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.” Each box is home to a connected network of computers that solves equations necessary for bitcoin’s decentralized network to function. 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 are created. 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 and Red Dog Technologies both profit from the Limestone Bitcoin mine.

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 expects to earn a net operating income of $0. $36 Millionover the next 18 month.

In fact, it seemed that the mine was uncontroversial enough for the Washington County Commission to unanimously approve the rezoning BrightRidge’s property in order to make way for the construction a “blockchain data center”. February 2020Without discussion or debate.

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 responded with sound barriers that were made from wood and sound-absorbent padding. They also promised to continue to work to address the problem.

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

Some 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’s complaints to neighbors show that it was, in charitably speaking, underestimating noise impact of the mine.

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. BrightRidge was sued by the county in November. The lawsuit claims that while the county rezoned the property to an agricultural A-3 district may have permitted a blockchain data centre, it did not allow for a Bitcoin blockchain verification facility, also known as a mine or operated by any unknown third parties. (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 held back individual and entire industries from trying new practices and ideas on their properties for nearly a century.

This is not an exception with 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. It is possible that even though officials may be responding to actual externalities, the rush towards regulation might end up hurting this new industry as well as making some of the issues they are trying to solve worse. The future of Bitcoin and the associated technologies will face numerous legal and political challenges over time, but Congress won’t be its first major regulatory battle. It will instead be over a network of poorly designed local zoning legislations.

Heigh-Ho, Higher Hums 

Blockchain is the decentralized ledger used to build bitcoin’s network. The ledger contains a publicly available record of all bitcoin transactions. It allows anyone to identify which anonymized bitcoin wallet holds which individual bitcoin. This prevents fraudsters from creating fake digital 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. Bitcoins that are generated by mining are sent to those machines which solve them first. To have a profitable mine, you’ll need ASIC machines that consume a lot more electricity.

These ASICs do not save energy. They are very energy-intensive. Artem Begspaloff (CEO of Asic Jungle), says that the ASICs require a great deal of power. 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.

The United States is home to many popular destinations that allow bitcoin mining, including Texas where there is plenty of natural gas and no regulation, as well as Montana, which has a cool climate and abundant, cheap hydroelectric power.

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 is a WJHL reporter.

Externalities can also be created by bitcoin mining, which has power consumption characteristics that affect where it ends up.

ASICs banks generate heat, so fans are needed to keep things cool. 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. This is sometimes not sufficient to fully account for some of the constant and distinctive sounds that emanate from certain 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 is not the volume of Bitcoin mines (which decibels measures), but their irritatingly high-frequency pitch.

The following people spoke with the author: 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 sound of thousands of hair dryers blowing at the same time.

Vibrations may also cause unpleasant sensations. It’s not just a sound. “It’s more than a noise. It is a vibration you feel throughout your entire body.” One resident owns a farm close to Red Dog’s Limestone Bitcoin mine. WJHL.

Even though these mines are located in areas that have been designated industrial, often within older industrial buildings, there is still a lot of concern about them. The fans make a constant, continuous sound for long periods, which contrasts with the more intermittent noises made by old industrial machinery.

Some mine owners have changed to water cooling methods to reduce noise or put in fans with less sound to address complaints from their neighbors. 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.

Regulative responses can have their problems. Cities have adopted bitcoin mining–inspired noise rules that are both heavy-handed and ineffectual. Plattsburgh, Take, for example.This 18-month ban on expanding or establishing bitcoin mining operations for 2018 was imposed by the government. It clearly angered local miners, making it difficult to open or expand new bitcoin businesses. This moratorium didn’t directly address neighbors’ immediate concerns because it grandfathered in operations.

Washington County launched a lawsuit against BrightRidge after it was initially motivated by 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 Noise complaints are a catalyst for local governments taking a more strict approach to all aspects of regulation regarding bitcoin mining. The nation’s first genuine cryptocurrency zoning ordinance was a good example of this.

The Bark is worse than the Bit 

Missoula County’s first bitcoin mining project was launched in April 2017. It was warmly received by Montana government officials. Project Spokane established its data center at Bonner, an abandoned timber mill. The then-Gov. blessed the mine in June. Steve Bullock with an Grant of $416,000From the 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 remember the sound of the lumber mill operating at the site when it was active said that this is quite different,” Diana Maneta (the sustainability program manager for Missoula County’s Community and Planning Services Department) stated.

The lumber mill produced a lot of noise, even though it was very loud. Maneta claims that people describe the continuous hum of the bitcoin mine more as “a jet engine which never lands.”

The county didn’t know about the Project Spokane facility or the cryptocurrency industry before the noise complaints. Maneta said that the county commission directed staff to learn more about the industry, and to consider whether there might be other impacts on our community.

The county was immediately interested in Project Spokane’s electricity usage.

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 “dangerous for the 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 and Netherlands. They forget that paper-making industries such as cement and paper 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. Any cryptocurrency mining company that establishes a Missoula office will be subject to the zoning ordinance’s green energy 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. This advantage can be negated by the fact that new mines will need to build or buy more costly renewable energy in order to meet their entire consumption.

This requirement doesn’t necessarily apply to other industries. It doesn’t matter if a developer builds a new subdivision or another sawmill.

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. The company settled the lawsuit it had with Energy Keepers later that year. They claimed they owed $3M in unpaid power bills.

Maneta said that some crypto miners had inquired about opening a business in Missoula County after the passing of the ordinance, but no one has yet done this. They may have learned everything they need to.

Go East, Young Man  

Bitcoin miners could be facing difficulties in Bonner Montana or Limestone Tennessee. People in China have a worse experience.

Five state-run Chinese banks were ordered by the Chinese government to stop all cryptocurrency transactions beginning in June 2021. The Chinese central bank then banned all cryptocurrency transactions in September.

It has had a huge impact on 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 majority of the sector is leaving the country now, and North America is the first 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 now see an enormous concentration of global mining in North America. Specifically, in Canada.

Local conflicts over noise and energy use will only increase as more mines are established in the U.S. It presents both a problem for the local government and the industry.

Bitcoin mining noise can cause serious problems. 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.

These regulations can, as Missoula County’s example shows, be an effective way to tax bitcoin mining. This is economically expensive and could be counterproductive for the environment.

Mines which were once located in this county for the purpose of generating abundant, carbon-free hydroelectric energy could now be moved to another area of the state or to a country that has more coal-fired electricity.

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. These mines reduce carbon emissions. 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. It has led to a push to regulate or ban it at every level of government. The U.S. Securities and Exchange Commission doesn’t pose a threat to crypto mining, rather, the local planning commission.