Lawmakers push forward on controversial law targeting data centers: 'A lot of its actual impact will fall on cryptocurrency miners'

A law proposed by Senate Democrats looks to rein in Big Tech and tamp down the pollution produced by energy-intensive data centers, which run artificial intelligence infrastructure, cryptocurrency mining operations, and cloud computing systems.

What is happening?

"Although the bill generally targets data centers, a lot of its actual impact will fall on cryptocurrency miners and those running AI models," CryptoNinjas reported. "Both industries have grown very rapidly in the past few years, and with that growth has come a correspondingly rapid increase in energy consumption."

The Clean Cloud Act, sponsored by Sen. Sheldon Whitehouse of Rhode Island and Sen. John Fetterman of Pennsylvania, would also help fund "long-term storage and clean firm generation" and assist low-income citizens with their energy bills, according to a news release.

The legislation sets a bar at 100 kilowatts; data centers, crypto facilities, and other companies that exceed this limit would have to decrease their emissions — as compared to regional grid emissions intensities and falling 11% annually — or pay $20 per ton of carbon dioxide equivalent. The penalty would rise by inflation plus $10 every year.

The release states that data centers use 4% of the nation's electricity and that the figure could reach 12% by 2028.

Why is this proposed law important?

The bill has earned the support of the Utility Workers Union of America, EnergyTag, the Center for Climate and Energy Solutions, and Public Citizen, as it could stabilize the electric grid, increase power generation, and add industry jobs.

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The goal is to avoid the strain on the grid created by data centers and the resulting rising electricity costs for consumers. The largely dirty fuel-powered grid is also the source of heat-trapping pollution that harms health and contributes to increasingly frequent and severe extreme weather.

Critics argue the law would only punish companies and not incentivize them to turn to cleaner energy sources, per CryptoNinjas. There is also a lack of detail about emission reporting and verification in addition to "the absence of clear definitions for utility vs. security tokens, which are tricky for blockchain operators to adhere to."

Are there other examples like this?

State lawmakers, including those in Minnesota, have proposed similar legislation, and countries, such as Malaysia, have enacted laws to regulate data centers' power and water usage. Europe has a similar data center emission reporting law that kicks in at 500 kW.

It's all about balancing the booming technology of today with the needs of tomorrow so everyone can enjoy a cleaner, cooler future.