Haywood seeks to ‘get ahead’ of cryptocurrency mining
The relatively recent rise of cryptocurrency, its associated strain on utility infrastructure and its potential to disrupt the peace and quiet of rural communities have all caused quite a ruckus in the Western North Carolina mountains. Elected officials in Haywood County are now looking for ways to prevent similar problems before they begin.
“I live in the Plott Creek Valley, where the neighborhood is very quiet except for Fourth of July and New Year’s Eve,” said Mary Thomas, who spoke just before Development Services Coordinator Jodie Ferguson made a presentation to commissioners on cryptocurrency mining and the problems it can cause.
The theory of cryptocurrency, often referred to as “crypto,” goes back to the mid-1980s, when mathematicians, computer programmers and cryptographers began to explore the feasibility of digital currency as a decentralized, unregulated, untraceable alternative to traditional mediums of exchange.
As computer processing power continued to increase and the internet became ubiquitous, modern cryptocurrency became a reality on Jan. 9, 2009, when Bitcoin was launched, spawning hundreds if not thousands of similar “coins.”
The process is commonly called “mining,” but it doesn’t involve the shovels and pickaxes that term evokes.
Instead, computers run around the clock at 100% capacity, verifying blockchain transactions. In exchange for proving that all transactions are valid — thus making Bitcoin virtually un-hackable — miners are rewarded with some fraction or multiple of a coin. The more work the servers perform, the better the chances the miners will be rewarded.
While mining can be performed by a novice at home with a traditional desktop computer, using more computers means more work is performed, which means more rewards.
Crypto coins are tradable through several well-known apps, including Coinbase and Binance, which operate much like traditional investment portfolio apps — fund your account, purchase assets and then buy or sell at will, based on the prices markets will bear.
Although crypto has many of the characteristics of money, it lacks two important ones, namely widespread acceptance by commercial entities and stable, predictable value. While the utilization of Bitcoin, Ethereum and other large-cap cryptos is becoming more widespread in commerce, it’s still somewhat impractical for use on a daily basis.
It does, however, eliminate many of the delays and restrictions that have typically been involved with transferring money overseas. But for now, its chief utility lies in its availability as an investment, albeit with one exceptionally high risk.
That didn’t stop some early adherents to the cryptocurrency concept from getting in on the ground floor, and some of them became quite wealthy in the process.
When Bitcoin was first introduced in 2009, each coin was valued at .0009 cents, almost a thousand to a penny. Four years later, it was trading above $100 per coin. By 2017, it was consistently trading above $1,000 per coin.
In April 2021, Bitcoin fell just short of $65,000 per coin, but two months later, it had crashed to less than $29,000 — a sobering testament to the volatility of cryptocurrency.
After another run-up to $67,000 in October 2021, a subsequent crash slashed the price to $17,000, leaving late-comers holding the bag.
Today, after a six-month rally, Bitcoin is trading around $28,000.
In late 2021, during the last upswing that put Bitcoin almost at $70,000, San Francisco-based PrimeBlock established a mining operation in Cherokee County, causing an uproar from citizens that eventually drowned out the dull droning roar emanating from the facility both day and night.
The noise comes from cooling fans designed to dissipate the massive amounts of heat produced by the dozens upon dozens of computers ceaselessly toiling to create cryptocurrency and thereby generate a return for the business on the infrastructure and utility costs incurred in establishing it.
A CNN story from January of this year contains an audio recording of what the facility sounds like. In the story, neighbor Mike Lugiewicz compared the sound, which had been measured between 55 and 85 decibels, to that of “ a small jet that never leaves .”
Normal conversation usually takes place at around 60 decibels.
The fact that the CNN story was written by its chief climate correspondent and not someone from the tech or business beat brings up another salient point — like electric cars, crypto mining operations don’t produce much pollution, but the fossil fuel-burning facilities that power them do.
Cherokee County found itself flat-footed on the issue, and passed a resolution asking its state and federal representatives to introduce legislation regulating crypto mining nationwide, per the Cherokee Scout .
That hasn’t happened, and according to CNN, PrimeBlock co-owner Chandler Song called the result of such efforts unconstitutional.
Haywood County Commissioner Tommy Long said he’d spoken to the chair of the Cherokee County Board of Commissioners, Cal Stiles, who told Long that another big problem was the tremendous drain crypto mines place on the power grid.
“The one in downtown Murphy actually uses twice as much power as the whole town,” Long said.
During the cold snap around Christmas 2022, some residents lost power while crypto mining operations continued. Another crypto mining operation in Cherokee County suffered a power outage after someone used a gun to shoot one of the service lines.
In Long’s view, crypto mining facilities don’t contribute much to the local economy, either.
“In some cases where they’re water-cooled, it uses a tremendous amount of water but also there are no jobs basically associated with these facilities,” he said after Ferguson’s presentation. “It’s a huge impact on our infrastructure, with no really substantial jobs, maybe a security officer sitting behind a screen somewhere watching the security cameras or a maintenance person that comes and checks those cooling units.”
Last August, Clay County imposed a moratorium on commercial crypto mining, according to the Clay County Progress .
Ferguson has taken her time in introducing the concept of crypto to Haywood County’s planning board, mentioning it during a January meeting, and then making a presentation in February. In March, the planning board began to discuss how best to prepare for crypto mining operations, should one present itself.
They decided that since the county has no zoning, thus preventing the county from regulating where crypto miners could locate, the best way to address the future of crypto mining in Haywood County was through its high-impact development ordinance .
The ordinance currently recognizes that certain high-impact developments — defined as asphalt plants, chemical, hazmat or explosives producers, flammable bulk fuel facilities, landfills and traditional mining or quarrying operations — have “important, positive economic benefits to the citizens of Haywood County” but that they should be kept well away from vulnerable populations, including schools and child care facilities, hospitals, retirement or nursing homes, assisted living facilities and correctional institutions.
In April, Haywood Electric Membership Corporation’s Chief Operations Officer Joshua Deaver spoke to the planning board, telling them that there had been a few inquiries from entities considering locating crypto mining facilities in Haywood County.
Thus far, no formal plans for commercial crypto mining facilities have come to the attention of county development officials, and Ferguson said her attempt to educate the planning board in advance of any such effort was not in response to any specific, forthcoming facility in Haywood County.
Ferguson also thinks the cost of power here is too high to make crypto mining profitable, but on the other side of that equation, the volatility of the cryptocurrency market makes such business ventures risky at present.
While the cost of power may be of minor concern to miners when Bitcoin trades near $70,000, it’s much more of a concern when it trades in the $20,000-$30,000 range.
Even if cryptocurrency never achieves widespread use — China and Saudi Arabia have banned it outright, due to its potential for criminal use and its ability to bypass conventional financial restrictions imposed by central government authorities — there’s yet another reason to explore the regulation of large data centers or server farms like those that deal in digital currency.
“Rutherford [County] has, I think, a Facebook data-type processing center , and so one of the things I’ve mentioned to the planning board is we might want to include data centers in general,” Ferguson said. “We’re seeing all this stuff in the media about the rise of [artificial intelligence], and something’s got to process all that data. We don’t want to be short-sighted if we’re going to look at this issue and try to take it all in.”
Any proposed changes to Haywood County’s high-impact development ordinance would have to be approved by commissioners before taking effect.
“We’re kind of in the infancy of this,” Ferguson said.