A state select committee plans to draft legislation it hopes will ease the challenges of cryptocurrency mining, the process of gaining cryptocurrencies by solving equations with the use of high-powered computers, in Wyoming.
The Select Committee on Blockchain, Financial Technology and Digital Innovation Technology heard hours of testimony to gauge the opportunities and challenges of cryptocurrency mining in the state.
Utilities including Black Hills Energy and PacifiCorp say there is a massive opportunity. Mining entities are already reaching out looking for up to 500 megawatts (MW) of energy. That would be more than twice the electricity demand of Cheyenne.
Miners said Wyoming is well-positioned to house miners given its potential for low energy costs, production of low-carbon power through wind energy, and the overall availability of baseload, or the minimum level of demand on an electrical grid over a span of time.
The question committee members contemplated: how does Wyoming both attract more miners and make money off of it.
"Is there a better way to do it whereby, rather than constraining that growth, we price in such a way that that growth happens and then there's a tax involved in that compensates the state in many other ways," asked Joel Revill, select committee member and CEO of Two Ocean Trust. "The potential revenue loss that we're facing from the mineral extraction industries over coming decades just to me seems like a potential opportunity to replace it, but we're not positioned to capture it right now."
The challenges of turning potential revenue into actual revenue are numerous. There are fiber redundancy issues, no proven method for utilities to enter contracts with miners, regulatory questions, plus simply the cost of doing business. Even if those issues are figured out, committee members wonder what tax will properly account for the activity.
Right now, miners say the biggest barrier to entry in Wyoming is simply the energy costs. It's upwards of 50 percent higher compared to other states due to transmission, capacity and distribution costs.
The committee considered ways to trim back the cost of energy.
Caitlin Long, select committee member and CEO of Avanti Financial Group, asked if there was a way to reduce transmission costs by, say, deregulating some of the power industry in the state.
"It seems that that's what this committee’s task is. If you think about the long-term health of the industry, it's dying and we have huge demand for it, and one obvious blocker which is transmission cost," she said.
Other members wondered if costs and regulatory issues could be streamlined by creating an aggregated hub for miners.
"Where we create a habitat using state lands, pre-permitting, and trying to provide more flexible power structure and rates. And provide an opportunity for miners to have a space… and aggregate some of that," said State Senator Chris Rothfuss.
The committee decided to move forward with that idea and put together draft legislation that would create an industrial power campus. The regulated zone would provide more flexibility for direct purchase, competition and pricing.
The topic will be reviewed further in the next legislative session.
