How Montana can take advantage of its pro-crypto mining bill is approved

The Montana Senate recently passed a bill designed to protect crypto miners operating in the state. The proposed law, currently making its way through the state House of Representatives, seeks to protect both individual and commercial miners in Montana from discriminatory laws by scrapping some of the rules that have the potential to undermine their operations.

Specifically, the bill seeks to protect miners from taxes on digital assets used as means of payment. In addition, it seeks to allow home cryptominers who use less than 1 megawatt of energy annually to do so, except when it violates existing noise ordinances.

Furthermore, it seeks to do away with any energy rate classification that discriminates against home cryptomining and digital assets.

The bill comes after years of concerted efforts by lobbyists and crypto companies to put more crypto-friendly laws on the books in the state.

Satoshi Action Fund CEO Dennis Porter spoke to Cointelegraph about the latest developments earlier this week. His nonprofit helps shape related policies by providing lawmakers and regulators with data that underscores the benefits of Bitcoin mining.

“Montana has very high wind energy potential. It’s ranked fifth according to NREL. However, remote wind projects are struggling in states like Montana because of the need for very long transmission lines to get the power to market,” Porter told Cointelegraph. “Mining helps solve this the problem because there may be an early buyer of that power. In general, Montana has difficulty exporting its power due to its remoteness. Now the state can bring in customers [Bitcoin miners] to them instead.”

Porter said there are two “main factors” holding back the crypto mining industry in the US: “The first is the misconception that mining is bad for the web or the environment. Mining is actually a powerful tool to balance the web and clean up the environment.”

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The other factor hindering mining in the US, according to the exec, is regulatory guidelines that apply to mining that do not take into account any of the positive aspects. He highlighted the concept of grid balancing as an example.

“Mining thrives in states that have grid balancing programs,” he explained. “These programs pay participants to turn down electricity consumption when power prices increase or there is a shortage of supply. Miners are well suited to participate in these types of programs because mining can reduce electricity consumption at the push of a button during any hour on the day.”

How Montana benefits

The supporters of the bill believe that with updated legislation, Montana will be able to attract mining companies to the state, which they believe will increase the region’s economy both directly and indirectly.

Speaking to Cointelegraph, Montana State Senator Daniel Zolnikov, who is the main proponent of the bill, said the region had a lot to gain by embracing the digital asset industry. He explained that by allowing crypto mining to operate without restrictions, Montana would potentially attract more business and investment from the broader cryptocurrency sector:

“I expect that if my legislation goes into effect, Montana will attract more digital asset miners who will invest in many of Montana’s rural communities, creating jobs where they are needed most.”

“I hope this will also signal to the larger digital asset industry that Montana welcomes their innovation as well as new innovative companies into our state,” he added.

Sustainability Concerns About Crypto Mining

Not everyone shares Zolnikov’s optimism about the impact cryptomining can have on small towns and communities.

While the influx of crypto mining companies may result in a short-term increase in development, Colin Read, former mayor of Plattsburgh, New York, and SUNY economics professor, said mining companies generally fail to deliver on their job creation promises. In 2021, he told CNBC:

“Counties and cities are lured by all these promises of job creation, which — when you look at it, and I have — they just don’t materialize.”

It is also likely to lead to an influx of crypto mining companies, and this could lead to energy and sustainability challenges.

New York state, for example, has had to deal with related issues since 2018, when it saw a surge in crypto mining companies lured by the affordable energy. The situation caused retail energy prices to skyrocket due to increased demand and forced the New York Public Service Commission to impose steeper energy tariffs for crypto miners to curb the problem.

Problems with sustainable power supply have also emerged in states such as Texas, where a significant number of crypto mining companies have set up operations.

Power grids typically experience problems with overloading during periods of extreme weather conditions, such as heat waves and winter storms. This is due to the fact that the general public often turn up the air conditioning during these times, resulting in an overtaxed grid. The situation has occasionally forced miners in Texas to pull the plug on their systems to ease the load on the network.

There are several examples from Montana itself. Responding to concerns over power consumption and pollution, Missoula County has required crypto mining companies to either consume or generate enough renewable energy to cover 100% of their operations.

Montana experiences demanding weather conditions. Summer heat in the state can sometimes soar to over 100 degrees Fahrenheit, and arctic blasts in the winter can cause sub-zero temperatures. The extreme temperatures have contributed to the state having one of the highest per capita energy consumption rates in the nation.

Due to growing environmental concerns about the ecological impact of cryptocurrency mining, several US states have implemented laws that place limits on such energy-intensive activities. The laws often put a ceiling on energy use or place restrictions on the kind of energy sources that can be used.

Most recently, New York imposed a temporary ban on mining companies that use non-renewable energy sources. The decision was taken with the aim of reducing the state’s carbon footprint following increased pressure from environmental groups. Related issues are likely to emerge in Montana if the crypto mining bill passes.

Addressing some of the sustainability concerns, Zolnikov stated, “Montana already has an energy mix that makes it attractive to the digital asset mining industry, and my intention in introducing and hopefully passing this legislation is to provide legal certainty for digital asset miners to continue to operate. in the state for the long term.”

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Montana currently has a number of geothermal, wind, solar and hydro energy sources. The Missouri River, America’s longest river, flows from western Montana, and its tributaries are also used to generate hydroelectric power.

A delicate balancing act

Montana’s pro-crypto mining bill is set to encourage more cryptocurrency mining businesses to set up their facilities in the state. While the approval is expected to bring some positive transformations to Montana, some initial teething problems are expected, especially related to environmentally friendly and sustainable energy.

Currently, the state possesses a wide range of both renewable and non-renewable energy sources that can be utilized for more energy. However, it will be interesting to see how the state adapts to new changes if cryptocurrency mining legislation is passed.