Earlier this year, a company called Power Block Coin, LLC announced its plans to invest over $250 million in a special tax finance district west of Butte, Montana. This money will be used to provide an electrical infrastructure to meet the power needs of what is expected to be one of the largest cryptomining campuses in the world. The term "cryptomining" refers to the process of creating new blocks (or transaction ledgers) within a blockchain. A blockchain is a series of decentralized transactions that are secured through a combination of cryptography and game theory. It takes a skilled programmer to "mine" these transactions to figure out how to attach a new block to the blockchain. As one developer explains, "In order to be added to the blockchain, each block must contain the answer to a complex mathematical problem created using an irreversible cryptographic hash function."
Blockchains represent an entirely new paradigm for the way in which transactions are consummated. They are considered far more secure and less costly than traditional networks. Forbes magazine predicted in 2015 that every company will eventually have a blockchain or be on a blockchain. Blockchains are useful not only for cryptocurrency transactions (like Bitcoin) but also for identity verification, management of digital assets, and implementation of smart contracts. A Blockchain Brand Innovation Summit held at Columbia University in May of this year featured companies as diverse as American Airlines, Hulu, Johnson & Johnson, General Electric, and Esurance, as well as the Federal Trade Commission.
Because of the computing power required, cryptomining requires an enormous amount of energy. In Iceland—one of the first major cryptomining sites—the degree of energy consumed by the cryptomining industry has surpassed that of all Icelandic households.
Cooler climates like Iceland and Montana are logical places for cryptomining because less energy is needed to cool the computers. In China, 600 computers were seized by Chinese authorities after they discovered an abnormal surge of electricity caused in part by the use of high-power fans. In Montana, Power Block Coin is expected to launch a Power Block Exchange platform in the second quarter of 2018. According to the company, this platform will generate enough power to supply the global Ethereum network or about one fifth of the global Bitcoin network.
The blockchain revolution has presented a variety of new legal issues, including whether cryptocurrency transactions should be regulated as securities, to what extent improvements to blockchain technologies are patentable, and whether and to what extent blockchain computer code is proprietary (the answer depends on whether the blockchain is public or private). In the intellectual property realm, blockchain has had the greatest impact on copyrights. Blockchain ledgers are being used to individualize digital copies of copyrighted works and enforce copyright licenses.
In our practice, we have been asked to register marks such as CRYPCO and CRYPTOCHARTER for various blockchain-related services. We represent a start-up company in Bozeman that provides educational services relating to the cryptocurrency markets. And we have advised clients on the legal implications associated with shifting from more traditional proprietary software platforms to open-source blockchain repositories. Some blockchain scholars believe that blockchain represents a societal disruption as significant as the birth of the Internet. Regardless of its fate, blockchain—and the cryptomining industry it has spawned—is coming to the Big Sky state in a big way. With its rich energy and mining history, and as the former home of the Rocky Mountain Supercomputing Centers, Inc. (a client of ours), Butte is a fitting location for this next wave of supercomputing power.
