The state of Minnesota has approved its first-ever prohibition on new data center and crypto mining operations, marking a major move as state authorities continue to address concerns regarding energy consumption, infrastructure overload, and proximity to residential areas.
According to local news reports, the new rule puts a one-year hold on new data center and cryptocurrency mining projects that meet certain requirements.
The temporary pause applies to data centers that are within 500 feet of residential areas or those that will consume more than 20 megawatts of electricity.
The interim measure will remain in effect until Feb. 17, 2027, unless the city council votes to lift it earlier.
Crypto facilities see one year halt
During the moratorium, authorities will not issue building permits for the construction, expansion, or alteration of affected facilities, except for essential repairs.
The decision followed a public hearing held on Tuesday, after which the council unanimously approved the temporary pause to review the potential impacts of such developments.
Data centers have emerged as a contentious issue in some parts of Minnesota. The main bone of contention lies within the backlash from local communities, giving a strong push backwards.
Some of the concerns raised by those opposed to data centers include the amount of electricity they consume.
The increasing use of artificial intelligence and cloud computing means that data centers are also in high demand. At the same time, their energy demands are increasing.
Reports highlight that what used to be considered a large 10-megawatt site now looks small compared to newer projects that require hundreds of megawatts.
Supporters argue that data centers are essential for powering modern technology and keeping up with digital growth.
They also highlight potential local benefits, such as job opportunities and new investment. That coupled with increased tax revenue for communities is likely a boon that has been ignored by critics so far.
Mining industry woes continue
The crypto mining sector is having a rough time currently. Volatility in the price of Bitcoin has made profits unpredictable, and the harsh winter storms in some parts of the U.S. have disrupted power supplies, forcing some miners to shut down or slow down their operations.
Many miners are simply waiting and watching, hoping for steadier weather or a rebound in Bitcoin’s price to ease the pressure.
With earnings per mined block shrinking, some companies are shifting their energy capacity toward AI data centers, while others have decided to exit the business entirely, as earlier reported by Coinheadlines.
In the past, sharp drops in mining difficulty have often marked moments of capitulation, sometimes followed by price stabilization once the selling pressure eases.