This week, Idaho’s lawmakers sided with special interests over protecting financial liberty by voting down House Bill 585. The bill would have protected Idahoans against modern fiscal threats, like the advent of central bank digital currencies and de facto bans on private digital currencies.
Voting down this legislation will leave Idahoans vulnerable to more federal overreach.
A central bank digital currency — or CBDC — is a particularly concerning and growing threat to liberty. This technology would only strengthen the Federal Reserve’s grip on the banking system. It would also introduce programmable government money. The Federal Reserve has touted the concept for its ability to automatically deduct taxes and pay out welfare benefits in what would become a cashless society.
The capabilities of a CBDC can go even further than extracting taxes and paying welfare benefits. The technology opens the door for government control over where money can be spent and who can spend it. The government could even create money that expires, forcing Americans to draw from their savings or risk losing those funds.
Around the world, nations that already have this technology, like in China, tie their CBDCs to so-called social credit scores. These outgrowths of the surveillance state can be combined to dictate your financial access based on how you align with the government decrees.
All of these features of a CBDC would grant the U.S. government officials precise control over an economy they have already proven they cannot be trusted to manage well. Do you trust D.C. bureaucrats to restrain themselves from using a CBDC to control Americans?
House Bill 585 used a combination of approaches to ban CBDCs. It mimicked a recent policy implemented in Florida to write CBDCs out of the state’s definition of money. It also adopted an approach from North Carolina to ban the state government from being able to transact, test, accept, or participate in any program using CBDCs. House Bill 585 takes the North Carolina approach even further by also placing criminal penalties on those who violate its provisions.
The crux of the problem with these approaches is they do nothing to defend the financial sovereignty of those living within those states. Americans are not as vigilant in protecting their rights as they once were. Federal enticements for private individuals to use a CBDC could make these state efforts to ban it meaningless.
The only effective means of fighting a CBDC is to provide alternatives and allow the free market to work. House Bill 585 sought to guard the right to own, transact, and mine private digital assets.
Though these assets are intangible, they represent real personal property deserving of protection. They offer an easy way to transfer value between parties without a bank or government operating as mediators.
Particularly in the case of technologies like Bitcoin, their decentralized nature flips our current schema of power and control on its head. The power lies in the individual, not a centralized power having the authority to de-bank dissidents or redistribute wealth through money creation.
The legislation would have worked to open markets and allow consumers to decide how best to store their wealth and execute transactions. It would have provided there be no special tax on the use of digital assets as money. This provision would remove the complexities of transacting with digital assets while avoiding any carve outs or special favors to the digital mining industry.
The central goal of House Bill 585 was to cut red tape and preserve the right of individuals to own digital assets. This would hold up private money as the superior alternative to letting the old-guard Feds implement a version of a CBDC.
Despite the redeeming qualities of these digital assets, Idaho lawmakers sided with special interests to oppose this change to the status quo. Those who have the monopoly on political and economic power justified their opposition by pointing to power of a different sort — electricity.
Idaho’s utility companies launched a campaign wrought with fear, gaslighting, and fallacious accusations about protecting digital assets in our state. Their concerns were rooted in a single provision in HB 585 — one that barred the Public Utilities Commission from setting unduly discriminatory electric rates for digital assets miners.
Idaho Power — an exemplar of big business special interests — claimed this language was not necessary because it would never discriminate among users. But Idaho Power is already guilty of practicing this very kind of discrimination. Upon receiving an inquiry about electric rates from a prospective digital asset mining business, Idaho Power established a special rate to distinguish these data centers from other data centers, such as those used by Facebook or Amazon.
Digital assets miners — which are not substantively different from other data centers — are charged $24,700 more per month than their peers for the same amount of electricity used. In fact, these rates are so egregious, they are already driving away prospective digital asset mining businesses. Idaho Power noted that there is not one customer on this rate schedule.
It’s fair to ask whether digital asset mining businesses put too much strain on the grid. Studies show these businesses use a lot of electricity, but they also benefit the grid by offering superior grid balancing capabilities. Texas even considers these businesses part of its grid management strategy.
Opponents fear mongered, claiming the digital mining industry could lead to new costly infrastructure. Idaho Power claimed these companies could later pick up and move, leaving small customers footing the bill for the infrastructure left behind.
These claims are speculative and unfounded. It often costs a mining business millions to establish its facility before it even purchases the computers. It would be cumbersome, and expensive, for a mining business to leave a site once established.
The bill’s sponsors removed the language about price discrimination, but the House of Representatives still voted down the legislation, siding with Idaho’s big power, power brokers.
The defeat of House Bill 585 only underscores its need. Lawmakers, special interests, and the federal government work together to silence those who seek to upend the status quo. The story is not one of government versus business but of big business and government versus the people. These games are played even at the cost of our nation’s fiscal stability and individual financial liberty.
It is true that products like Bitcoin do not require the government’s permission to integrate into society. They are purely about individuals and businesses opting in. But as we saw during the pandemic, people are more likely to instinctively go along with government overreach than to resist tyranny.
This legislation was about trying to free the market, allow innovation, and provide a practical way for Idahoans to look to other means for protecting their wealth. We are entering a new frontier for property ownership.
Giving Idahoans the basis to defend those property rights against local, state, and federal government overreach is key to guarantee a free society. Our lawmakers had the opportunity to provide these protections for Idahoans, but they traded these liberties and protections for extending short-sighted gains to political juggernauts. Idaho can and should do better.
