Legislators propose bills to back data centers, legislate blockchain technology

Cold is a major worry — there’s a lot of demand for energy when winter hits, and “brownouts,” when there’s a reduction of power in a specific area, are a major concern for some in the Legislature.

NorthWestern customers recently had to pay an extra $39 million following a cold snap because the utility had to buy power on the market.

“We need to make sure that the power that’s going to satisfy these larger loads doesn’t become a critical and potentially problematic factor when we’re at 20 below zero, and we’ve already experienced that,” Sen. Chris Pope, D-Bozeman, told the Daily Montanan.

In December 2024, NorthWestern Energy announced an expectation to serve “up to” 450 MW of power to data centers, according to Jo Dee Black, a spokesperson for the company, in an email to the Daily Montanan. Black added the utility owns 1,065 MW of production capacity, but it “would be wrong to state that all that generation, or all generation from an owned-generation resource, would serve a single class of customers.”

NorthWestern is also adding to its capacity, both at the coal-fired plant in Colstrip, and its new methane-fired plant in Laurel. But Molnar said data center businesses will put permanent pressure on energy providers.

“Data centers, they don’t scale up or down,” Molnar said. “They are a constant run of their computers storing and generating data. They do not ramp up and down based on how much electricity is available.”

At one point, NorthWestern was producing about 1,600 MW of electricity. Peak demand in 2023, according to the utility, was about 2,000 MW.

During the hearing for Fitzpatrick’s bill, Alan Olson, who was lobbying for NorthWestern, was asked if the utility could provide enough base load energy to meet customer demands.

“Today, we are short,” Olson said to the committee.

This session has seen a push to bring nuclear power to Montana, cited by tech companies as a way to ramp up domestic power production. 

Fitzpatrick’s bill brought the need for more production — and whether or not the utility can serve all of its customers — to the forefront. NorthWestern believes it will have enough generation capacity to follow through on the commitments it makes to businesses drawing large amounts of power, such as data centers.

“Recently, the PSC seems to have developed a novel interpretation of the law, which suggests that they get to decide whether or not Northwestern can serve a new industrial load,” Fitzpatrick said on Monday in House Energy. “This bill simply says no, it’s not within the purview of the PSC authority to tell NorthWestern who it cannot serve as long as the proposed new customers can demonstrate that the services received does not harm existing customers.”

The bill says the PSC’s “role does not extend to prohibiting large electric customers from obtaining service from certain public utilities.” Fitzpatrick is a former NorthWestern lobbyist. 

There’s been frustration from some Democrats with NorthWestern as well.

“Northwestern Energy says, ‘Oh, we can absolutely provide this energy,’” Minority Leader Katie Sullivan said in an interview with the Daily Montanan. “And at the same time, they come to us and say, ‘We have an energy crisis, and we can’t supply energy to homes anymore.’”

Currency mining is one the purposes of data centers, an industry some legislators want to grow in Montana.

Currency mining, or proofing, is an energy-intensive process that essentially involves a computer solving complex math problems. The more computers and larger the system, the faster it can process those problems, and miners can receive cryptocurrency as a reward for doing so.

In 2022, the U.S. Energy Information Administration reported cryptocurrency mining “probably represents from 0.6% to 2.3% of U.S. electricity consumption.”

To put it in perspective, one estimate out of Columbia University’s Climate School had cryptocurrency worldwide uses as much electricity as the country of Argentina. 

More computers means more energy consumption. This was at the heart of disputes in Missoula County several years ago, which eventually led the county to develop zoning regulations for cryptocurrency.

Essentially, the county forced mining companies to source clean power for their operations. A bill in 2023 — SB 178, brought by Sen. Zolnikov — took away a municipality’s ability to pass certain laws regarding cryptocurrency mining. 

Task Force Blockchain

While energy usage is an important discussion point on data centers and new technology, Montana’s economy is too.

As Bozeman continues to develop as a tech hub and Montana remains an attractive place to live, legislators say some foresight will likely be needed to guide future laws.

Lammers’ bill, SB 330, will do just that.

A new task force created by his bill will be made up of a handful of legislators as well appointees of the governor, Senate and House leadership. The Attorney General’s office and State Auditor will also have representatives on the task force.

Their goal will be to provide recommendations that will shape future laws, as well as to attract businesses to the state. The businesses aim to bring include energy-intensive data centers, a focus this session, but a major debate across the state for about a decade.

Lammers’ bill specifically deals with blockchain technology. The blockchain is a type of ledger that records information transferred between entities.

Cryptocurrency — a decentralized, digital currency — has been most commonly associated with blockchain, but it’s not the only application. Advocates, including Lammers, point to potential in medical records, uses in agriculture, and tracking supply chains. 

Proponents of the technology, including IBM, say it’s more secure  — it’s stored on a network rather than on one server — and reduces the risk of fraud as blockchain records cannot be altered. Medical records, for example, are either stored electronically or as physical copies. The idea is technology like blockchain can make accessing records easier and quicker. Additionally, blockchain technology does not require a third-party to approve a transaction, keeping things between two entities.

The bill was heard in the House Energy, Technology and Federal Relations Committee on March 19 and had several proponents, including the Montana Bankers Association and the Satoshi Action Fund, a nonprofit dedicated to advocating for Bitcoin, a type of cryptocurrency. 

“We believe that Bitcoin and Bitcoin mining have the potential to positively impact our environment, our grid, our economy, and society as a whole,” the Satoshi Action Fund states on its website.

However, a 2023 United Nations study pointed to serious environmental concerns with Bitcoin, which it said is highly dependent on fossil fuels.

Reputation Problems

Not all of the pushback against blockchain technology and the data centers needed to run them involve energy. 

A controversy in Butte over CryptoWatt, a cryptomining company, involved a majority owner who was indicted in a $722 million Ponzi scheme.

Some legislators are wondering if this new technology has staying power or is the right industry for Montana to embrace.

“I think a lot of the problems with the reputation of cryptocurrency now was it was oversold and became a pretty easy Ponzi scheme to get into and scam, you know, pump and dump,” Rep. Kelly Kortum, D-Bozeman, said in an interview with the Daily Montanan. “There are legitimate uses of cryptocurrency and Bitcoin, but it’s been so abused by so many bad actors that they’ve lost a lot of credibility on their practical, real world uses.”

Legislators also discussed the makeup of the task force, a minor controversy. There’s also the question of what type of businesses Montana wants, an idea that doesn’t exactly hold to partisan lines.

For example, Senate President Matt Reiger, R-Kalispell, said he likes small businesses in Montana and “the rural feel.”

“You can make great money just being in the trades,” Reiger said during a media presser. “You don’t need a tech job. You probably make more being a plumber, honestly.”

New Regulations

Senate Bill 265, brought by Sen. Zolnikov and co-sponsored by Rep. Zolnikov, a married couple, has yet to hit the House floor, but had a hearing in the House Energy, Technology and Government Relations Committee the same day Lammers’ SB 330 was heard there.

The legislation is regulatory in nature, Sen. Zolnikov said during the hearing.

“We’re trying to attract these very on-the-leading-edge technology companies to our state and give them a framework in which they can live and play within without worrying about being thrown out or breaking a law they didn’t know they’re breaking,” Zolnikov said.

The legislation would also make it law that a governing authority can’t disallow a business from taking digital assets or currency as a form of payment. It also formally allows the operation of businesses either using or developing software for blockchain operations.

There’s also a securities exemption, which Zolnikov said would clear up ambiguities in the law. The U.S. Securities and Exchange Commission requires, “Every offer and sale of securities must either be registered under the Securities Act of 1933” or have an exemption.

“This bill, with the help of the auditor’s office and other individuals, creates a clear pathway for entities who want to be in America, who are legitimate,” Sen. Zolnikov said.

To be sure these companies don’t get bogged down with federal U.S. Securities and Exchange Commission requirements, the bill also offers an exemption, which Sen. Zolnikov said would clear up ambiguities about whether they need to register.

House Bill 424, brought by Rep. Zolnikov, seeks to make the business climate more friendly and stable for businesses utilizing data centers. The bill does this by creating incentives for on-site energy production at data centers and extending the timeframe in which those businesses can be built. 

Some regulations surrounding the data centers sunset in 2027, she said during a floor debate on March 24.

That bill included an amendment from Rep. Fitzpatrick dealing with the price of power and taxation. Data centers would only be able to sell excess power for cost of production, in an effort to prevent price gouging during electrical emergencies. The amendment also revises the tax rate on power production, putting it in class 13 — the power plant class — after a period of 10 years.

The property tax rate for data centers is 0.9%, while power plants pay a 6% property tax rate. Power generation facilities at data centers would slowly have their rate increased over time, treating it as an introductory rate. Lastly, the amendment would also not exempt data centers from paying into tax increment financing districts.

“Class 17 property regarding data centers currently exist in state law,” Rep. Zolnikov said during a floor session on March 24. “What we’re doing in this bill is we’re expanding this class to include power generation behind the meter, and this is what’s key to supporting grid resiliency and benefiting Montana in times of electrical emergencies.”

Blockchain Task Force

Some representatives took issue with who would be on the task force created by SB 330.

The amendments made some people feel more at ease with the legislation, Lammers said. The amendments put six legislators on the task force, as well as the state auditor and attorney general or their designees. 

The governor also gets to pick five people to put on the task force and those individuals who would need to have experience with blockchain, cryptocurrency, financial technology or digital innovation technology.

The majority leaders in both the House and Senate also get to pick four other members each who do not have to be in the legislature. Minority leaders in both chambers get to pick one representative each.

“I’m worried that some of the members selected could not necessarily be experts, but be marketing experts,” Kortum said. “And that’s something we’re seeing nationwide.”

Daily Montanan is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Daily Montanan maintains editorial independence. Contact Editor Darrell Ehrlick for questions: info@dailymontanan.com.