Posted June 30, 2024 at 7:00 am EST.
Several U.S. states have introduced and passed Right-to-Mine laws to protect the Bitcoin mining industry, acknowledging the economic benefits cryptocurrency mining can bring to their economies.
Read on to learn about Right-to-Mine laws, their key provisions, how they will impact Bitcoin mining, and the challenges they face in the implementation process.
What Are Right to Mine Laws?
Cryptocurrency Right-to-Mine bills are a set of laws from different jurisdictions in the United States that advocate for the rights of cryptocurrency miners and prohibit predatory practices such as overcharged electricity costs. These bills have already been passed into law in states like Montana, Mississippi, Oklahoma, and Arkansas.
Right-to-Mine bills have enabled miners to outstrip local governments the right to employ zoning laws meant to curtail cryptocurrency mining operations.
Texas welcomed the large migration of hashrate from China after the People’s Republic banned crypto operations in 2021. Since then, the state has embedded various crypto-friendly laws in its constitution that apply to residents who generate, utilize, and store bitcoin.
These laws have led to an influx of crypto mining operations setting up in Texas, and in 2023, state legislators passed two more bills that waged support for cryptocurrency miners.
The first bill, SB 1929, requires miners consuming over 75 megawatts to be registered under the Public Utilities Commission (PUC) in Texas, which will then share data with the Electricity Reliability Council of Texas (ERCOT), a grid operator tasked with among others, managing electricity loads of energy-intensive enterprises’ electricity consumption.
The second bill, HB 591, introduced tax exemptions for businesses that harness what would have otherwise been wasted gas. This and other laws passed in Texas and other U.S. states aim to eliminate limiting factors that face Bitcoin mining operations.
Which States Have Passed Right-to-Mine Crypto Bills So Far?
Right-to-Mine crypto laws are being discussed across several states in the United States.
The states of Arkansas and Montana passed their Right-to-mine bills in 2023 with the help of the Satoshi Action Fund, an educational organization devoted to informing regulators and policymakers about the benefits of Bitcoin mining.
Through each of the bills, state legislators wanted to create suitable laws to protect miners from predatory electricity charges, zoning laws meant to prohibit mining operations in certain areas, and over-taxation.
For instance, Montana’s Right-to-Mine laws outlawed the addition of any taxes on bitcoin when used as a payment method. Mississippi also passed a similar bill in February 2023, which made it legal for businesses and individuals to run nodes for Bitcoin mining at home and in a business setup.
In Oklahoma, a bill was passed to protect Bitcoin rights in May 2024. However, the bill will take effect in November 2024. Besides supporting Bitcoin mining, the bill promises the right to self-custody, allowing people to hold their crypto assets securely. The bill also allows Bitcoin and other cryptocurrencies to be used for transaction purposes without additional taxes.
How Will Right-to-Mine Laws Impact Bitcoin Mining?
Right-to-Mine bills that have been passed all have one theme: to protect miners and outlaw punitive regulatory practices that restrict Bitcoin mining.
This means Bitcoin miners would be legally protected to mine Bitcoin commercially and at home, helping to create widespread adoption of the digital asset.
Arguably, Right-to-Mine laws can also pave the way for the creation of more universally accepted laws around cryptocurrency mining and usage. This could have a very positive impact on the crypto sector as a whole, paving the way for new capital to flow into the industry.
Challenges Facing Right-to-Mine Bitcoin Laws
Although several jurisdictions have begun passing the Right-to-Mine Bitcoin laws and more are expected to join in, the bill still faces some challenges.
The two major challenges that Right-to-Mine bills face are Bitcoin mining’s high energy consumption and noise pollution.
Bitcoin Mining and the Transition to Clean Energy
One of the challenges facing the Right-to-Mine Bitcoin laws is an issue that has been raised amongst clean energy campaigns claiming that Bitcoin contributes to global carbon emissions.
Bitcoin uses the proof-of-work consensus mechanism, which has always been energy-intensive as it requires a lot of electricity and computational power to carry out the hashing operations. Due to the high electricity consumption, Bitcoin mining also contributes to global carbon emissions.
A UN study conducted between 2020 and 2021 revealed that Bitcoin mining emitted over 85.89 Mt of CO2 globally. As such, laws aimed at protecting cryptocurrency miners via the Right-to-Mine bills have faced backlash from environmentalists.
Complaints by Neighborhoods About Bitcoin Mining Rigs Noise
Besides the energy consumed by Bitcoin mining rigs, they can also be quite noisy.
Bitcoin mining requires high-powered, specialty computers that are run all day, every day. With thousands of computers running all at once, Bitcoin mining causes noise pollution. The sound levels from a mining rig have been said to be between 70 to 9 decibels.
People living near mining facilities have also described the noise as sounding ‘like a jet engine idling on a nearby tarmac.’ Despite the level of noise pollution caused by Bitcoin mining, Right-to-Mine laws will make it illegal for neighborhoods to enjoy zoning ordinances, as this will go against the bill.
What Is the Model Right-to-Mine Bill by the Satoshi Action Fund?
The Satoshi Action Fund published the model Right-to-Mine bill that shields Bitcoin mining.
The bill protects commercial crypto mining activities from local regulations and oversight. The model bill (now dubbed The Blockchain Basics Act) has two main proponents:
A ban on localities from enacting zoning and noise ordinances that protect neighbors from the noisy operation of crypto mining facilities.
Provisions that prohibit utility regulators from overseeing crypto mining activities and setting relevant electricity rates that consider costs, effects on other customers, and risks to the grid.
Some states in the US have already passed their Right-to-Mine laws, while several others have proposed the same bill to their local state. The Satoshi Action Fund believes that the Right-to-Mine laws “will ensure that Bitcoin and digital asset technologies are able to grow and that innovation is able to flourish.”
The Takeaway
Right-to-Mine bills will have a lasting impact on the Bitcoin mining industry and the crypto sector as a whole. The passing of these bills by different states could pave the way for a nationwide bill. Moreover, it could lead to more robust laws covering the issuance and use of cryptocurrencies.
Since laws like these will legally protect Bitcoin miners, they will also help attract more crypto businesses, drive innovation, and give rise to economic opportunities.
While a few states have already passed right-to-mine laws, more states have proposed the bill to their Senate and are awaiting voting.