Texas Blockchain Council (TBC) and Riot Platforms, a Bitcoin mining enterprise, have secured a legal victory against several US energy agencies that attempted to collect data on the energy consumption and environmental impact of crypto mining operations in the US. The US District Court for the Western District of Texas granted a temporary restraining order (TRO) that halted the data collection until further notice, ruling that the plaintiffs had shown a likelihood of success on the merits and irreparable harm if the data collection proceeded.

The Data Collection Controversy

The data collection controversy began in January 2024, when the US Energy Information Administration (EIA), a statistical agency within the US Department of Energy (DOE), announced that it would start collecting monthly data from a sample of crypto mining facilities in Montana, as part of its efforts to analyze and write about the energy implications of cryptocurrency mining activities in the US. The EIA stated that it intended to focus on how the energy demand for crypto mining was evolving, identify geographic areas of high growth, and quantify the sources of electricity used to meet crypto mining demand.

However, the EIA’s data collection was met with strong opposition from some crypto industry leaders and groups, who argued that it was politically motivated, intrusive, and potentially harmful to the crypto mining sector. Among them were the TBC, a non-profit organization that advocates for blockchain technology and digital assets in Texas, and Riot Platforms, a Bitcoin mining enterprise that operates one of the largest and most efficient Bitcoin mining facilities in North America. They filed a lawsuit against the EIA, the DOE, the Federal Energy Regulatory Commission (FERC), and their leadership, challenging the legality and validity of the data collection.

The plaintiffs claimed that the data collection violated the Administrative Procedure Act, the Paperwork Reduction Act, and the Privacy Act, and that it posed a threat to the security, competitiveness, and innovation of the crypto mining industry. They also alleged that the EIA had misused its authority to have the emergency survey approved, without providing adequate justification or explanation for the urgency or necessity of the data collection.

The Court Ruling

On February 23, 2024, the US District Court for the Western District of Texas granted a TRO that stopped any further data collection by the EIA, as well as prohibited the EIA from sharing any data that had already been received from the survey . The court ruled that the plaintiffs had shown a likelihood of success on the merits and irreparable harm if the data collection continued . The court also noted that the EIA had not adequately explained the urgency or necessity of the data collection, and that it had failed to consider the alternatives or the burden imposed on the crypto mining facilities .

The court found that the EIA’s estimates of the time and cost required to complete the survey were grossly underestimated, and that the survey would impose an undue burden on the respondents . The court also found that the survey requested highly proprietary and confidential information, such as the specifications of the machines used in each facility, the specific locations of mining operations, and the contractual information relating to each commercial energy partner . The court stated that the disclosure of such information could compromise the security and competitiveness of the crypto mining industry, and expose it to legal and regulatory risks .

The TRO will expire before March 25, 2024, unless extended by the court or consented by the parties . The court ordered the parties to confer and submit a proposed schedule for further proceedings by March 1, 2024 .

The Implications

The court ruling represents a significant legal victory for the crypto industry, as it challenges the authority and legitimacy of the US energy agencies to collect data on crypto mining. The ruling also has important implications for the crypto industry, the US energy system, and the future of crypto mining regulation. Here are some of the possible impacts:

• For the crypto industry, the ruling could boost its confidence and credibility, as it demonstrates its ability to resist government interference and protect its interests. The ruling could also encourage more crypto mining operations to set up or expand in the US, especially in states that offer favorable policies and incentives, such as Texas.
• For the US energy system, the ruling could create some challenges and uncertainties, as it limits the availability and reliability of data on crypto mining and its energy consumption. The ruling could also hamper the efforts of the US energy agencies to monitor, analyze, and report on the energy trends and impacts of crypto mining, which could affect their policy-making and planning.
• For the future of crypto mining regulation, the ruling could set a precedent and a benchmark for other legal disputes and challenges that may arise between the crypto industry and the government. The ruling could also influence the development and implementation of crypto mining regulation in the US, as it highlights the need for a balance between data collection and privacy protection, as well as between innovation and regulation.

The legal battle between the EIA and the crypto industry is likely to continue, as both sides have different views on the role and impact of crypto mining on the US energy system. The outcome of this case could have significant implications for the future of crypto mining and its regulation in the US. Therefore, it is important for the readers to stay informed and updated on the latest developments and news on this topic. It is also advisable for the readers to conduct their own research and consult with professionals before making any decisions related to crypto mining or investing.

References:

1. EIA to collect data on cryptocurrency mining and its energy use
2. Texas Blockchain Council Sues Federal Agencies Over Crypto Mining Data Collection
3. Texas Blockchain Council Announces Legal Action Against the Department of Energy’s Energy Information Administration Overreach