(Ivan Radic/FlickrCC)

Legislation to draw cryptocurrency banks to Wyoming may turn out to be great for billionaires in New York and San Francisco, but as I have written before, do little to create good paying jobs for Wyoming’s miners, construction workers and truck drivers.

Meanwhile, it seems our biggest opportunity is still in mining — bitcoin mining — where our wind, sunshine and clean coal confer massive advantages. Embracing that burgeoning industry will create jobs for Wyoming families most affected by the reduction in coal production. 

To make a bitcoin, a “miner” must first solve a puzzle called “proof of work.” This is not an intellectual exercise. The puzzle solves itself by running an algorithm that anyone can access. To mine, one needs a building, computer hardware and software and lots of electricity.

If bitcoin were a country, it would use more energy than all of Argentina. That consumption won’t decrease over time. This is because the fella that invented bitcoin designed the puzzles to get harder every 14 days, with the target to limit the number of bitcoins produced to one every 10 minutes — no matter how efficient the computers become. 

As the difficulty of making the next bitcoin increases, so too does the required computing power. This design principle cannot change. Every year, bitcoin mining uses more energy. As David Gerard, author of “Attack of the 50 Foot Blockchain,” explains, “Bitcoin is literally anti-efficient … bitcoin’s energy use, and hence its CO2 production, only spirals outwards.”

Which is why in 2017 bitcoin used about 7 terawatt-hours of power, while today that number is about 120 terawatt hours. All to make the same number of bitcoins.

The critical resource in mining bitcoins is cheap electricity, not computer smarts. Which is why today nearly 75% of bitcoin mining is in China and Russia, where during the wet season miners rely on cheap hydroelectric power, and in the dry season by burning some of the world’s dirtiest and highest-polluting coal. In just the last three years the share of bitcoin production using Chinese coal has doubled, while bitcoin production in countries like Norway and Canada is becoming insignificant. Bitcoin is the gas-guzzling SUV of currencies. 

That’s where Wyoming comes in.

There are only so many bitcoins that can be made per day. This means that every bitcoin made in Wyoming using our abundant wind, sunshine and low-sulfur coal is one less bitcoin made using higher-polluting energy sources elsewhere. Instead of using legislation to force coal plants to stay open, Wyoming could use those same plants to power bitcoin mining operations, reducing the world’s carbon footprint while preserving Wyoming jobs. 

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At the same time, the days of a computer geek staying up all night mining bitcoin on his or her couch are over. Bitcoins are now produced in massive, air-conditioned buildings. Such facilities need to be constructed and maintained, creating good-paying jobs which can be in those counties most affected by the reduction in coal consumption. 

In charting our economic future, we need to consider the confluence of growing markets, our competitive advantages and our existing workforce. As it relates to cryptocurrency, we’ve made the mistake of trying to compete with cities like London and Boulder, hoping to attract bankers and software developers to our state. Not only are we at a competitive disadvantage in those labor markets, but those jobs won’t do an out-of-work coal miner in Gillette one bit of good.

We’re not going to be able to regain our economic footing through lawsuits and regulations that try to stem the shift in world energy consumption. But if we’re smart and creative, which I know we can be, there are plenty of markets out there that we can win.

Dave Dodson

Dave Dodson lives in Wyoming and is a former CEO and professor at Stanford University. He was a Wyoming Republican candidate for U.S. Senate. Read more from his archive at davedodson.com/news.

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  1. That age old Hindu parable of the blind men trying to perceive the elephant is nothing compared to decidedly analog primates trying to explain digital cryptocurrency. Bitsplainin’ how it can be readily done in of all places Wyoming is boggling. I cannot even begin to parse the logic of it, but then again , what is Money in the first place , beyond the ” good faith of your government ” backstopping it sans gold bullion.

    Here’s one thing I learned in the last couple days. Turns out that blockchains can , in fact , be hacked and real money siphoned away. One recent token heist in South Korea swiped $ 30 million in one event. Over $ 2 BIILION is crypto has been purloined since 2017 , sayeth the MIT Technology Review. It is not impregnable technofinance after all .

    Dodson’s logic and expectations in trumpeting blockchain buildout and cryptocurrency ‘mining’ as Wyoming’s next Manifest Destiny payday is straight out of Lewis Carroll. Six impossible things before breakfast…

  2. Bitcoin is a terrible activity. What is Wyoming saying ?? Come shoot up here so we can sell you syringes ?

  3. Mr. Dodson seems to ignore the fact that Wyoming coal is dead. Why would any intelligent person support bitcoin production?

  4. Skip the coal. Sun and wind power are the only solutions to long-term viability of Bitcoin mining. If not sustainable, Bitcoin will be disastrous for our world.

  5. I think Bitcoin, as it currently exists is in an evolutionary dead-end.

    As the author explained, the network of Bitcoin miners (who are critical to maintenance of the bitcoin “blockchain” and thus the continued existence of bitcoin itself) use an enormous and growing amount of electricity. But there are several cryptocurrencies that serve the putative functions of bitcoin (currency, store of value) without the energy consumption.

    So in the early 21st century and onward, bitcoin mining is not an acceptable use for so much electricity, especially if much of it comes from coal. And let us be clear: There is essentially unlimited demand for Wyoming produced RENEWABLE electricity. Any that is not used in this state just gets exported elsewhere.

    SO 100% OF WYOMING ELECTRICITY THAT GETS CONSUMED ON BITCOIN MUST COME INCREMENTALLY FROM COAL (caps intended only for emphasis).

    The author is in effect suggesting that Wyoming use bitcoin to create a huge new market for coal based electricity. Thus allowing coal mines to stay open and keeping the past alive a little bit longer by prolonging Wyoming’s economic dependence on coal.

    I believe that in the next few years (possibly quite soon) Bitcoin will be recognized as the energy hogging, polluting boondoggle that it is, and it will be abandoned. More practical cryptocurrencies will displace it.

    Bitcoin is definitely not the star that Wyoming’s wagon should be hitched to.