Missoula County zeroes in on cryptocurrency mining, cites extreme energy use

Citing an environmental emergency, Missoula County commissioners on Thursday directed staff to draw up interim zoning rules to regulate the placement of new cryptocurrency mining operations and mitigate certain impacts.

The move could come as early as April and lead to permanent zoning and other regulations focused on businesses that consume large amounts of power, such as renewable energy mandates or a tax on electrical consumption.

“This isn't throwing ice on economic development or saying that industries aren't welcome here because we're an unfriendly environment that hates progress,” said Commissioner Cola Rowley. “Cryptocurrency and economic development – bringing businesses here – are two very different things.”

Thursday's hearing follows two earlier discussions where concerns over the HyperBlock center in Bonner began to surface. Commissioners at the time rejected interim measures for the business, though they did direct staff to gather more information.

According to the county, the HyperBlock center currently consumes as much electricity as one-third of all residential properties in Missoula County. Commissioners called that an egregious amount of power, though they also suggested they want the business to succeed if it's willing to go green or adopt other energy saving measures.

“One-third of the county's residential energy used in one factory that employs 19 people to do something that, as of right now, is of dubious social good – I just can't see this continuing,” said Commissioner Josh Slotnick. “I would encourage interim zoning with an eye to renewable energy to permit cryptocurrency mining.”

Those in the business took issue with some county facts and cautioned the commissioners against singling out one company. While the county said Thursday's decision “wasn't about any one business,” the HyperBlock center in Bonner is the only industry of its kind in the county.

“I do have to express some concern about the potential of focusing on the current operations out at the Bonner millsite, especially given how very, very careful they've been to make certain they had sited themselves in a facility that was really designed for something like this,” said James Bowditch, an attorney with Boone Karlberg representing HyperBlock.

Bowditch urged the county to proceed with caution.

“The response should be somewhat measured and careful because I don't want you to be picking on a company that's a very responsible citizen of this community based on what may be occurring in other communities, most of which are outside this country.”

The cryptocurrency industry has shown high interest in Montana in recent years. Aside from HyperBlock, at least three others have located in the state and others have shown interest.

Jason Vaughan, the site manager at HyperBlock, called it a good business to work for and said cryptocurrency mining is widely misunderstood. He said his company provides transactional security on a global scale, contrary to the claims of opponents who say it benefits only a few.

“I came to this company because I believe in blockchain technology and Bitcoin as a longtime, worldwide currency,” he said. “What we provide is security and transactional confirmations on the Bitcoin network, which is a worldwide network. It's not just Missoula, and it's not just for the benefit of a few.”

State law permits the county to draw up interim zoning on short notice if it's able to cite an emergency, be it public health or the environment. On Thursday, all three commissioners pointed to the company's impacts on the environment as a pressing emergency.

“I'd be very interested in looking at ways in which cryptocurrency mining operations could exist, and take a look at how that facility, that company's construction of additional renewable energy, might fulfill that,” said Commissioner Dave Strohmaier.

“If we're going to allow it, at the rate they're using energy, they darned well better be using renewable energy. In fact, they better be creating new renewable energy.”

Over the next few weeks, county staff will develop interim zoning rules commissioners could implement as soon as April 4. Staff will also develop permanent zoning for future consideration, as well as additional regulations that could be placed upon the industry.

“This discussion hasn't been about any one business, and as we go forward, it's not about any one business,” said county planner Jenny Dixon. “Our goal is to try to help the businesses that are here right now or want to come here to do cryptocurrency mining be able to remain or settle here as long as they address those impacts of concern. We're working hard on finding ways to do that.”