Supreme Court’s Restrictions on EPA Oversight Could Impact Bitcoin Mining

The Supreme Court issued a ruling on Thursday that limits the Environmental Protection Agency’s (EPA) ability to regulate carbon emissions from power plants, which could have an impact on Bitcoin and other cryptocurrency mining operations that source their power from fossil fuels.

Citing the “major questions doctrine,” the court said they “declined to uphold [the] EPA’s claim of ‘unheralded’ regulatory power” over energy plants and that rules need to be specifically mandated by Congress, according to the Supreme Court ruling.

“It greatly complicates the ability of the EPA to use the Clean Air Act as a regulatory tool on climate,” U.S. Congressman Jared Huffman, lead author of a letter from House Democrats calling for more EPA oversight on crypto mining, told Decrypt.

While not specifically aimed at cryptocurrency mining operations, the Supreme Court’s decision could also limit the EPA’s ability to regulate the facilities at the behest of President Joe Biden’s executive order issued in March on ensuring the responsible development of digital assets.

Huffman thinks if crypto mining operations are “celebrating, and thinking that crypto now has a green light to continue devouring huge amounts of energy contributing to air pollution and e-waste,” they’re wrong.

He stated that it’s likely the EPA will still be able to go after particular crypto mining operations, “especially if they're tied to a fossil fuel power plant,” whether that could be in relation to extending the life of a plant or bringing a coal plant back online to generate electricity for cryptocurrency mining.

One of the executive order’s principal policy objectives is implementing the use of cryptocurrencies in a way that “reduces negative climate impacts and environmental pollution, as may result from some cryptocurrency mining,” and the EPA was included as one of the agencies necessary in enacting actions required under the executive order.

The court’s opinion was written by Chief Justice John Roberts and said the Clean Air Act does not authorize the agency to regulate the carbon output of power plants as a whole industry, aside from ones that are specifically coal-fired. 

The decision also emphasized that Congress must authorize rules considered transformational to “a fundamental sector of the economy” before they can be adopted by the EPA or any executive agency to address a certain issue, such as climate change.

The court’s decision follows a letter sent by House Democrats to the EPA last month calling for “increased oversight” into the environmental impact of cryptocurrencies, which Bitcoin advocates responded to in their own letter to the agency, saying the statement from House members was full of “misconceptions.”

Referencing the letter sent by Bitcoin enthusiasts that included signatures from Block CEO Jack Dorsey and MicroStrategy CEO Michael Saylor, Huffman said the argument that people’s “beef is with the grid, not with crypto” doesn’t hold up anymore.

“It's going to be harder to green the grid after this ruling,” Huffman said. “I think it becomes harder for crypto to say we're just a benign user of electricity on a grid that keeps getting greener.”

Huffman said crypto mining companies will continue to chase the cheapest energy they can find in fossil-fuel-friendly states, while states like California will step in to fill the void left by the Supreme Court's ruling.

On Thursday, as the Supreme Court struck a blow to the EPA’s authority, legislators in New York denied a renewal application for a Title V air permit from Greenidge Generation, LLC, a gas-fired power plant that uses energy to mine Bitcoin in Yates County, New York.

Basil Seggos, Commissioner of the New York State Department of Environmental Conservation (DEC) announced the agency’s decision in a tweet, stating that “burning fossil fuels to power crypto mining tripled facility emissions.”

According to a statement posted on its website, the DEC’s denial was partly based on the fact that the facility “rather than solely providing energy to the state's electricity grid, … now primarily provides energy behind-the-meter to support the demands of Greenidge's energy-intensive proof-of-work cryptocurrency mining operations.”

Earlier this year, New York state lawmakers passed a two year moratorium on crypto mining operations that are powered by fossil fuels and use proof-of-work, a method of verifying blockchain transactions that requires large amounts of computational power, but the bill has yet to be signed by Kathy Hochul, the state’s governor.

Hochul shared a tweet on Thursday commending the DEC for its decision and stated, “While the Supreme Court sends the federal government backwards in the fight against climate change, New York will continue to lead.”