DeSantis and the Escalating Battle Over Bitcoin's Cultural Impact

CoinDesk recently published an exceptionally thought-provoking and impartial article on bitcoin mining, which has captivated my attention. The article delves into the operations of Greenidge, a bitcoin mining company located in upstate New York, which was embroiled in a prolonged media controversy last year. Environmental activists alleged that the company's activities were causing water pollution and harming fragile ecosystems. These accusations eventually played a significant role in Governor Kathy Hochul's decision to impose limitations on bitcoin mining within the state.

However, the majority of the damaging allegations against Greenidge were completely inaccurate. CoinDesk's Nik De, Doreen Wang, and Cheyenne Ligon traveled to Dresden, a town located in Upstate New York, to conduct an on-site assessment of the lake's condition and engage with the local community. Their investigation revealed that not a single legislator had visited this declining industrial town or communicated with its mayor before proposing a moratorium on new bitcoin mining operations, essentially freezing any further development.

The ongoing discourse surrounding bitcoin mining largely revolves around its environmental consequences. Greenidge emerged as a focal point due to its transition from a deactivated plant to one powered by natural gas. This shift meant that when the miners were activated, they were not merely utilizing electricity that would have been generated regardless, but rather contributing to the release of "fresh" carbon emissions into the atmosphere.

The energy consumption of the Bitcoin network is comparable to that of a country such as Norway. Assessing whether this consumption is "worth it" largely depends on how one values the concept of permissionless money. While individuals can form their own opinions on the matter, determining how a nation should approach Bitcoin, such as whether to encourage or prohibit mining, requires a broader societal discussion involving politicians, stakeholders, and those impacted.

In a detailed account of the story's development, De expressed his anticipation of the local community's disapproval of the plant. He and his team had been informed that Greenidge was releasing pollutants into Seneca Lake and generating continuous noise (a claim that was subsequently proven false). However, contrary to their expectations, De's team discovered that numerous residents in the town and its vicinity actually supported the emerging enterprise. While Greenidge only generated a relatively small number of jobs, every employment opportunity holds significance in a town like Dresden, with a population of 296.

Indeed, the limited grievances regarding Greenidge raised by residents primarily originated from affluent non-residents, colloquially referred to as "cottage people," who owned vacation residences along the lakeshore. While it is true that these individuals, as taxpayers, possess the right to be apprehensive about their property's worth, should their viewpoint hold greater significance? It appeared to be the case.

And here lies the crux of the matter: Amidst all the other unsolvable arguments surrounding bitcoin mining, there exists a class conflict. You're all familiar with the narrative: Bitcoin emerged in the midst of the Great Financial Crisis as a means for anyone to participate in a partially private digital currency system, ensuring a transparent money supply-a complete rejection of the traditional banking system and the Federal Reserve.

Over time, the narrative surrounding Bitcoin has grown increasingly intricate, particularly with the emergence of prominent Bitcoin enthusiasts who have now attained elite status primarily through successful trades they made a decade ago. Presently, there exists a multitude of white-collar professions dedicated to analyzing Bitcoin's price movements and advocating for innovative investment instruments derived from the cryptocurrency.

The process of Bitcoin mining has transformed from a task that could be performed on a personal computer at home to a capital-intensive industry. To compete on a significant level, individuals now need to acquire hundreds or even thousands of specialized computers that consume electricity around the clock. However, the proof-of-work algorithm, which is integral to Bitcoin, also links it to real-world communities. Consequently, these investments are being made within tangible localities.

For example, Greenidge has employed electricians who are part of a labor union and generated numerous temporary construction jobs. The company has implemented various enhancements in Dresden, such as refurbishing a playground for children and engaging in other beautification initiatives. While not all facilities have their own converted coal plants like Greenidge, which demand extensive labor, many of them still provide opportunities in areas where opportunities are scarce.

If we take Greenidge as an example, the discussions surrounding bitcoin mining and socioeconomic classes will increasingly be overshadowed by another conflict: the Culture War. I have long believed, albeit in a somewhat simplified manner, that bitcoin will become a partisan issue in the United States, with Republicans increasingly embracing it while Democrats distance themselves from it. Although the underlying network itself is likely to remain "credibly neutral," our perception and politicization of it will align with predictable divisions. Numerous topics have followed a similar trajectory. Before climate change became a divisive issue in American politics, for instance, it was a relatively bipartisan concern with widespread agreement among politicians regarding the need for action.

Yesterday, during an event to announce his 2024 presidential campaign, Florida Governor Ron DeSantis (R.) addressed the potential impact of Bitcoin on the existing system, referring to it as a "threat to the current regime." Despite positioning himself as a populist leader, DeSantis has garnered early support from influential figures in the tech industry, including Elon Musk and David Sachs, both renowned entrepreneurs associated with PayPal's early days (known as the PayPal Mafia). On a national scale, DeSantis is perhaps most recognized for his involvement in the controversial "Don't Say Gay" bill and a notable dispute with Disney.

There is a nagging feeling that DeSantis' commitment to "safeguarding" Bitcoin is merely a show, much like his "prohibition" on central bank digital currency (CBDC) in Florida, even before the Federal Reserve has determined whether a digital dollar warrants thorough examination. However, this gesture will still influence certain individuals' perceptions of cryptocurrency, contributing to a political feedback loop that facilitated environmentalists' misinformation regarding Greenidge's environmental impact and allowed the Democratic administration in New York to wholeheartedly embrace it.

In line with my colleague Nik De's observation, “a conversation that doesn’t include the people most directly impacted can lead to wonky outcomes.” When the primary focus of the two significant political parties revolves around debating the legitimacy of digital currency, the only individuals with a chance to express their opinions are likely those who own vacation homes.

Source Coindesk