What's the status of cryptocurrency mining in Wyoming?
A select committee is looking to make it easier for cryptocurrency miners to set up shop in Wyoming. Crypto-mining is the process of gaining cryptocurrencies by solving equations with the use of high-powered computers. Energy and Natural Resources reporter Cooper McKim speaks with Chris Rothfuss, chairman of the Select Committee on Blockchain, Financial Technology and Digital Innovation Technology, on why the state is so interested in getting their business.
Sen. Chris Rothfuss: I think it's part of our overall effort to try to make Wyoming blockchain-and-financial-technology-friendly and develop a framework for regulation that enables rather than prohibits activities in this space. Obviously, at this point in time, cryptocurrency mining is a big part of blockchain and cryptocurrency development. We recognize that Wyoming is energy-rich; we produce far more energy than we consume in Wyoming. But when we consume it for purpose in Wyoming, it actually ends up providing more revenue to the people of the State of Wyoming, and is one of those value-added economic diversification processes that honestly helps us pay for education and the roads and all of the other needs that we have. We're obviously struggling to diversify our revenue in the state so anything we can do to achieve that is going to be positive.
Cooper McKim: So this seems like a multi-step process. Wyoming's an energy-rich state, as you said, it could provide revenue, but it's not an easy A plus B equals C... it seems like so how does revenue theoretically come from this?
Rothfuss: The easiest and most direct way is that we do have sales tax on power consumed in the State of Wyoming where we end up exporting that sales tax out-of-state. The consumption of power in Wyoming that is produced in Wyoming is actually very revenue positive for the state and the people of Wyoming. It's one of the few sectors where we have a sufficient number of taxes in place that we benefit from it. If that power is leaving the state for consumption, then... it's alright, we tax it a little bit but certainly not as well.
McKim: So utilities made it sound like there's a lot of potential, they're getting a lot of interest. So what's holding them back from being able to provide that power to some of these miners and get more of them here?
Rothfuss: Wyoming's regulatory structure for power production is very complicated. We are a regulated state. And as a regulated state our Public Service Commission is statutorily obligated to do what is in the best interest of the ratepayers, the people of the state effectively. It's a very complicated process then: weighing what can be added to that rate base, what new power can come online, what new transmission can be incorporated into that. So, for the power providers, it's not as easy as just: negotiating a rate with a consumer and charging that rate. The overall regulatory structure leads to some challenges, I think for our power providers, where their price ends up being a little bit higher than some of the states that are less regulated. Texas being an example. So, there are always trade-offs and one of those trade-offs are slightly higher costs for Wyoming based on the integration of that structure.
McKim: Okay, so we've heard the big barriers. What is the next step to get past them and get to the opportunity, start improving the system and getting miners here?
Rothfuss: What we suggested to the select committee was, "let's try and explore the idea of deregulated zones with regard to power purchase, and find out what we can do while maintaining our traditional regulatory structure. But recognizing that there might be circumstances and use cases where a direct purchase that is outside of the traditional regulated structure may make sense." Now we have to do that in a way that doesn't hurt the ratepayer, doesn't hurt existing consumers of power, nor producers of power in the State of Wyoming and maintains the current existing balance. So, I think there's going to have to be a lot of thought, a lot of further discussion.
McKim: Okay, so it sounds like there's still a lot of work, but you feel like the state is making some headway towards attracting these folks?
Rothfuss: I think we're already pretty attractive honestly, when I say that we're a little overpriced, I mean, a little overpriced. And the low-cost power that's out there is drying up, right? It's sort of the low-hanging fruit concept where there are places where you can get this ridiculously low-cost power. There's going to be a consumer that immediately snaps that up. And that's not an endless supply. So, as you have cryptocurrency miners, looking for places to locate, they're going to be considering a lot of different factors: price being the lead driver. But as that market for the lowest cost saturates that next tier is where I think Wyoming is probably already attractive.
At this point. We are attracting some in the crypto-space, but a lot of it is still exploratory.
McKim: Great. Well, that was state Senator Chris Rothfuss. Thanks for joining me.
Rothfuss: Thanks for having me. Appreciate it. Take care.