Will Bitcoin Be Done In By Terrible Zoning Laws?

A steady hum emanates from 15 large, metal containers that sit next to an electric substation in Limestone, Tennessee, since late 2020.

Each of these boxes makes up the bitcoin “mine.” A network of connected computers within each box solves mathematical equations to keep the decentralized bitcoin network running. In exchange for solving these equations—for performing the work of keeping the bitcoin network alive—the mining computers are rewarded with bitcoins. This is how bitcoins, and other cryptocurrency are made. Others forms of cryptocurrency have been introduced to the world. They are complex and computationally intense, similar to running a high-end video game.

Anybody who ever experienced a surge of metallic warmth following pushing their laptop’s limits will know that this constant computational intensity is a sign that those boxes are constantly being pushed. hot—This is why the “mining” machine produces a hum.

BrightRidge owns the Limestone substation and Red Dog Technologies, the operator of the Limestone mine, is mutually beneficial.

BrightRidge also holds the land where the Bitcoin mine is situated. It makes revenue from selling surplus power to Red Dog, its most important customer. Red Dog claims it will make an operating profit of approximately $2.5 million. $36 MillionOver the next 18-months, Limestone will be mining bitcoin.

The mine was so uncontroversial that the Washington County Commission unanimously approved rezoning BrightRidge’s property in order to permit the construction of “blockchain data centers”. February 2020There is no discussion.

The county started to take a different course soon enough.

The neighbors complained that their property was being disrupted by the constant vibrating sound from computer equipment stored at the mine. Red Dog installed sound barriers made of sound-absorbent padding and wood to reduce the nuisance.

It was not easy for the county to accept. The county was not resolute when commissioners complained to BrightRidge about how BrightRidge had misled the public regarding the nature of this data center. BrightRidge downplayed the amount of noise it would produce, and covered the fact that the utility company wouldn’t operate it directly.

These accusations may be more accurate than others.

According to a report by the county planning staff, BrightRidge had stated that any noise coming from its facility will be of a “small size” and would not be heard or impact on adjoining properties.

BrightRidge is accused of underestimating the impact on the environment from the mine. Neighbors have complained.

However, court documents show that county personnel met with Griid employees almost one year prior to the county’s claim of learning about Red Dog’s previous company.

BrightRidge was sued by the county in November. According to the lawsuit, the county claimed that the A-3 Business Agricultural District rezoning the property allowed for a Blockchain Data Center, however it does not permit a “Bitcoin Blockchain Verification Facility,” also known as an unidentified bitcoin mine. The zoning codes do not clarify the differences between a Bitcoin mine and a Blockchain data center.

In short, Red Dog’s bitcoin-mining computers were having code problems—but with zoning rather than ones and zeroes.

The ever-explicit zoning codes in America’s towns and cities have continued to frustrate the efforts of entrepreneurs as well as whole industries to experiment with new practices and ideas on their properties for over a century.

The exception is cryptocurrency. Private citizens as well as planning commissions have reacted with anger to the computerized mining systems that generate and maintain digital money and the blockchain networks on which they are built. They object to, at times, with some justification, the loud and vibrating noises from mines located next to quiet, rural homes. Some of the more common complaints have been used by politicians and planners as an excuse to attack mines for power consumption and their perceived impact on local goals to combat climate change.

This is likely to become more frequent and less friendly as crypto continues to increase in value. Even when government officials respond to externalities real and tangible, the rush for regulation could lead to the demise of this industry or worsen some of their efforts to address them. While Bitcoin and its associated technologies are bound to face many legal and political hurdles in the future, Congress will not be their first regulatory challenge. It will instead be over a network of poorly designed local zoning legislations.

Heigh-Ho and High Hums 

Blockchain is the decentralized ledger used to build bitcoin’s network. This ledger, which is public information about bitcoin transactions, allows all parties to see which anonymous bitcoin wallet has which bitcoin and protects against fraudulent copies.

The blockchain needs lots of computer chips called “application-specific integrated circuits” (ASICs). These ASICs are used to solve mathematical problems and earn new bitcoins. Complex computations are required to keep the blockchain running smoothly. The machines who solve the problems first receive bitcoins from mining. To have a profitable mine, you’ll need ASIC machines that consume a lot more electricity.

They aren’t energy-efficient. They use energy. Artem Bespaloff is the CEO of Asic Jungle. The company sells machines to Bitcoin-mining companies. Your average ASIC, which consumes between 1,400 to 3,500 watts of electricity, can heat up a room measuring 900 sq. feet in 10 minutes.

The power consumption needs of bitcoin mining have a major influence on where these bitcoin mines—the largest of which have tens of thousands of ASIC machines—set up shop, Bespaloff tells There are reasons.

There are two popular places to mine bitcoin in America: Texas (where natural gas is abundant and regulation is difficult) and Montana (with its cooler climate and readily available hydroelectric energy).

Many utility companies have begun to seek out bitcoin miners because it is such an energy-intensive business. Some utilities companies have provided incentives for businesses to locate near power stations and substations to attract reliable customers who can use the spare power.

BrightRidge in Limestone offered $100,000. Also, discounted power for the company to become Red Dog and build its Bitcoin mine. According to ReportingJeff Keeling, WJHL journalist

These same energy consumption factors that make bitcoin mining profitable can cause externalities to neighbors that could be irritating.

Fans are required to cool everything because of the heat produced by ASIC banks. They can generate a great deal of noise when spinning at high speeds, which is why bitcoin mining has become so popular.

Conventional zoning regulations aim to reduce noise externalities. They limit heavy industry in certain parts of the city, and set decibel limits. Sometimes, this is not enough to account for the unique, often continuous, sounds emanating from bitcoin mines.

The chief building inspector in Plattsburgh, New York—which has become something of a hub for bitcoin mining—Telled The Wall Street Journal Problem isn’t the bitcoin mining volume, as decibels are used to measure it, but their irritatingly high frequency pitch.

Others who have spoken to the Journal You can describe the sound of Bitcoin mines like a combination of the whine from a jet engine, the whine of an electric drill or the loud hum of thousands of hair dryers all at once.

It is possible for vibrations to cause an uncomfortable physical sensation. It’s not just a sound. “It’s more than a noise. It is a vibration you feel throughout your entire body.” Red Dog’s Limestone mine is home to one resident, who also owns the farm. WJHL.

Even though the mines may be located in an industrial area, or even within older industrial plants, the fan noises can still cause complaints. This is unlike the irregular sounds made by machines and other industrial equipment.

A few mine owners from the U.S. switched to water-cooling systems to produce less noise. Or installed fans that emit less sound in response to neighbors’ complaints. Some have also installed sound barriers and berths on the property—basically sound-absorbing walls that surround the mines themselves and which suck in some of the noise they give off.

Many times, noise issues can be solved by individual negotiation with miners. But it can still prove to be a burden on neighbors—what economists call a  “negative externality,” or a cost born by someone who didn’t choose to participate in a project, and isn’t a party to any potential benefits. These externalities are often difficult to address through private channels.

But regulatory solutions often face serious issues of their own. Cities have adopted bitcoin mining–inspired noise rules that are both heavy-handed and ineffectual. Plattsburgh, For instanceThe, placed an 18-month moratorium in place on 2018’s establishment and expansion of Bitcoin-mining operations. This caused outrage among local miners who made it impossible to start or expand bitcoin businesses. This moratorium didn’t directly address neighbors’ immediate concerns because it grandfathered in operations.

Washington County also launched a lawsuit against BrightRidge, which was originally sparked in response to noise complaints. The county also raised concerns about the company’s approved site plan, which did not include noise barriers that it was later asked to put in. The county’s complaint was that the noise was too loud and BrightRidge should do something about it—and also that the noise mitigation measures hadn’t been approved.

Also Local governments have used noise complaints to push for stricter regulation of all aspects bitcoin mining. The nation’s first genuine cryptocurrency zoning ordinance was a good example of this.

The Bark is Worse than the Bit 

The first Bitcoin mine in Missoula County Montana was a government-funded project which was welcomed warmly by officials. Project Spokane, a company founded in April 2017, set up its first data center in Bonner’s old timber mill. The mine was blessed in June by the then-Gov. Steve Bullock with an 416 000 grantThe state’s Big Sky Economic Development Trust Fund.

Soon enough, however, the whir of fans coming from the Project Spokane site—which would later be taken over by the company HyberBlock—began attracting complaints from neighbors.

“Even some” of these are possible. long-time [spoken interview? if so, “longtime”]Residents who clearly remembered hearing the lumber mill’s noise at the site when it was operating said that this is very different,” Diana Maneta (the sustainability program manager for Missoula County’s Community and Planning Services Department) stated.

The lumber mill’s noise was quite loud but it would make a lot of different sounds. Maneta claims that people describe the continuous hum of the bitcoin mine more as “a jet engine which never lands”.

Before the noise complaints, Project Spokane and the whole cryptocurrency industry weren’t even on the radar of the county government. Maneta said that the county commission directed staff to learn more about this industry, and whether there might be other impacts on our community.

The county was immediately interested in Project Spokane’s electric use.

Bitcoin mining is energy-intensive, making it an attractive target for environmentalists as well as crypto-skeptical politicians. They are keen to discover any fault in this decentralized currency.

It’s terrible for our environment Claim Sen. Elizabeth Warren (D–Mass.), who is fond of saying that the average bitcoin transaction uses more electricity than the average U.S. household uses in a month—a misleading statement since there’s no direct link between the number of bitcoin transactions and the amount of energy that’s needed to sustain the blockchain. Some critics also point out the fact that bitcoin consumes as much energy in countries like Argentina or Netherlands. They forget that paper and cement use more.

Those concerns were nevertheless enough to push Missoula County—which estimated that the Project Spokane/HyberBlock mine was using about a third as much energy as all households in the county—into action.

A temporary zoning ordinance was issued in 2019. It was made into a permanent one in February 2021. The county then placed new restrictions on crypto mines. That included requirements that they locate in industrial areas and go through the process of getting special conditional use permits—which comes with additional noise restrictions.

But, the most crucial requirement for the zoning ordinance’s green energy regulations was. All cryptocurrency mining operations that set up shop in Missoula will now be exempt from the regulations. [Missoula? Or Missoula County?] You would need to buy or make enough renewable energy to cover 100 percent of the energy used by a mine.

Maneta warns that the country would not be able to achieve its climate targets of zero carbon emissions in 2050 without this obligation.

The county also charges a substantial entry fee for cryptocurrency mining businesses that may want to establish a business in the area. Montana’s abundant, cheap energy is one of its main attractions. However, this advantage is not realized when more mines are required to purchase or build new renewable energy that could be much more expensive to provide enough electricity to all of their needs.

This requirement doesn’t necessarily apply to other industries. Developers could construct a subdivision in suburban areas or another sawmill, without needing to reduce its energy consumption.

HyperBlock was the successor to Project Spokane. It had been grandfathered in to the new regulations and ended up closing down operations in May 2020. It settled with Energy Keepers in May 2020, claiming that $3 million of its overdue power bills were owed.

Maneta claims that some cryptocurrency miner have inquired about setting-up in Missoula County, since the passage of the new ordinance. However, none of them have yet to do so. They may have learned everything they need to.

Go East, Young Man  

Bitcoin miners may be experiencing difficulties in Bonner Montana and Limestone Tennessee. People in China have a worse experience.

The Chinese government issued five orders to state banks in June 2021 to stop cryptocurrency transactions. This was then followed by a total ban from the Chinese central banking on all cryptocurrency transactions.

This is a major disruption for bitcoin. Prior to the ban, as much as 80 percent of new cryptocurrency was being minted by Chinese mining operations, according to Nikkei Asia. The country is seeing the industry flee the country with North America as the main destination.

“These miners that have become quite well to do have the means now to transfer their hardware overseas,” says Max Song, a partner at Hong Kong–based investment firm Pacific Century Group. We see a large concentration of world mining now in North America. This is primarily in Canada and the United States.

As more American mining companies establish themselves, noise-related and energy consumption issues will become more common. It presents both a problem for the local government and the industry.

Noise from bitcoin mining can create a nuisance. The noise generated by bitcoin mining can be a nuisance to neighbors. It is understandable that local governments would seek to reduce those effects.

Too often, however, governments’ response to the racket—as the cases of Washington County and Plattsburgh show—has been to use heavy-handed rules to shut down the cryptocurrency industry rather than pursue peaceful coexistence.

Worse still, legitimate concerns about noise externalities can morph into a wholesale effort to regulate other aspects of the bitcoin-mining industry—including its energy use.

As Missoula County has shown, these regulations could be a very effective entry tax for bitcoin mining. It’s both economically and environmentally costly.

The county could have mines, which would have been set up to benefit from its abundant hydroelectric power. However, the power can be diverted to areas in the country or state where coal-fired power has a greater presence.

Other companies Are you installing mines? at oil and gas wells where they use spare fuel—that would otherwise be “flared” or burned off into the atmosphere—to power their operations. They are also reducing carbon emissions by using these mines. They would still have to produce more renewable energy under Missoula’s rules.

Bitcoin and cryptocurrency in general are a relatively new field that is difficult for people to comprehend and harder for politicians and regulators to regulate. This has resulted in a rush to ban or regulate cryptocurrency at all levels. The U.S. Securities and Exchange Commission doesn’t pose a threat to crypto mining, rather, the local planning commission.