This past session of the Legislature was a mostly productive time for Wyoming’s burgeoning digital money industry.
These organizations use massive amounts of computing power – along with correspondingly large portions of electricity – to rapidly perform calculations in order to virtually mint digital currency. They scored some legislative wins at the state Capitol in this past session, which wrapped up earlier this month.
As detailed in a recent article in the Wyoming Tribune Eagle, these virtual miners got some changes to state law that they say will make it even easier for them to register their operations in this state. And legislators also passed Senate File 106, the Wyoming Stable Token Act.
Industry did not get all it wanted, however.
In the wake of the session, Gov. Mark Gordon vetoed the stable coin bill. He said that the state treasurer’s office was busy with other obligations besides potentially dealing with the currency.
During the Legislature’s budget session, efforts fizzled to allow for the creation of deregulated energy zones, if a county commission successfully petitioned the Wyoming Board of Land Commissioners for one on state land. Senate File 71 died in the Senate Minerals Committee, following testimony from many stakeholders over a few days. Utilities generally opposed the bill, as did most others.
The failure of the bill doesn’t mean that the issue is dead, a wide array of stakeholders agreed in recent interviews. Crypto companies still want power, and many would ideally like to locate at least some operations in Wyoming.
The issue remains that digital currency miners contend that they need a lot more electricity to expand their operations in the state to the extent that they would like. On the other side are utilities, which often cannot deliver as much power, as quickly and at as low a cost as the virtual financiers desire.
Frustration over the failure to pass his bill was evident in comments from its backer, Sen. Chris Rothfuss, D-Laramie. Speaking as the bill was voted down by all other members of the Minerals Committee who took part, he was upset that the issue was being punted to the interim legislative work session later this year.
“We have done a tremendous job over the years of wasting opportunities and not providing an appropriate regulatory framework for anybody to do anything at a large scale in the state” that is new and innovative, such as with the cryptocurrency operations, Rothfuss said last month.
“We can push the pause button. It is what we have done before” on other issues in the committee, he added. “That tends to be the end-game mantra. And a lot of the time, it comes from industry, because we are changing things in a disruptive way.”
This was seemingly acknowledged by the legislative panel’s chairman, Sen. Jim Anderson, R-Casper. In a tense exchange with Rothfuss, Anderson seemed to agree with him that even though the issue of deregulated power zones for crypto companies might come up in the interim session, it might not advance further.
Neither lawmaker responded to numerous recent requests for comment.
On April 8, the Legislature’s Management Council will meet to discuss what topics should be addressed in the interim session. Those on all sides of the issue expect that the panel will at least consider whether something like SF 71 should be a legislative topic. Many expect that the issue of electricity deregulation could come up more generally.
“There could be a larger utility discussion as a whole, and this will be part of it,” said Shawn Taylor, executive director of the Wyoming Rural Electric Association.
Utility officials, speaking in recent days, said they’re interested in entering into contracts with crypto miners. It’s just that there seem to be differences in the expectations of this technology industry in how quickly and at what cost power can be provided, and the reality of needing to carefully connect those operations to the grid in a way that does not create financial shockwaves if these new companies later change plans.
Rural electric cooperatives, which cover most of the state’s geographic territory and serve about a quarter of Wyoming’s electric customers, want to reach commercial agreements with crypto firms. “We recognize the advantage if we can make it work” that virtual currency mining would bring to the electric grid and other customers of these member-owned co-ops, said Taylor.
A change in the law is necessary to get virtual currency miners the power they want, said Sean Murphy, a local digital mining expert. The situation is “something that is not going to change unless the law changes,” said Murphy.
Murphy’s cryptocurrency consulting company has some clients who are interested in potentially moving to Wyoming. It “has been frustrating for companies that want to come to Wyoming and just can’t get the power,” he said. He said that Black Hills Energy stands out for its request for proposals to solicit expressions of interest from such miners.
During the hearing, and in follow-up communications with the WTE, utilities, including Black Hills, noted that they have sought requests, such as through RFPs. Some deals are in the works.
Utilities respond that they want to sell more power, since that is their business. They need to make sure that if they agree to serve a miner, that the customer won’t suddenly change plans and leave the power provider with a stranded investment that might need to be paid for by other customers who had nothing to do with the minting of new virtual tokens.
Speaking at the Feb. 24 hearing, Black Hills lobbyist David Bush said, “We have been working with crypto miners here in Cheyenne.” The company’s Cheyenne Light, Fuel and Power subsidiary has more than 43,000 customers in the Cheyenne area. Its RFP sought expressions of interest for at least 10 megawatts for at least two years, with service interruption provisions.
Black Hills officials noted that they got requests to purchase about 1.9 gigawatts of electricity, a staggering seven times the peak power load of all of Cheyenne. The RFP “helps illustrate our due diligence efforts in order to protect our current customers,” a company spokesperson said by email.
During the Feb. 24 hearing, a representative of Rocky Mountain Power noted that it, too, had issued an RFP. The company has been analyzing responses to see what it could viably deliver, said the official. He noted, like others, that Wyoming is a net exporter of electricity to other states, and that all companies’ electric rates in Wyoming are low compared with elsewhere. (A hearing was also held on Feb. 23.)
“Rocky Mountain Power will provide the electrical service requested by residential, business and industrial customers in our service territory, including those in the blockchain technology industry,” a company spokesperson wrote in an email. It is owned by PacifiCorp.
Rocky Mountain Power is an example of a utility that must plan ahead when it comes to power distribution, because it operates in several states and not just Wyoming, said Shannon Anderson, a staff attorney at environmental group Powder River Basin Resource Council. “There is not extra power, per se, because they have built the system for that load” that is already being used, she said.
“Utilities like long-term planning,” she said. “It’s not something that you can just do when someone says, ‘Hey, we need this power tomorrow.’ And it doesn’t work like that anywhere in the country.”
Montana-Dakota Utilities “has received inquiries to serve crypto miners, but does not have any signed agreements,” according to its spokesperson, noting that some would-be power buyers want 100 megawatts. (That is just under half of the power that Cheyenne typically consumes.) “We are interested in serving these types of loads,” the representative wrote in an email. “Once we explain projected costs to secure additional power and upgrade our infrastructure to handle such a load, the interested entities have not pursued further discussions.”
Likewise at Black Hills, its spokesperson noted of the retail tariff rate under which miners could buy power that it “does not provide the desired rate for the miners.”
Some blamed the defeat of SF 71, in part, on the process for drafting the legislation, which may not have fully included all stakeholders.
Before the 2022 budget session, there was discussion of the bill in the Select Committee on Blockchain, Financial Technology and Digital Innovation Technology, experts noted.
While some got a chance to participate in such discussion of the then-draft legislation, others said they did not. Now, they are looking ahead to the interim session so that they can fully take part in any further process.
“I think the unfortunate part is that neither I nor any commissioner that I am aware of was ever contacted or alerted to the fact that this legislation existed and the fact that commissioners would play a critical role in the process. Had that occurred, we certainly would have brought our concerns (up) earlier,” said Jerimiah Rieman, executive director of the Wyoming County Commissioners Association. (There are 23 counties in the state, and each has several commissioners.)
“Commissioners are not generally involved in blockchain legislation, nor would the title of the bill have given away that commissioners would play such a seminal role,” said Rieman, who acknowledged that he missed it, too. Although the association’s members generally want to see more businesses start up in their counties, the legislation envisioned an unusual role for them in the industrial land zone siting process, he said.
These local officials “were opposed to the way that the specific legislation was structured, which put them in what felt like an untenable situation where commissioners are making decisions for the state relative to these industrial power users without the benefit of much of the information” that would be needed for them to make an educated decision, according to Rieman.
For now, experts predict that more smaller power deals will be worked out, including for operations that can rely on alternative setups that don’t involve connecting to the grid.
“I think there is power out there” at lower amounts, such as several megawatts, instead of dozens or more, said Wyoming lawyer Will Reese. He is also co-founder of Highwire Energy Partners, which mines virtual currency using energy from gas that would otherwise be flared from wells.
If something like SF 71 does eventually pass the Legislature, “I think it could be very good,” Reese said. “In theory, it could allow you to unlock some power that is not being unlocked” as “every megawatt of power burned within the state” is better than getting it from elsewhere, he added. “Any encouragement to utilize power within our borders, I think, is for the best.”