With Rushed Moratorium On Bitcoin Mining, North Carolina County Stifles Innovation

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This is an opin­ion edi­to­r­i­al by Den­nis Fas­suli­o­tis, founder of South Car­oli­na Blockchain Inc. and co-founder of South Car­oli­na Emerg­ing Tech­nol­o­gy Asso­ci­a­tion, Inc.

Why is the Bun­combe Coun­ty, North Car­oli­na mora­to­ri­um on Bit­coin min­ing so important?

Because they got caught. 

There is a con­ta­gion run­ning through West­ern North Car­oli­na and this time, we know it was man made in a lab. It is called a “mora­to­ri­um on bit­coin min­ing.” Its ori­gins date back to August 2022 in Clay Coun­ty, and Bun­combe Coun­ty has mutat­ed it into this newest strain based on broad­ly con­stru­ing a North Car­oli­na zon­ing statute to autho­rize a devel­op­ment moratorium. 

When prop­er­ly used, North Carolina’s devel­op­ment mora­to­ri­um statute seeks to ensure that a new type of devel­op­ment does not pro­ceed until changes to reg­u­la­tions or envi­ron­men­tal issues are appro­pri­ate­ly addressed. This allows for more effec­tive plan­ning and man­age­ment of growth and devel­op­ment while min­i­miz­ing poten­tial neg­a­tive impacts on the community.

Because a mora­to­ri­um is a dras­tic restric­tion on prop­er­ty rights, the statute impos­es con­di­tions that an admin­is­tra­tive author­i­ty must sat­is­fy to get one. Even then, such a mora­to­ri­um can only span a min­i­mum of 61 days and a max­i­mum of one year, as not­ed by the plan­ning com­mis­sion­er dur­ing a recent pub­lic brief­ing.

In this case, Bun­combe Coun­ty com­mis­sion­ers, under the direc­tion of Plan­ning Direc­tor Nathaniel Pen­ning­ton, argued that they need­ed a one-year mora­to­ri­um on cryp­tocur­ren­cy min­ing in the unin­cor­po­rat­ed areas of Bun­combe Coun­ty so they could study the indus­try and “craft stan­dards for the new­ly-defined use.”

But we already have a work­able def­i­n­i­tion for a bit­coin mine, as con­firmed in my last opin­ion edi­to­r­i­al, where I referred to a bit­coin mine as a “dig­i­tal asset data cen­ter.” So, let’s just sim­ply define a “bit­coin min­ing cen­ter” as a data cen­ter that pro­duces an intan­gi­ble product. 

That’s now where the rub­ber meets the road. At the Feb­ru­ary 2023 com­mis­sion meet­ing, armed with the Amer­i­can Plan­ning Association’s “Zon­ing for Data Cen­ters and Cryp­tocur­ren­cy Min­ing,” Pen­ning­ton argued that cryp­tocur­ren­cy min­ing cen­ters don’t meet the def­i­n­i­tion of a data cen­ter under exist­ing North Car­oli­na law. 

The North Car­oli­na statute that enables data min­ing cen­ter tax breaks was enact­ed in 2015, just six years after the birth of bit­coin. Con­se­quent­ly, most states, includ­ing North Car­oli­na, are liv­ing with statutes tai­lored for cen­tral­ized data cen­ter oper­a­tions and incen­tives that were carved out to attract cor­po­rate data cen­ters built by com­pa­nies like Google, which include large cam­pus­es, con­sume vast amounts of water and require huge amounts of pow­er. Qual­i­fied data cen­ters receive sales tax exemp­tion on electricity. 

As a result, North Carolina’s data min­ing cen­ter laws in prac­tice offer big mon­ey for the ben­e­fit of a select few tech cor­po­ra­tions, but the over­ar­ch­ing intent of this legal frame­work was to pro­mote eco­nom­ic devel­op­ment in North Car­oli­na. Rather than fol­low the orig­i­nal intent of the data cen­ter def­i­n­i­tion to cre­ate oppor­tu­ni­ties, it’s now the club that is being used to dis­cour­age sit­ing dig­i­tal asset data cen­ters in some west­ern North Car­oli­na counties. 

How­ev­er, in his rush to pass an ordi­nance where there were no per­mit appli­ca­tions pend­ing, the plan­ning direc­tor failed to include a “state­ment of the prob­lems or con­di­tions neces­si­tat­ing the mora­to­ri­um and [that’s the oper­a­tive word] what cours­es of action, alter­na­tive to a mora­to­ri­um, were con­sid­ered … and why those alter­na­tive cours­es of action were not ade­quate,” as is required by the North Car­oli­na Gen­er­al Assembly’s mora­to­ria guide­lines.

So, in my eyes, the plan­ning com­mis­sion has failed to com­plete the due dili­gence legal­ly required to impose a mora­to­ri­um and appears to be act­ing with a bias intend­ed to dis­cour­age Bit­coin min­ers from locat­ing in Bun­combe County. 

Now that Bun­combe County’s over­reach has been caught and called out, do we catch and release or seize the oppor­tu­ni­ty to counter unfound­ed claims of e‑waste, noise, water con­sump­tion and pub­lic safe­ty con­cerns to get this mora­to­ri­um over­turned by the county’s com­mis­sion­ers or the court system?

This improp­er­ly-enact­ed mora­to­ri­um is low-hang­ing fruit and Bit­coin­ers need to press pub­lic offi­cials like those in Bun­combe Coun­ty who don’t do their job prop­er­ly or exert a bias with­out doing their home­work. Some­one should be held account­able and, in this case, all fin­gers point in the direc­tion of the Bun­combe Coun­ty Plan­ning Com­mis­sion and the Amer­i­can Plan­ning Association. 

The way in which Bit­coin min­ing is treat­ed presents a piv­otal moment for Bun­combe County’s inno­va­tion econ­o­my. With their hasti­ly and improp­er­ly enact­ed mora­to­ri­um, Bun­combe County’s com­mis­sion­ers failed to rise to the occasion. 

Rather than ban a per­fect­ly-legal activ­i­ty that they do not ful­ly under­stand, the com­mis­sion­ers could have cre­at­ed a coun­ty­wide task force, but that was nev­er pre­sent­ed as an option. A task force could study the pros and cons of dig­i­tal assets, while plan­ning could have a seat at the table and serve all of their con­stituents, not just a vocal minor­i­ty. That should have been the objec­tive. Instead, the adopt­ed pol­i­cy sti­fles inno­va­tion and advances a false narrative. 

I know this has not gone unno­ticed at the state lev­el and the recent unan­i­mous vote to advance an anti-cen­tral-bank-dig­i­tal-cur­ren­cy (CBDC) bill after pub­lic uproar result­ed in revis­ing a pri­or anti-Bit­coin bill tells me that progress can be made. Edu­ca­tion on all lev­els is still the key. Hope­ful­ly, the Bun­combe Coun­ty com­mis­sion­ers will learn to join the cause or miss out on one of the most impor­tant emerg­ing tech indus­tries dri­ving adop­tion of the sound­est mon­ey ever invented.

This is a guest post by Den­nis Fas­suli­o­tis. Opin­ions expressed are entire­ly their own and do not nec­es­sar­i­ly reflect those of BTC Inc or Bit­coin Magazine.

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