Beware the Trojan Horse
A Penny for Your Thoughts on Bitcoin
Your windshield tour of western Woodbury County begins a few miles southeast of Sioux City, not far from where I grew up. First we'll see a large dairy permitted to build on the Missouri River bottomland gumbo soils, despite a very high water table. Next we'll travel a few more miles to WinnaVegas, a casino near Sloan operated by the Winnebago tribe that's been raking in gambling proceeds since 1992. Along the Missouri River, Port Neal Industrial Park showcases soybean crushing and fertilizer plants– and much more. No surprises here: just the usual round-up of the rural economic development suspects.
But if we venture onto a gravel road south of Salix, population 299, we'll come across an unfamiliar-looking structure enclosed by a tall fence, surrounded by cornfields, next to an electrical substation. Despite its unassuming appearance, don't be deceived: It's a high-tech twist on economic development sprouting up on Iowa's fertile soils. The interior houses a tangle of cables and computers similar to a data center. But these computers are engaged in calculating complex algorithms, culminating in an end product called cryptocurrency. Referred to as Bitcoin miners, they're securing transactions via a digital ledger called a Block Chain.
But if President-elect Donald Trump and his new pal Elon Musk have anything to say about it, rural Iowa could become the next digital dumping ground. Trump has promoted cryptocurrency, and he and his family have formed a crypto company. In 2021 he had called it a scam. That was before campaign donors like Musk caught his ear. Musk is in line with Vivek Ramaswamy to head a new department without statutory authority, and it's no coincidence that its acronym, DOGE (Dept. of Government Efficiency) is a nod to Musk's cryptocurrency, Dogecoin. Dogecoin has risen in value more than 150% since Election Day.
Bitcoin mining isn't an overtly extractive industry, like open pit mining, the nearby large dairy, or a gambling casino. But it extracts invisible, very real resources from Iowa, which ranks number eight in lowest energy costs in the U.S. Massive fans are required 24/7 to keep computer banks cool, sucking up immense amounts of energy generated by Iowa's wind power. Bitcoin mining employs minimal staff and it generates noise (from 70 to 90 decibels). The Woodbury County mine is owned by a company called AUR (Aurum Capital Ventures, Inc.) that seeks out depopulated rural communities facing industrial decline. The mine opened in 2023, and its closest neighbors live 2,000 feet away. You'll find it listed as an Iowa Foreign Profit entity with a principal address of Dover, DE.
Near Grundy Center, a cryptocurrency Bitcoin mine with 2,000 computers is operated by Miningstore, a Texas-based company. The entire town of Grundy Center uses 2.5 million kW per month; the mine uses about 4 million kW per month, supplied by the Grundy County REC. An agreement is in place to shut down when the REC is at peak power use.
Simple Mining also operates a Bitcoin mine with 6,400 computers in the much larger community of Cedar Falls, in its industrial park.
In Marshall County, near St. Anthony, population 76, a British cryptocurrency company called Vinanz Limited, is partnering with Miningstore at a mine with 80 computers. It opened in June.
On Second Thought
However, in September, after thoughtful deliberation, the Woodbury County Board of Adjustment declined to issue a permit for a second Bitcoin installation. AUR, the operator of the mine near Salix, had offered to invest $900,000 in noise abatement, and use a new liquid-based cooling system, in an effort to minimize concerns from this location's closer neighbors.
Other recent Bitcoin rebuffs:
· Black Hawk County Board of Supervisors refused to rezone land for a cryptocurrency "farm" in 2022.
· Grundy County turned away the application for a second MiningStore site, stating it was too close to a park.
· Simple Mining proposed an installation near Osage, in Mitchell County. The Planning and Zoning Committee put its decision on hold in October while it drafted a noise ordinance and climate impact statement.
Other states have learned too late. A June 2024 Time Magazine article called "We're Living in a Nightmare," detailed the health issues of Granbury, Texas, residents, after a Bitcoin mine began producing noise exceeding legal limits daily. (There are no major health studies on the noise exposure--above 70 dBA is considered harmful.)
· In Stanton County, Nebraska, Stanton Public Power recruited a Bitmine company. County Commissioners approved it, expecting property tax revenues within a couple of years.
· A grassroots opposition campaign formed in Georgia, called "Birds, not Bitcoin".
· North Dakota's Basin Electric Power Coop plans to add a natural gas-powered plant to accommodate the state's Bitcoin mining industry. Gov. Doug Burgum, Trump's nominee for Secretary of the Interior, apparently thinks it's fine.
· In Tennessee, Bitcoin mines, described as a "nuisance" have popped up in abandoned motels.
· In Arkansas, legislators passed a "Right to Mine" law to protect cryptocurrency operations from local zoning laws, but have revised it slightly, banning foreign entities.
· Oklahoma passed a Bitcoin Bill of Rights.
· Bitcoin mines operate using coal-fired plants in Indiana and Wyoming.
Not Better Living Through Bitcoin?
Why would states relinquish their resources, electric, water, prime agricultural land, and the peace and quiet of their residents in the name of economic development when these companies employ only a handful of people in an unproven industry?
It might be different if the end product were destined to make our lives better. Bitcoin mining often is promoted as a clean industry, if its source is renewable. But in some cases, only 20%-40% of power generated by wind turbines truly is renewable. This sudden expansion is occurring when the U.S. needs to reduce electricity consumption to combat climate change.
Life may be improved for speculative investors, especially nefarious individuals around the globe who prefer to remain anonymous. After all, transactions are verified by multiple computers globally, with no central authority.
But what's the urgent need for cryptocurrency? Cryptocurrency is volatile and poses risks to its investors. In 2022, the fraudulent FTX Trading Ltd. led by Samuel Bankman Fried created billions of dollars of losses. Now cryptocurrency is having another moment – what has changed?
A couple of years ago, cryptocurrency lobbyists began making campaign donations. In our most recent election, Crypto currency Super Pacs contributed to the Ohio Senate campaign of Bernie Moreno as well as other key races. Almost 1/2 of corporate political contributions in 2024 were from the cryptocurrency industry, according to Public Citizen. As of November 5, some say that U.S. may have the most pro-Cryptocurrency Congress ever.
What do its lobbyists want? Less regulation. Cryptocurrency eliminates the need for governments or banks. How would we know the source of campaign donations? Russia, China, North Korea, South America? Crypto also is an easy means for bad-actor countries to avoid sanctions.
More guardrails are needed to protect financial industry and consumers, as well as our Democracy, and the U.S. government may be nearing a tipping point on determining the role of cryptocurrency. President Biden signed an executive order for government oversight of crypto in 2022, asking the Federal Reserve to study if creating its own digital currency. The order also directed the U.S. Treasury Dept. to study the impact of crypto on financial stability and national security.
What agency would oversee it? The U.S. Securities & Exchange (SEC) Commissioner Gary Gensler, has been critical of crypto, and with Trump's election, he's surely to be fired.
All bets may be off. In June, Matt Gaetz, Trump's nominee for Attorney General introduced a bill allowing federal income tax payments to be made in the apex cryptocurrency. He also co-sponsored a bill to abolish the Federal Reserve.
Beware the Trojan Horse
Meanwhile, closer to home in Iowa, I contacted several former school classmates as well as relatives living in Woodbury County. A few are remotely aware of a Bitcoin mine near Salix, but no one recalled grand groundbreaking or ribbon-cutting ceremonies to celebrate its opening. Certainly it doesn't sponsor or decorate a float in the 4th of July parade in nearby Whiting.
After all, shipping containers and moving pods may be here today, but gone tomorrow, leaving behind a trail of obsolete e-waste. It's up to Iowans be attend public hearings and ask questions of elected officials. It's not business as usual; it’s only the next bright shiny rural economic development Trojan Horse.
"Move along, people. Nothing to see here. Move along."
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Thank you for this education and for your efforts to source and describe multiple projects across the state of Iowa. Well done..
I have wondered how many Bitcoin mining establishments had been located in Iowa, so I appreciate this information. I expect the Trump Administration to block federal and state regulation of cryptocurrency in the near future, which will encourage more mining.