COLUMN: China’s loss is Colorado’s crypto gain | Opinion

When the Chinese central government banned the production and use of cryptocurrencies, it was big news in the financial and technology markets. At the same time, however, it was not at all surprising.

Cryptocurrencies are part of the decentralized finance industry, or DeFi. And unlike traditional currencies, Bitcoin, Ethereum, and other digital currencies based on blockchain technology operate independently of central banks and central governments.

Typically, anything that tries to operate independently of the Chinese central government will ultimately be viewed as a threat by the Chinese central government – and banned as a result.

But the loss of China is the gain of America. Just ask Crusoe, a Denver-based tech company that “mines” cryptocurrency with a fleet of mobile data centers.

Chinese government ban “drove minors west [and] a lot of those miners come to the United States, ”Cully Cavness, president and co-founder of Crusoe, recently told the Wyoming select committee on blockchain, fintech, and digital innovation technology.

The creation of the select committee was part of an aggressive push by Wyoming officials to attract large-scale investment from the cryptocurrency industry. Among other crypto-friendly moves, Wyoming approved two state-chartered banks – Avanti and Kraken Bank – specializing in digital currency transactions.

Wyoming isn’t the only western state courting the rapidly growing industry. Earlier this year, for example, Colorado Governor Jared Polis raised the possibility of the state government accepting payments in cryptocurrency.

“I would love to be the first state to allow you to pay your taxes in a variety of cryptos,” Polis said at a CoinDesk conference on cryptocurrency and blockchain technology. Granted, not everyone is optimistic about cryptocurrencies. But whether you support, oppose, or have no opinion on cryptocurrencies – for the record, I’m a supporter – there are definite economic benefits associated with cryptocurrency infrastructure.

In particular, data centers that mine cryptocurrency are heavy consumers of electricity, which can provide the necessary capital for utility companies to invest in new generation facilities and power grid upgrades.

During the recent Wyoming blockchain committee hearing, utility company Black Hills Energy said it was reviewing a dozen different power requests from cryptocurrency miners. Together, these demands add up to hundreds of megawatts of generating capacity.

The biggest proposal submitted was for 500 megawatts, more than double the capacity currently needed to serve Cheyenne, David Bush, head of Black Hills Energy, told the committee. Cheyenne is the state capital and the largest city in Wyoming.

Some of the proposals also call for specific sources of electricity to run the data centers used to mine the cryptocurrency. “They want clean energy,” Bush told the committee.

This could be very good news for the country’s energy transition. Cheaper, cleaner sources of electricity are already growing at a rapid pace, but if crypto miners and other DeFi players invest even more capital in low and zero carbon technologies, it will likely accelerate the market even further. energetic transition. You can already see the beginnings of this trend in the nuclear industry, with a number of recently announced deals between cryptocurrency mining companies and the owners of existing and proposed new reactors.

Crusoe, one of the companies who testified before the Wyoming blockchain committee, uses “stranded” natural gas and renewable electricity to power its mobile data centers. If not used for cryptocurrency mining, that energy would otherwise be wasted due to bottlenecks in the country’s natural gas and electricity infrastructure.

Another example: Riot Blockchain, headquartered in Castle Rock, has cryptocurrency mining operations in upstate New York, where hydropower is plentiful, and in West Texas, where wind farms dominate the electricity grid.

After decades of job losses for American communities to the benefit of China, it is a welcome change to see new industries flee this state-controlled economy and instead choose the American free enterprise system.

Not only that, as foreign cryptocurrency companies expand their operations here and domestic DeFi industry leaders continue to expand, more money will be invested in new energy sources and network upgrades. American electric.

Like I said: the loss of China, the gain of America.

Simon Lomax is a researcher and advisor to free enterprise groups and business coalitions in the energy, health care, education, housing and other economic sectors. He is a former Bloomberg News reporter and a former congressman of the American Political Science Association. The opinions expressed are his own. This commentary is reproduced courtesy of The Center Square.

Simon Lomax is a researcher and advisor to free enterprise groups and business coalitions in the energy, health care, education, housing and other economic sectors. He is a former Bloomberg News reporter and a former congressman of the American Political Science Association. The opinions expressed are his own. This commentary is reproduced courtesy of The Center Square.

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