Pennsylvania Removes Crypto Mining Ban Amid Union Pressure

By  Noah Washington October 18, 2023

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  • The Pennsylvania House removed a proposed two-year ban on new crypto mining operations from an energy regulation bill after pressure from trade unions
  • The bill still includes new reporting requirements for crypto miners on energy use, emissions and other data to provide oversight
  • The decision shows the influence of trade unions on lawmakers in Pennsylvania and compromises on environmental policy

In a surprising reversal, the Pennsylvania House of Representatives has opted to remove a previously proposed two-year ban on cryptocurrency mining from a bill aimed at regulating the industry's energy consumption. The decision came after intense lobbying efforts from trade labor unions, which culminated in the recent approval of the Cryptocurrency Energy Conservation Act by the Pennsylvania House Environmental Resources and Energy Committee.

According to the bill's sponsor, Democratic Representative Greg Vitali, who also chairs the committee, the decision to remove the ban was influenced by the powerful trade labor unions and concerns about maintaining the Democratic majority in the state's House.

Cryptocurrency Mining Regulation

The initial proposal to ban cryptocurrency mining for two years was intended to address concerns about the industry's energy consumption and its impact on the environment. However, following intense pressure from trade labor unions, lawmakers decided to take a different approach and focus on regulating the industry's energy use instead.

The Cryptocurrency Energy Conservation Act, which was approved by the committee on Wednesday, requires cryptocurrency mining operations to disclose energy consumption and adhere to energy efficiency standards. The bill also establishes a task force to study the industry's energy use and make recommendations for future regulations.

The journey of the Cryptocurrency Energy Conservation Act has been a troublesome one, starting with its introduction to the Pennsylvania House Environmental Resources and Energy Committee on June 21. This bill, designed to address the pressing issue of crypto mining's energy consumption, faced an uphill battle from the beginning. When it came time for the committee to vote on the bill, it passed with a narrow margin of 13 votes in favor and 12 against.

Pressure from Trade Labor Unions

According to Representative Vitali, the decision to remove the two-year cryptocurrency mining ban from the bill was motivated by pressure from Democratic Party leaders who were concerned about the influence of trade labor unions over their colleagues. Vitali revealed that these unions had significant sway within the Democratic party and could potentially sway the votes of otherwise supportive members.

Faced with the political reality of a delicate balance of power in the Pennsylvania House, Vitali made a strategic decision to prioritize the passage of the bill over the inclusion of the mining ban. He acknowledged that pushing against the unions could have put the Democratic majority at risk.

Changes to the Bill

Removal of the two-year ban marks a significant shift in the bill's provisions. Initially, it aimed to halt the issuance of new and renewed permits for crypto mining facilities for a two-year period. However, with this ban now stripped away, the bill takes a different approach.

Instead of an outright ban, the bill introduces an impact study on crypto mining operations and imposes a series of new reporting requirements on miners. These changes reflect a more measured approach to regulating the crypto mining industry while still addressing environmental concerns.

Reporting Requirements

Under the revised bill, miners in Pennsylvania are mandated to provide detailed information within six months. This information encompasses the number and size of mining sites, the sources of energy used, emissions reports, and data on energy and water consumption.

Bitcoin energy usage in terawatt-hours since 2019. Source: Cambridge

Furthermore, Pennsylvania-based crypto miners are required to submit these reports annually, ensuring ongoing oversight of their operations. New miners entering the state must also furnish the same reports before commencing their activities.

One notable player in Pennsylvania's crypto mining landscape is Stronghold Digital Mining, a company that ventured into the state, known for its coal production, with ambitions to utilize coal-burning power plants to fuel its Bitcoin mining operations.

Stronghold's move was met with opposition from local environmental groups when the company sought approval to burn shredded tires as an energy source, a decision that stirred controversy in the region.

Additionally, TeraWulf, another Bitcoin mining firm, operates a nuclear-powered site in Pennsylvania, showcasing the diversity of energy sources within the state's crypto-mining industry.

Growth and Environmental Responsibility

The removal of the two-year crypto mining ban from the Cryptocurrency Energy Conservation Act in Pennsylvania signals a shift in approach towards regulating the industry. While the ban's removal may disappoint environmental advocates, the introduction of an impact study and reporting requirements showcases a commitment to addressing the environmental impact of crypto mining in the state.

The implications of this decision are far-reaching, impacting both the crypto mining industry in Pennsylvania and the broader context of environmental policy within the state. As Pennsylvania continues to grapple with the challenges posed by crypto mining, the hope is that this revised legislation will strike a balance between industry growth and environmental responsibility, setting a precedent for other states to follow.