Running Bitcoin Miners Out of Town

Trying to sue or zone bitcoin mines out of town is the wrong response to the tradeoffs the industry presents.

Since late 2020, a steady hum has emanated from the 15 large metal containers installed next to an electricity substation in the unincorporated rural community of Limestone in Washington County, Tennessee. The boxes make up a bitcoin "mine." Inside each one, computers work to solve equations that keep bitcoin's decentralized network up and running. In exchange for solving these equations, the computers are rewarded with bitcoin.

That operation is now engaged in a life-or-death struggle with local officials, ostensibly because of noise complaints. The dispute illustrates a nationwide trend that pits bitcoin miners—many of whom are looking for new homes in the U.S. as foreign governments ban their business outright—against regulators who likewise find them intolerable.

Bitcoin-mining computers consume a lot of energy and thus give off a lot of heat, which is blown away by rows and rows of noisy fans. Utility companies with spare power to sell love the high energy consumption. That's why BrightRidge, the company that provides power to Limestone, used cash incentives and cheap rates to induce the bitcoin company Red Dog Technologies to set up its computers next to the utility's substation.

But noise generated by the operation was a problem for neighboring residents. They took their complaints to Washington County officials, who sued BrightRidge in November 2021. While the county commission had approved construction of a "blockchain data center" the year before, the lawsuit said, it had not approved a "Bitcoin blockchain verification facility."

One of the noise complaints about the Limestone bitcoin mine was not actually a noise complaint. Rather, the county objected to Red Dog not getting permits for sound barriers it was also urging the company to put up. Washington County is seeking to close down the mine.

Across the country, other local governments are using zoning laws to restrict bitcoin mining. As in Limestone, these conflicts often stem from noise complaints. But the ensuing regulatory interventions frequently attempt to do much more than mitigate noise.

Complaints about noise brought Project Spokane's bitcoin mine to the attention of policy makers in Missoula County, Montana, in 2017. Soon after beginning their investigation, county officials announced that they wanted to restrict the company's energy use. They estimated that Project Spokane's mine was consuming up to a third of the county's electricity output, thereby undermining a locally set goal of net-zero carbon emissions by 2050.

Beginning with a 2019 temporary zoning ordinance, which was made permanent in February 2021, Missoula County imposed several new restrictions on cryptocurrency mines. Mines could be located only in industrial areas and needed special conditional use permits that come with additional noise restrictions.

The most significant requirement in Missoula County's new zoning ordinance is that cryptocurrency mining operations purchase or produce enough renewable energy to offset 100 percent of the energy they consume. That's a significant entry tax on mining operations, especially in Montana, which is a mining hotspot because it has plentiful energy, mainly from hydroelectric dams.

Noise complaints can lead to excessive regulatory responses even when they don't become a backdoor for climate change regulations. When a growing number of bitcoin operations started provoking noise complaints in Plattsburgh, New York, in 2018, the city imposed an 18-month moratorium on new mines and mine expansions.

Trying to sue or zone bitcoin mines out of town is the wrong response to the tradeoffs the industry presents. Voluntary efforts by mining operations to build sound barriers around their properties or switch to quieter cooling methods often can address the negative externalities they create. Unless local governments can find some means of peacefully coexisting with bitcoin miners, they will be stuck fighting them for a long time.

Comments

[Jerryskids]

Big Man wants his 10%. Well, 40%, but who's counting?

[Pamela E. Poole]

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[R Mac]

“The most significant requirement in Missoula County's new zoning ordinance is that cryptocurrency mining operations purchase or produce enough renewable energy to offset 100 percent of the energy they consume. That's a significant entry tax on mining operations, especially in Montana, which is a mining hotspot because it has plentiful energy, mainly from hydroelectric dams.”

Isn’t hydroelectric considered renewable energy?

[Mickey Rat]

These are not zero energy requirements that the greens want for all buildings by around 2035.

[MT-Man]

They (the county) tore out the dam next to the bitcoin operation so maybe he's getting at that they need to build it back? The county commissioners here are the same people that want to decree we need to plant gardens in the center lane of all the roads.

[perlmonger]

Can we make the politicians go weed the ones in the middle of the interstate, with no traffic direction?

[Earth-based Human Skeptic]

Look, once the Church of Gaia obtains complete control of society, the Holy Electricity will be produced only according to doctrine, and will be distributed based on devotional standing.

[Jerry B.]

Bitcoin has always seemed like some sort of Ponzi scheme to me.

[Illocust]

Bitcoin will eventually fail, because the hard cap on currency means that eventually, we won't have coin to pay for the Pele uproot the servers. My understanding is that someday the last coin will be mined, and that will be the end of the system. Then again, maybe I'm misunderstanding something.

[Overt]

It won't be "the end", just as more economic activity is transacted in bitcoin, each bitcoin will have more and more purchasing power.

The miners will no longer get mining rewards, they will subsist solely on transaction fees.

If you look at the mining from the perspective of the miners, they are making a trade off between how much energy costs, and how much return they get. Right now, that is a certain transaction fee + a small amount of bitcoin as a bounty (mining reward). As the bitcoin reward decreases every ~4 years, they expect higher transaction fees. So all things being equal*, bitcoin would only "fail" if people were unwilling to pay higher transaction fees to replace the reward.

There is some question as to whether Bitcoin's deflationary structure can work in a real economy. But it isn't because of the mining.

* Of course all things are not equal. Energy prices go up or down. Also, we are learning how to pack more transactions onto the block chain, and certain transactions can be effectively moved off the blockchain- meaning that even if the cost per mined block goes up, the cost per transaction can stay low. Finally, if miners drop out of the pool because the economics don't support it, the difficulty of mining (i.e. the amount of energy required to mine) new blocks goes down. Eventually there is an equilibrium that is reached.

[Illocust]

I did not know about the transaction fee, so I was missing something.

[mad.casual]

Eventually there is an equilibrium that is reached.

Bullshit. Pure, unadulterated bullshit pulled straight out of your own ass. Not even speculated by the most renowned experts and, even if speculated, only as a narrow and fleeting possibility among many, many outcomes.

[ElvisIsReal]

LOL it's the same exact theory as Uber surge pricing.

[Agammamon]

There is no 'the last coin'. But there are diminishing returns. Each coin requires more processing power (and that requires more electricity and faster hardware/more time) so eventually you'd have to turn the whole universe into a miner . . .

[mad.casual]

There is also no 'hard cap' any more than there is a 'hard cap' on the amount of gold that can be mined. Even if you extract all the gold, as Overt entails, we'll arbitrarily ascribe more value to increasingly infinitesimal fractions of it or adopt a different medium of exchange.

[ElvisIsReal]

This is the dumbest thing I've ever heard. The last coin won't 'require' any more energy than the first coin did, only the power of the network has changed.

[Agammamon]

This is the dumbest thing I've ever heard.

Each coin takes more computational power to find than the last.

If you don't scale up the network it still uses more power because of the increased time you need to compute.

If you scale up the network you decrease the time required but you increase the power usage per unit of time.

If this were not the case - if computational resource requirement ( and thus power requirement) were the same for each coin then we'd still be profitable mining on GPUs.

[ElvisIsReal]

"Each coin takes more computational power to find than the last."

False.

[Bubba Jones]

That's like saying an asymptotic function doesn't have an upper limit.

[ElvisIsReal]

Miners also are awarded the fees contained inside their 'found' block. As the bitcoin reward itself shrinks, these fees become a higher proportional reward -- especially if the network sees lots of use.

[MT-Man]

Isn't that pretty much most of our systems, stocks, social security etc? I guess just pick which one you feel you can take advantage of?

[Illocust]

Stocks seem to be going the way of ponzi schemes, with how dividends no longer seem to be an appreciatable way to turn a profit with the big companies. With the way the currency keeps being inflated though. People don't really have a choice but to invest though, otherwise the value of your money is constantly decreasing.

[mad.casual]

Isn't that pretty much most of our systems, stocks, social security etc?

I don't disagree that SS is a Ponzi scheme and I don't disagree that fiat is bad. I also don't agree that every Ponzi Scheme is inherently bad or useless. Part of the problem with inflation is that with enough of it, you can write off anything as a Ponzi Scheme. Even specific capital investments that are rooted in feeding people and building houses. Sure, evolution and the complicated waterwheels we've set up downstream from the local fusion source is a Ponzi Scheme, but I don't think checking out of them just because they can be described as a Ponzi Scheme is the correct choice. BTC (and EMV and fiat...) expends a lot of energy for low/minimal returns on sociopolitical risk. The distinction is that EMV and fiat makes no claims, promises, or hedges against sociopolitical risk.

[mad.casual]

fiat makes no claims, promises, or hedges against sociopolitical risk

Failed to make a distinction here. Fiat does make these things, EMV, stocks, etc. don't (inherently). That BTC does makes it distinctly more like Fiat than others. That's not to say that BTC shouldn't exist, just that its claims to social/moral superiority aren't, in any real way, detached from those of fiat.

[Ragnarredbeard]

"Trying to sue or zone bitcoin mines out of town is the wrong response to the tradeoffs the industry presents. "

What tradeoffs? Bitcoin miners use massive amounts of electricity and produce nothing.

[Overt]

"Bitcoin miners use massive amounts of electricity and produce nothing."

Untrue. They use energy to secure and validate a peerless balance sheet. Saying they "produce nothing" is like saying that because you weren't in a bike accident, the time and energy spent buying and wearing a helmet produced nothing. Except, of course, the Bitcoin network is under attack regularly, and its distributed, adversarial nature spends energy to survive those attacks.

[mad.casual]

They use energy to secure and validate a peerless balance sheet.

You either don't know what the word 'peerless' or 'they' means. Unless you mean 'peerless' and 'they' in the sense that King George III was without peer, in which case, the royal 'they' would, not-so-coincidentally, be the fiat the FF declared independence from.

because you weren't in a bike accident, the time and energy spent buying and wearing a helmet produced nothing

Correct, a bike helmet that never gets used in a bike accident produces nothing except a false sense of security. It also produces a few manufacturing jobs but, presumably, that doesn't apply to software.

Bitcoin network is under attack regularly, and its distributed, adversarial nature spends energy to survive those attacks.

This doesn't even make sense. Bitcoin is a cryptographically-secure protocol. It's like saying email or the internet is under attack regularly and expending energy to survive those attacks. Certain aspects of the network(s) may be exploited regularly but the vast amount of energy is spent on other functions than combating those attacks. Moreover, it's a self-licking ice cream cone. Unlike email or the internet, both the network, the protocol, and the attacks are a means to an end, not the means and ends themselves. That is, the attackers aren't exploiting email or the internet to gain access to the content of emails or take over, operate and extract the value from the web pages the way they are with BTC.

[perlmonger]

But they're paying for the electricity, so why do you care?

[Earth-based Human Skeptic]

But electricity belongs to everybody!

[mad.casual]

They're not paying for the noise. Just because I pay for the electricity to power my concert venue doesn't mean my neighbors have no claim about the noise pollution that spill out from beyond my borders.

The real question is that this seems a largely local/civil matter, why does anyone not living in Pittsburgh, Missoula County, or Washington County care. If it's all the users of BTC, it says a lot that that a totally-not-centralized network of common currency users want to foist the tailing and gangue of their mining off on the local plebs across the country.

[Rossami]

And if noise were all the municipalities were really dealing with, they would be on solid ground. Instead, we see examples like those cited above - complaining about the noise but also prosecuting for not getting permits to put up the very sound barriers the city was asking for. Or claiming that the approval for a "Bitcoin blockchain verification facility" is somehow not the same as the approval they gave for a "blockchain data center" only a year before.

We also wouldn't see any of this silliness about energy usage or renewability. If renewable energy is really their priority, it should be just as much their priority for traditional manufacturers and service industries. By making the restrictions unique to bitcoin miners, they expose their hidden agenda.

[Earth-based Human Skeptic]

Some people should be returned to those happy conditions people enjoyed before industrialization. You know, dark caves or mud huts down by the river bank. No noisy fans or fears of evil fossil fuels there.

[mad.casual]

2008: The majority of humanity lives in huts by the river banks churning mud with sticks.
2009: The majority of humanity lives in the bliss of economic domination by oligarchs, obese and wanting for nothing, and fearing nothing but a virus that kills <0.5% of the population, most over the age 65.

The difference? The Lord and Savior Satoshi Nakamoto. That's quite a revolution!

[mad.casual]

bitcoin's decentralized network

Bitcoin is distributed, not decentralized.

Email is decentralized. Lots of people used Gmail or Yahoo! but you can start your own email server, or client, and send emails directly or to/through Gmail. There is no central authority which controls the sending of email, no single source through which all emails are routed.

Facebook is distributed. You can't start your own Facebook server, or client, and send or post information outside of Facebook. Facebook is the central authority through which all Facebook messages and pages are controlled, all Facebook messages/pages are routed through Facebook.

Bitcoin (and any blockchain) is the latter. You may be able to spin up your own blockchain and cryptocurrency but it's not Bitcoin any more than MySpace is Facebook. Even at that, the blockchain protocols require you to approve all transactions through the central ledger or blockchain.

[CE]

...no single source through which all emails are routed.

Not counting the NSA.

[Agammamon]

that keep bitcoin's decentralized network up and running. In exchange for solving these equations, the computers are rewarded with bitcoin

No. Nonononono. That is now how Bitcoin works. Not even close. This is so far from correct it can't even see it from where it is.

JFC - I have the equivalent of a high school physics understanding of crypto and I'm more familiar with it than the people Reason is getting to write articles about it.

[Longtobefree]

The key point being they are paid to write about it, not understand it.

[Bubba Jones]

Actually, I think the bitcoin mining, and the bitcoin validation are the same process.

"Bitcoin mining is the process of creating new bitcoin by solving puzzles. It consists of computing systems equipped with specialized chips competing to solve mathematical puzzles. The first bitcoin miner (as these systems are called) to solve the puzzle is rewarded with bitcoin. The mining process also confirms transactions on the cryptocurrency's network and makes them trustworthy. "

in other words

"To begin, miners are the ones who propose updates to the ledger and only miners who have successfully completed the Proof of Work are permitted to add a new block. This is coded into the Bitcoin protocol."

[Agammamon]

"Trying to sue or zone bitcoin mines out of town is the wrong response to the tradeoffs the industry presents. Voluntary efforts by mining operations to build sound barriers around their properties or switch to quieter cooling methods often can address the negative externalities they create"

1. They're only going to build the sound barriers if they're forced to - that why a negative externality is a negative externality. *They* don't suffer, someone else does.

2. There is no quieter cooling method.

[mad.casual]

2. There is no quieter cooling method.

Just build more windmills.

But seriously, yes there is. It's not difficult to convert the heat into radiative noise that humans can't hear or at/to levels under background. Complicated and expensive, sure, but not difficult.

[Agammamon]

Complicated and expensive *is* what difficult is.

[mad.casual]

As long as it is understood that "it would be difficult to make a quieter cooling method" *is not* what "there is no quieter cooling method".

[Rossami]

re: 2 - Actually, there are many quieter cooling methods. You could, for example:
- install concrete sound barriers like we do along highways
- plant trees (organic sound barriers)
- buy quieter fans
- move the facilities underground
- distribute the facility more widely
- install active noise cancellation (similar to the technology in your noise-cancelling headset but more complicated)
- buy out the nearest neighbors (sound energy disperses as a cube of the distance)
- waterproof the computers and use the local river, lake, harbor, etc as the heat sink instead of using the atmosphere.

Yes, that last sounds crazy - and Microsoft has been doing it for some of their data-processing facilities for over a decade now. The acreage for a new datacenter in Manhattan is outrageously expensive but the same footprint at the bottom of the East River is surprisingly cheap. Remember that in modern facilities, you don't even try to repair the computers inside the shipping container. When enough fail, you just swap out the entire container.

And, yes, the miners are not already doing those voluntarily because there is no incentive for them to do so. Addressing noise pollution is a valid exercise of municipal authority - but it should be accomplished through neutral enforcement of existing noise pollution statutes, not through pretextual zoning decisions.

[YNamdo]

Lol... These are not zero energy requirements that the greens want for all buildings by around 2035.

[Earth-based Human Skeptic]

See my comment above about the Church of Gaia.

[ElvisIsReal]

Know what also produces a constant, steady hum?

Electrical substations.

[Unicorn Abattoir]

Barbershop quartets. And they're way more annoying than substations.

[ErvinSmith]

Oh, I've heard about these problems when I was thinking about getting into mining myself. I'm glad I understood that it wasn't the best idea because it was pretty complicated, and I'd have to invest a lot for that. Eventually, I just decided to work with guys from https://4irelabs.com/blockchain/ and develop my own blockchain-based product, and I can tell you that it turned out to be even more profitable than I thought.

[RandyGoldy]

I also thought about my own cryptocurrency mining, because people say that it is much more profitable than crypto trading, but I also decided that it's not for me. I'm currently trading on a crypto exchange using Bitcode Prime. It is a legal, safe and convenient trading tool. By the way, it is possible to start with a demo account, but I decided to take a chance and immediately trade on a real trading account.