Kentucky’s state utility regulator recently denied a proposal by Ebon International to receive millions in energy price discounts for its planned cryptocurrency mining facility in Louisa, Kentucky.
The decision came as a significant setback for Ebon International, which had intended to operate a 100-megawatt mining operation until 2024 before ramping up to 250 megawatts. The company had negotiated a contract with Kentucky Power Company that would have provided a discounted rate for electricity over ten years.
Environmental concerns take center stage
The decision was met with applause from environmental organizations like Greenpeace and Earthjustice. These groups have long argued that cryptocurrency mining operations, such as the one proposed by Ebon International, contribute significantly to climate change and unfairly burden average energy consumers.
Joshua Archer, the Bitcoin Campaign Lead for Greenpeace USA, emphasized that the proposed mining facility had the potential to extend the life cycle of the Big Sandy gas plant until 2041, thereby exacerbating climate change. He also noted that Bitcoin’s energy-intensive consensus mechanism is a fundamental issue that needs to be addressed to prevent companies like Ebon International from exploiting communities.
The state of Kentucky has been a significant hub for Bitcoin mining in the United States, alongside Texas, Georgia, and New York. However, the regulatory landscape for cryptocurrency mining is becoming increasingly stringent. For instance, New York enacted a proof-of-work mining moratorium in November 2022, and Texas passed a bill removing incentives for miners earlier this year.
The Public Service Commission of Kentucky had announced its plans to review the deal between Ebon and Kentucky Power as early as December 2022. The details of the proposed contract, which were partially redacted, had stirred controversy and led to increased scrutiny from both environmental groups and the general public. The commission’s decision to reject the contract is seen as a victory for average energy consumers in Kentucky, who would have been burdened by the discounted electricity rates provided to Ebon International.
The decision by Kentucky’s state utility regulator sends a strong message about the growing importance of environmental considerations in the crypto industry. It also raises questions about the future of large-scale mining operations in the United States, particularly in states that are becoming increasingly conscious of their environmental responsibilities. With the rejection of this proposal, other states may follow suit, setting a precedent for how cryptocurrency mining projects are evaluated and approved in the future.