US Midterm Elections to Set the Tone for Bitcoin Miners' Future
Bitcoin miners across the U.S. are looking to Tuesday's midterm elections for a signal on the future of environmental policy, which may impact their expansions and operations.
Since President Joe Biden took office almost two years ago, bitcoin mining has garnered attention in the U.S. political landscape, as miners moved their operations en masse from China and new investments were made domestically.
The midterms are crucial for policy because they could “set the tone for how the industry is perceived at both the state and federal level as they weigh approaches to the industry,” said Kyle Schneps, director of public policy at digital asset mining and staking infrastructure firm Foundry, which is owned by CoinDesk’s parent company, Digital Currency Group.
As more miners expanded in the U.S., Democratic lawmakers led by Senator Elizabeth Warren have questioned the industry’s large energy usage and impact on electricity grids throughout the country. Bitcoin mining consumes great amounts of electricity to secure the blockchain’s network as specialized computers try to guess the answer to an equation, which environmentalists think is working against U.S. and global climate goals.
However, the the Republicans have been a supporter of bitcoin mining and crypto in general. “Although the mining industry has tried to promote a bipartisan approach to lobbying, support has mostly come from right wing or center politicians,” said Ethan Vera, COO at mining services firm Luxor Technologies. “Republicans are less likely to push the more stringent direction proposed in White House paper released in early September,” Vera said.
The White House Office of Science and Technology Policy called for standards to reduce the industry’s impact on the environment in a September report.
Crypto broadly and mining in particular “has managed to stay largely bipartisan at the federal level,” said Foundry's Schneps. The biggest difference is not along party lines but adoption, meaning “younger and more diverse political leaders are embracing the industry,” he said.
But John Olsen, New York policy lead at industry lobbying group Blockchain Association thinks that the issue “has too often developed into the hyper partisanship we’ve all experienced in other areas of political life.”
Amid this debate, the key states investors will be watching in the upcoming midterm elections are New York and Texas.
In July, New York state passed legislation, sponsored by Democrat Anna Kelles, that prohibits the development of new mining facilities using carbon-based energy for two years as authorities study its impact on the environment on local communities and the environment.
The legislation, which has not yet been signed into law, has nevertheless pushed companies and jobs out of the state, Schneps said.
“Upcoming elections could show a public rebuke of this type of anti-jobs policy during a time of economic hardship,” Schneps said. The economic impact of the moratorium was a sticking point for Democrats Clyde Vanel and Jeremy Cooney, who opposed the bill.
Meanwhile in Texas, arguably the world’s latest bitcoin mining hub with 1.5 gigawatts (GW) of mining projects, politicians are working with industry group Texas Blockchain Council (TBC) to introduce legislation “to support the continued development of the bitcoin mining industry in Texas,” said Steve Kinnard, the council’s director of Bitcoin Mining Analytics.
The TBC has identified eight candidates from both parties who “have demonstrated support for the blockchain, bitcoin and digital asset industry through in-depth technical knowledge of the space or willingness to engage on key policy issues,” Kinnard said. The list includes Governor Gregg Abbott.
The council has endorsed some of these candidates, Kinnard said, adding that the midterms are important because they will “set priorities and key stakeholders for the upcoming legislative session."