 100% of its electrical consumption.

The business must also dispose all e-waste through a recycler certified with the Montana Department of Environmental Quality. The regulations apply countywide, and any new mining business must locate with a district zoned as light or heavy industrial.

“We’re already experiencing the impacts of climate change, and those impacts are only forecast to accelerate in the coming years,” said Diana Maneta. “Given the urgency of addressing climate change, we have to go further, and we’ve made the commitment to go further. New or expanded crypto mining is fine, as long as it brings new renewable energy onto the grid with it.”

Maneta, the energy conservation and sustainability coordinator for Missoula County, and Jennie Dixon, a county planner, helped research and draft the regulations adopted by the county.

According to Dixon, current estimates suggest that cryptocurrency mining globally consumes more than 100 terawatt-hours of electricity a year. She compared that to the consumption of entire nations, including the Netherlands and Argentina.

Several mining operations are also operating in elsewhere Montana, and the industry’s interest in the state was high before the pandemic, according to inquiries to NorthWestern Energy.

“The utility had received inquiries from dozens of cryptocurrency mining firms interested in moving to the state, and if all those projects were developed, it would add up to 1,000 megawatts of new electric load to the state,” said Dixon. “That’s on top of the total load across Montana in NorthWestern’s service area of 1,600 megawatts. It would have amounted to an unprecedented increase in electrical load.”

The county cited a public emergency in 2019 when it placed interim regulations on new or expanded cryptocurrency operations as it sought a solution to the industry’s large energy consumption. It expanded those temporary regulations again in 2020 before adopting permanent zoning this week.

Jason Vaughan, the former site manager for Hyperblock in Bonner, blamed those regulations on the company’s bankruptcy and his loss of a job. The company was looking to expand when the county adopted its initial regulations.

“Because millions were lost on expansion that we couldn’t complete under emergency zoning, Hyperblock didn’t have the reserves to sustain the cut in revenue, which ultimately led to bankruptcy,” Vaughan said. “This ended up being my family of six losing a six-figure job here in Missoula.”

Vaughan also countered the frequent criticisms directed at the industry by local officials – that cryptocurrency mining creates nothing of redeeming value, that it only generates wealth for a few and only employs a small number of people.

He said bitcoin has increased 200% annually over the last decade and argued that the industry does, in fact, create a redeeming service.

“There are tens, possibly hundreds of millions of users of bitcoin globally who use it as a stored value to help protect their wealth against fiat currencies that continue to print trillions of dollars, debasing the value of their dollars and pushing countries close and closer to hyperinflation,” he said. “It’s estimated there are 1.7 billion unbankable humans in the world. Bitcoin gives these financial refugees an opportunity to participate in worldwide commerce.”

Vaughan didn’t dispute many of the new regulations adopted by the county, though he did oppose the requirement that mining operations purchase or create enough new renewable energy to offset 100% of their electrical consumption.

While he called that cost-prohibitive and unrealistic for a new business to accomplish, others wanted to take it further. Members of the city’s Energy and Climate Team urged the county to require any mining operation to also offset the electrical consumption of all upstream manufactures, including those who make the computer hardware.

“There’s the constant movement of new CPUs and related equipment into these systems,” said Chris Rowe, chair of the climate team. “You’re missing a big energy consumption element of this.”

Both the city and county of Missoula have cited climate change as a crisis and have taken steps to address it. In 2019, they both adopted a goal of achieving 100% clean electricity by 2030, and they’ve both completed an inventory of greenhouse gas emissions.

This week, they also finalized an agreement with the cities of Bozeman and Helena to hire a consultant and work with NorthWestern Energy to develop Montana’s first green tariff.

Missoula County Commissioner Josh Slotnick sympathized with Vaughan’s loss of work but said the climate crisis has emerged as a global challenge, and local governments must do their part to address it.

“We have a moral responsibility, regardless of where we live, to address the emergency of our era,” Slotnick said. “We can’t say we’re not going to do anything about it because they’re not doing anything about it anywhere else. These are the levers we can pull. These are the things we can do. Hopefully, we do our part and others do their part and these things stack up and eventually, we address climate change in an effective way.”