A recent report from the federal watchdog group Office of the Inspector General for Department of the Interior claims that cryptocurrency miners working on public lands have not been paying their dues (DOI OIG). The regulatory agency’s document, which was released this week and is dated Monday, emphasizes the absence of a clear policy regarding crypto mining, which has caused the U.S. government and its land to lose out.
By a system of permissions and leases, fossil fuel firms and other resource extraction enterprises mine on federal lands in part. As part of the agreement, the government gets given a kickback in the form of dividends on all of the extracted oil and gas (the royalty rate for onshore operations was previously 12.5%, but the Biden Administration recently increased it to 18.75%).
Yet, it appears that some of these oil and gas companies using public lands have started cryptocurrency side businesses, which are not taken into account in the royalty payments. After a tip from the Colorado Oil and Gas Conservation Commission, the DOI OIG found that at least one gas business was using fuel obtained from a federal lease to power servers hastily mining blockchain currency. In other words, “these activities use federally owned gas to create earnings for private corporations, often without the leaseholder paying mineral royalties,” according to the report. The loss of federal or tribal mineral revenues could result from these activities, according to the statement.
The DOI OIG reports that there may be safety concerns for the land and the individuals involved in operating these crypto mining equipment in addition to the federal fuel being used without federal license (and without the agreed-upon fee).
The paper states that cryptocurrency mining itself necessitates physical infrastructure and can have a major impact on the ground on which it takes place. Large generators, cooling devices, and a sizable number of computer arrays housed in portable facilities are all included in the crypto mining units. These facilities are always in use and use a lot of energy. Nevertheless, the DOI OIG is undoubtedly correct. On the blockchain, creating value requires a lot of energy and is labor-intensive. According to a 2018 study, cryptocurrency mining actually consumes more energy than the actual extraction of materials from the earth.
Additionally, the server systems in Colorado that the watchdog group observed are transportable units, according to their research, making it simple for fossil fuel businesses to transfer their cryptocurrency activities and avoid disclosing them to the Bureau of Land Management or other authorities. The DOI OIG wrote that without proper declaration and clearance, these mining units can unintentionally be positioned in sensitive regions, harm infrastructure, or lack adequate accident insurance.
The use of federal gas to finance crypto mining activities is a growing problem that might have an impact on federal and tribal lands and resources, according to the research. The Inspector General’s office suggested that the Interior Department publish formal instructions on how to conduct crypto activities going forward in order to “address potential land use concerns, safety risks, environmental implications, and royalty collection responsibilities” in order to resolve the issue.
In response, the DOI informed its OIG that it will take action to “incorporate crypto mining threat detection in future inspector and investigator training,” in addition to other procedures including informing its agencies and having a conference. Yet, the OIG feels that more needs to be done. The watchdog stated, They consider this advice resolved but not implemented. It will keep an eye on [DOI’s] activities to see if it has provided clear and consistent guidelines, the statement reads.
