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

Original author: Dennis Fassuliotis

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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.