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Texas Blockchain Council and Riot Platforms File Lawsuit Against US Federal Agencies Over Crypto Energy Regulations

Texas Blockchain Council (TBC) and Riot Platforms have initiated a lawsuit against the U.S. Department of Energy (DOE), its Energy and Information Administration (EIA), and the U.S. Office of Management and Budget (OMB).

The legal challenge, filed in the U.S. District Court for the Western District of Texas on Feb. 22, marks a significant pushback against what the plaintiffs consider to be unwarranted regulatory scrutiny from the Biden Administration towards the cryptocurrency sector, particularly concerning energy consumption.

The core of the lawsuit alleges that the EIA’s emergency collection of information from various TBC members, including Riot Platforms, contravenes legal standards. The plaintiffs argue that these actions breach the Paperwork Reduction Act and its regulations, accusing the EIA and OMB of acting without due process, akin to accusations previously leveled at the SEC for similar regulatory actions.

The filing sharply criticizes the government’s methodology, framing it as a blend of “sloppy government process” and “invasive government data collection” without proper justification or procedural adherence.

This legal action stems from an announcement by the EIA last month, declaring its intent to gather data on electricity consumption from select U.S.-based crypto-mining operations starting in early February. This move followed a rapid approval by the OMB of an emergency data collection request on Jan. 26, compelling commercial miners to disclose their energy usage details.

The TBC has voiced concerns over the request for detailed operational information, such as the types of machines used and the locations of mining facilities. There is apprehension that making such information public could expose the industry to further scrutiny and potential targeting, a fear that is underpinned by previous statements from The White House.

Describing the government’s initiative as a “direct assault on private businesses,” TBC and its allies are seeking legal remedies to prevent the DOE and EIA from proceeding with data collection from identified commercial cryptocurrency miners. They also aim to annul the OMB’s approval of the data collection effort, arguing for a halt to any data gathering without proper notice and a chance for public comment.

Following the OMB’s swift approval of the EIA’s request for energy usage data from 82 Bitcoin mining operations, the EIA reported a significant increase in the annual electricity consumption by crypto miners, from 0.6% to 2.3% of total usage. This has led to a declaration from the EIA of its intent to monitor and potentially regulate energy usage associated with mining operations.

Lee Bratcher, President of the TBC, voiced strong opposition to the government’s oversight efforts, suggesting that the motivation behind the survey is not grid stability but a politically driven campaign against the cryptocurrency sector.

The lawsuit represents a broader pattern of resistance within the crypto industry against perceived regulatory overreach. Notable figures such as House Majority Whip Tom Emmer have publicly criticized the Biden administration’s stance towards Bitcoin mining and the broader cryptocurrency industry, accusing it of abusing its power.

Additionally, recent legal actions, such as those by Texas-based Lejilex and the Crypto Freedom Alliance of Texas (CFAT) against the SEC, highlight the growing discontent within the industry towards regulatory pressures.

Texas Blockchain Council (TBC) and Riot Platforms have set the wheels in motion for a legal battle against key government agencies in the U.S. This lawsuit, filed in the U.S. District Court for the Western District of Texas on Feb. 22, represents a significant pushback against what the plaintiffs perceive as unwarranted scrutiny of the cryptocurrency sector by the Biden Administration, particularly in relation to energy consumption.

The crux of the lawsuit revolves around the emergency collection of information by the Energy and Information Administration (EIA) from various TBC members, including Riot Platforms. The plaintiffs argue that this collection violates legal standards, specifically the Paperwork Reduction Act and its associated regulations. They accuse the EIA and the Office of Management and Budget (OMB) of proceeding without proper due process, drawing parallels to similar accusations leveled at the SEC in the past.

Criticism towards the government’s approach is sharp in the filed complaint, condemning it as a mix of “sloppy government process” and “invasive government data collection” lacking justification or adherence to procedures. The EIA’s recent announcement of gathering data on electricity consumption from select U.S.-based cryptocurrency mining operations has stirred concerns within the TBC regarding the disclosure of operational details like machine types and facility locations.

This move has raised fears of increased scrutiny and potential targeting within the industry, echoing sentiments expressed by The White House in previous statements. The TBC, viewed as a leading voice against government intervention in the crypto space, along with their allies, is actively pursuing legal avenues to halt the DOE and EIA from collecting data on identified commercial cryptocurrency miners. Their objective is also to challenge the OMB’s approval of the data collection effort, advocating for a cessation of data collection without proper notice and public comment opportunity.

Following the quick approval of the EIA’s data request on energy usage from 82 Bitcoin mining operations, a notable rise in annual electricity consumption by crypto miners has been reported, now constituting 2.3% of total usage, up from 0.6%. This surge has prompted the EIA to consider monitoring and potentially regulating energy usage associated with mining operations.

President of the TBC, Lee Bratcher, has vehemently opposed the government’s oversight actions, implying a politically motivated agenda against the cryptocurrency sector rather than a genuine concern for grid stability. This legal battle, part of a broader trend of industry resistance against perceived regulatory overreach, has garnered support from influential figures like House Majority Whip Tom Emmer, who has publicly denounced the Biden administration’s approach to Bitcoin mining and the wider cryptocurrency space, citing abuse of power.

In a related development, legal actions by Texas-based entities such as Lejilex and the Crypto Freedom Alliance of Texas (CFAT) against the SEC underscore the growing dissatisfaction within the industry towards regulatory pressures. These actions signal a sector poised to defend its autonomy against what it perceives as unjust governmental interference.

There is an evident undercurrent of tension between innovation and regulation in the cryptocurrency landscape, with stakeholders on either side vying for control and influence over the industry’s future trajectory.

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