[Discussion] Cryptocurrency

On an evening in December 2023, 43-year-old small business owner Sarah Rosenkranz collapsed in her home in Granbury, Texas and was rushed to the emergency room. Her heart pounded 200 beats per minute; her blood pressure spiked into hypertensive crisis; her skull throbbed. “It felt like my head was in a pressure vise being crushed,” she says. “That pain was worse than childbirth.”

Rosenkranz’s migraine lasted for five days. Doctors gave her several rounds of IV medication and painkiller shots, but nothing seemed to knock down the pain, she says. This was odd, especially because local doctors were similarly vexed when Indigo, Rosenkranz’s 5-year-old daughter, was taken to urgent care earlier that year, screaming that she felt a “red beam behind her eardrums.”

It didn’t occur to Sarah that these symptoms could be linked. But in January 2024, she walked into a town hall in Granbury and found a room full of people worn thin from strange, debilitating illnesses. A mother said her 8-year-old daughter was losing her hearing and fluids were leaking from her ears. Several women said they experienced fainting spells, including while driving on the highway. Others said they were wracked by debilitating vertigo and nausea, waking up in the middle of the night mid-vomit.

None of them knew what, exactly, was causing these symptoms. But they all shared a singular grievance: a dull aural hum had crept into their lives, which growled or roared depending on the time of day, rattling their windows and rendering them unable to sleep. The hum, local law enforcement had learned, was emanating from a Bitcoin mining facility that had recently moved into the area—and was exceeding legal noise ordinances on a daily basis.

Over the course of several months in 2024, TIME spoke to more than 40 people in the Granbury area who reported a medical ailment that they believe is connected to the arrival of the Bitcoin mine: hypertension, heart palpitations, chest pain, vertigo, tinnitus, migraines, panic attacks. At least 10 people went to urgent care or the emergency room with these symptoms. The development of large-scale Bitcoin mines and data centers is quite new, and most of them are housed in extremely remote places. There have been no major medical studies on the impacts of living near one. But there is an increasing body of scientific studies linking prolonged exposure to noise pollution with cardiovascular damage. And one local doctor—ears, nose, and throat specialist Salim Bhaloo—says he sees patients with symptoms potentially stemming from the Bitcoin mine’s noise on an almost weekly basis.

“I’m sure it increases their cortisol and sugar levels, so you’re getting headaches, vertigo, and it snowballs from there,” Bhaloo says. “This thing is definitely causing a tremendous amount of stress. Everyone is just miserable about it.”

Not all data centers make noise. And industry insiders say they have a technical fix for the ones that do, which involves replacing their facilities’ loud air fans with much quieter liquid-based cooling solutions. But some of their touted methods, including “immersion cooling” in oil, are expensive and untested on a large scale.

A representative for Marathon Digital Holdings, the company that owns the mine, did not answer questions about health impacts, but told TIME that it is working to remove the noisy fans from the site. “By the end of 2024, we intend to have replaced the majority of air-cooled containers with immersion cooling, with no expansion required. Initial sound readings on immersion containers indicate favorable results in sound reduction and compliance with all relevant state noise ordinances,” they wrote in an email.

The number of commercial-scale Bitcoin mining operations in the U.S. has increased sharply over the last few years; there are now at least 137. Similar medical complaints have been registered near facilities in Arkansas and North Dakota. And the Bitcoin mining industry is urgently trying to push bills through state legislatures, including in Indiana and Missouri, which would exempt Bitcoin mines from local zoning or noise ordinances. In May, Oklahoma governor Kevin Stitt signed a “Bitcoin Rights” bill to protect miners and prevent any future attempts to ban the industry.

While some Granbury residents are fiercely protesting the mine, many others feel powerless to alter the will of a company with legal, political, and financial might. And the data center industry at large is only growing more dominant, thanks to the twin forces of Bitcoin mining and AI, the latter which spends a vast amount of energy training generative models to find patterns in data sets. According to a recent report, data centers will use 8% of total U.S. power by 2030, up from 3% in 2022. And if operators continue to locate the centers near existing communities and prioritize profits above all else, then the story of Granbury could become the story of countless small towns across America.

Granbury sits about an hour southwest of Fort Worth in Hood County, which houses a mostly rural and Republican population of about 65,000 people. About a 15-minute drive south of Granbury’s charming historic town center—which includes a 19th-century opera house—lies a gas plant called Wolf Hollow II. Driving toward the plant on a windy, predawn morning in May, it rises out of the sky like an oil rig in a pitch-black ocean, lights ablaze.

But the glowing gas plant never caused substantial issues for the local residents. Rather, the problems started when Constellation Energy, which operated the plant, signed a deal in 2021 to power a new Bitcoin mining facility that would sit directly on its lot. The new facility consisted of 163 squat metal boxes resembling shipping containers, which housed a total of over 30,000 computers. These computers started running in the summer of 2022, and seemed to be switched on all day and night. As of December 2023, the Granbury mine is owned and operated by Marathon, one of the largest Bitcoin holders in the world.

The computers power a process called proof-of-work mining. Rather than relying on a central bank or governmental agency, Bitcoin is created, maintained, and guarded by watchdogs around the world known as miners, who prevent tampering through a complex cryptographic process and are rewarded with bitcoin for doing so. Bitcoin’s first supporters hoped that this new system would support a global digital currency that would bring freedom, financial fairness, and wealth to its adopters.

But the system also requires an immense and ever-increasing amount of electricity. While Bitcoin’s first miners were solo operators often working out of their bedrooms, the industry is now dominated by a handful of billion-dollar corporations who operate industrial-size server farms across the globe. In the month of March 2024 alone, the Bitcoin mining industry generated a record $2 billion in revenue.

Much of the American Bitcoin mining industry can now be found in Texas, home to giant power plants, lax regulation, and crypto-friendly politicians. In October 2021, Governor Greg Abbott hosted the lobbying group Texas Blockchain Council at the governor’s mansion. The group insisted that their industry would help the state’s overtaxed energy grid; that during energy crises, miners would be one of the few energy customers able to shut off upon request, provided that they were paid in exchange. After meeting with the lobbyists, Abbott tweeted that Texas would soon be the “#1 [state] for blockchain & cryptocurrency.” The following month, the Commissioners Court of Hood County approved the development of a cryptocurrency operation at Wolf Hollow. The owners promised local jobs and said that they would mostly use “stranded energy” that would otherwise go unused.

For months during 2022, Granbury residents Nick and Virginia Browning sat in their front yard watching the new metal boxes of the massive facility be installed in the dirt across the road. “It layered our houses with dust. We haven’t gotten it all out yet,” Nick Browning, 82, says.

The dust, it turns out, was just a prelude to the noise. In order to cool the machines, the site’s operators attached thousands of fans to the containers, which churned constantly, emitting a vicious buzz. As more machines were switched on, the noise sounded like a ceiling fan, then a leaf blower, then a jet engine. It consumed afternoon dog walks and revved through cloudless nights, vibrating the trailer homes of many of the low-income residents who live blocks from the facility. The noise floated miles down the winding Brazos river, through the lush golf courses in the gated community Pecan Plantation and past county lines.

At first, residents responded to the intrusion by vacating their porches, retreating inside, and turning up their fans and air conditioners to the max. But many still felt tremors in their beds—including Larry Potts, a 77-year-old retired pastor who lives up the road from the plant. Potts says he stopped sleeping and started losing hearing in both ears. In February, his heart gave out after another sleepless night; he was rushed to the hospital and kept alive by an external pacemaker. There, he was diagnosed with third degree atrioventricular block, hypertension, and depression.

“I’m sick of this world and all this mess around here,” he says he told his wife that day, referring to the Bitcoin mine’s noise. “We moved out here for the peace and quiet. But this has made me want to go.”

A "state of the union" at Christie's Art and Tech Summit in New York Thursday affirmed what has become apparent in the NFT market — sales are down.

Why it matters: Amid a market rout, the movers and shakers in fine art got real about their relationship status with non-fungible tokens, and it's in transition.

Context: Pace Gallery and Christie's were early in embracing the technology, and after seeing sales in NFTs, profile pics and generative work drawing millions around 2021, built platforms around them, like Pace Verso and Christie's 3.0.

At Thursday's panel, however, Artnet News' former editor-in-chief Andrew Goldstein observed that in recent conversations, both houses appeared to be pivoting away from thinking about NFTs as their own category in the art world.

Between the lines: Pace Gallery CEO Marc Glimcher said its foray into NFTs was artist-driven, and that while they might even prove useful in the art world's back-office processes, they're unlikely to get picked up.

- "We know that there is a provenance verification opportunity here. We all know it and we all know that the art world is resisting it because it suggests transparency, which we say we want but we don't really want," he said.
- "Or at least, the people in power don't." (The crowd tittered at that.)
- "It's absurd," Glimcher added, "that a $30,000 car has a title and registration, but that a $170 million Modigliani does not."

Christie's Dirk Boll said NFTs represent an interesting application of technology, but echoed Glimcher in that art buyers didn't seem to care all that much whether their high-priced transaction was recorded on a blockchain or a regular receipt.

- The auction house tried to offer NFTs-as-receipt, but it didn't catch on: "People still seem to think that the Christie's invoice as a PDF, or printed, is good enough to prove the transaction."

Behind the scenes: A self-described disruptor told Axios that it was disappointing to hear that leaders in the art world wanted to maintain the status quo.

NASHVILLE, Tenn. — Donald Trump will deliver a keynote speech at a Bitcoin conference in Nashville Saturday.

Why it matters: His appearance at the United States' largest gathering of bitcoiners comes amid cryptocurrency's emergence as a wedge issue in the 2024 election. It's already caused some notable tech executives to pledge support — and donations — to the former president.

Catch up fast: Trump's head-spinning turnabout on cryptocurrency has brought more mainstream attention to the industry, and spurred hopes for favorable regulation.

- In May he made headlines by inviting holders of his NFT series to his home at Mar-a-Lago, where he committed to end the regulatory hostility to the industry if re-elected.
- Later than month he announced he'd be accepting crypto for campaign donations.
- And in June he met with Bitcoin miners, immediately afterward using his Truth Social account to implore crypto users to "vote for Trump," citing "Biden's hatred of Bitcoin."

The big picture: Industry participants are frustrated with the Biden administration for not making any progress on regulations that would legitimize the industry.

- Lack of clarity in regulation, the industry argues, has stifled innovation and growth in the sector.
- Crypto's had some recent successes in Washington, but has so far not been able to push legislation across the finish line.

The intrigue: Vice President Kamala Harris, a long-time friend of the tech industry, has reportedly been engaging some in the industry with questions since becoming the Democrat's likely nominee, but she's yet to publicly discuss a position on crypto.

Behind the scenes: There's lots of support for Trump on the ground in Music City through the first two days of the conference.

- There's swag that blends crypto names with Trump's campaign slogan, and boxes of t-shirts being given away that say "Free Ross Vote Trump," a nod to the bitcoin community's embrace of imprisoned founder of the online illegal drug marketplace Silk Road, who's sentence Trump has pledged to commute.

The International Olympics Committee walked away from its partnership with Nintendo and Sega for the long-running Mario & Sonic at the Olympic Games series in order to explore deals with new partners, NFTs and esports, Eurogamer understands.

As the real-life Olympics gets underway in Paris, there's been discussion online of there being no new Mario & Sonic tie-in for this summer's Games, for the first time in almost two decades.

Speaking with Eurogamer, a veteran behind the series has now said the decision to end the popular Mario & Sonic franchise rested with the IOC, which chose not to renew its licensing deal with Nintendo and Sega, and allowed it to lapse in 2020.

"They wanted to look at other partners and NFTs and esports," Lee Cocker, who worked on almost every entry in the series, told Eurogamer. "Basically the IOC wanted to bring [it] back to themselves internally and look at other partners so they would get more money."

Since around 2013, Jonathan Mann’s sole job has been writing and posting a song online each day. With titles ranging from “Yeah, I’m Rocking a Headband” to “Joe Biden, Retire” (posted July 1), his pop tunes are at turns whimsical and topical. Some go viral.

Still, says the Connecticut-based Mann (aka “Song a Day Mann”), monetization was a “slog.” Sales from distribution platform Bandcamp and advertising revenue from YouTube “never amounted to much.” Conference performances and jingle contests filled the gaps. Then came NFTs, which let Mann attach one-of-a-kind blockchain-based tokens to his songs so buyers could easily purchase unique copies online. The tech transformed his music-selling game.

“NFTs are a simple way to capture the monetary upside of [viral] attention,” he says. He could sell his songs directly to buyers without involving third parties that would take cuts, like a record label. Plus, he could program the NFTs so that he’d earn additional revenue through secondary sales. In 2018, his NFT “B-U-I-D-L” (the title is crypto industry slang) was the first tokenized song on the blockchain network Ethereum, he claims, and sold for 2.56 ETH (at time of writing worth more than $5,600). His more popular songs have since sold for the US dollar equivalent of five figures.

Then the game changed again. In August 2023, the US Securities and Exchange Commission announced a settlement of more than $6 million with Impact Theory, a media entertainment company that sold NFTs containing digital graphics. About a month later, the SEC said that it had done the same with a project known as Stoner Cats, which involved celebrity couple Mila Kunis and Ashton Kutcher and sold NFT cartoon cats to finance the production of an animated web series by the same name. (Both Kunis and Kutcher voiced characters, and Kunis’ Orchard Farm Productions helped produce.) Stoner Cats agreed to pay a $1 million fine.

Both projects had, per the SEC, conducted “an unregistered offering of crypto asset securities in the form of purported nonfungible tokens.” In other words, the SEC, which had never provided clear rules surrounding art or NFT sales, had in short order designated some NFT-connected digital art pieces as securities, meaning they’d have to be registered with the commission. Its decisions could shake up how the centuries-old art business operates, argues Mann.

On July 29, Mann and the conceptual artist and lawyer Brian Frye filed a lawsuit in a Louisiana federal district court against the SEC, which begins by asking a simple question: “Should art be regulated by the SEC?”

“We’re not libertarian or anti-government,” Mann says. “What the SEC has done directly affects my ability to make a living and, by extension, many other NFT artists. That's what it’s about to me: protecting our ability to experiment and make a living on the internet.”

Mann and Frye, represented by the attorney Jason Gottlieb, are seeking a “declaratory judgment” from the SEC that, by releasing two specific NFT art projects, they “do not violate US securities laws,” per the lawsuit. Mann wants to sell 10,420 NFTs, for roughly $800 each, of remixes of “This Song Is a Security,” a track referring to the SEC’s 2023 actions. Meanwhile, Frye’s Cryptographic Tokens of Material Financial Benefit project, which will include 10,320 NFTs minted on Ethereum, has economics “literally identical to Stoner Cats on purpose,” he says.

The essence of the case, Frye adds, is about NFT art writ large and “using NFTs the way most people are—to sell them.” The point is to get SEC regulators to have a “long, hard think” about what’s in their purview, he says.

Security vs. Art
In 1946, a US Supreme Court ruling about the Howey Company, which sold citrus groves to buyers who shared in their profits, cemented the test for determining what a security is. The “Howey Test” defines securities as “an investment of money in a common enterprise with the expectation of profits from the efforts of others.”

In other words, Gottlieb says, it makes an investment contract a security. That can be tricky to apply to art, analog or NFT-affiliated. “When you sell a certificate, what you're really doing is essentially selling art collectors an interest in your art,” Frye says. That means buyers are investing in the expectation “that you're going to get more famous.” That fame, in turn, makes the art more valuable.

If you look at it that way and apply the Howey Test, Gottlieb says, it can look very much like art buyers are investing in a common enterprise and expecting to benefit from the artist’s efforts. The difference, Gottlieb says, is that “artists don’t owe you anything.” You may hope that your purchase of an autographed Brat album will go up in value as Charli XCX keeps selling out concert venues, but that wasn’t promised with the record’s sale. Same, the suit argues, goes for a digital cat cartoon tied to some blockchain-based code.

Plus, people aren’t only buying art NFTs to resell them at a profit. They buy Mann’s work, Gottlieb says, “for all sorts of reasons,” like just enjoying the music itself. But based on the SEC’s Impact Theory and Stoner Cat rulings, Frye argues, “not only the entire NFT market but the entire art market itself is a security.”

Through a spokesperson, the SEC declined to comment. Though the agency’s past actions don’t necessarily indicate that the SEC views all NFTs as securities, it hasn’t provided a clear stance on how artists using the technology for sales should proceed with selling their work, either. Mann’s work “might be different enough” from the two projects that paid fines to the SEC, says attorney Michael Rinaldi, partner at Duane Morris in Philadelphia. If owners hold onto an NFT because it’s “collectible or unique … or for enjoyment, as opposed to being an investment, that wouldn’t be a security.”

Mann and Frye’s lawsuit aims to get some answers from the SEC. “Other than [Impact Theory and Stoner Cats’] digital nature, there was little conceptual difference between those series of artworks and, say, Andy Warhol’s 1962 series” of 32 Campbell’s Soup Cans, the lawsuit states. The Stoner Cats NFTs funded an animated series, but what does buying art do for artists if not fund their future work?

Then again, NFTs have a fundamentally money-related nature that other artistic media don’t. “Canvas is not a financial layer,” says London-based Ben Gentilli, who creates blockchain-related art under the name Robert Alice. NFTs, he says, are like “if art was made with bank notes.” When NFT art sales took off in 2021, exemplified by the $69 million Christie’s sale of a work by digital artist Beeple, the market highlighted the medium’s investment potential. “You could see that creep into the language of people marketing NFT projects,” Gentilli says.

The stakes of the suit are potentially so high as to touch the First Amendment, says Gottlieb. Since the SEC ordered both Impact Theory and Stoner Cats to destroy the yet unsold NFTs associated with their projects, the regulatory body could be seen as demanding that an artist burn their art. “That’s an incredibly dangerous and oppressive thing for the United States government to tell artists,” Gottlieb says, “just because they’re working in this new, digital medium.”

What’s Next
While a couple of other NFT artists who spoke with WIRED cite the “chilling effect” the SEC’s past actions have had on the NFT art market, others don’t worry about drawing the commission’s attention. “Personally, the SEC's actions so far haven’t had a major impact on my digital art practice,” NFT artist Bryan Brinkman says.

Plus, the regulatory body stands to change depending on the 2024 election. Former President Donald Trump has promised to fire SEC Chair Gary Gensler—who historically has ruled against the cryptocurrency industry—if elected. The two commissioners who dissented in the Impact Theory and Stoner Cats settlements, Hester Peirce and Mark Uyeda, are Republicans. Vice President Kamala Harris has yet to speak publicly on these issues.

At the very least, artists want the lawsuit to get the SEC’s attention. “I hope the outcome will bring clearer and more transparent rules for releasing digital collectibles and art,” Brinkman says. Fellow digital artist Gentilli, however, isn’t optimistic. He calls the suit an interesting “artistic gesture,” but points out that the SEC hasn’t even offered clear rules on cryptocurrency, let alone NFTs, which “are much further down the list.”

The SEC has 60 days from the date the lawsuit was filed to respond. Gottlieb says the agency can either come back with a motion to dismiss or an answer in which they’ll probably “deny the allegations and plan to contest.”

Regardless of what happens next, the issue won’t be cut and dry. “Software is as limitless as human imagination,” Gottlieb says. He adds that blockchain-based tokens can be “the object of investment contracts,” but they can also be commodities, payments, concert tickets, and art pieces, or all those things at once—“like Schrödinger’s software.”

For Mann, this whole experience feels like the domino effect meme, in which a man is poised to strike a tiny white rectangle at the start of a chain that ends with one the size of a tombstone. The first domino would be Mann learning about NFTs at a conference in 2017; the last, him suing the SEC.

“Prior to like, 2021, I did not know what a security was,” Mann says. In “This Song Is a Security,” Mann pleads with SEC Chair Gensler: “Hey Gary/Give me a call, baby/And we can settle this/Once and for all, maybe/Because it’s so confusing/I don’t know what you’re doing.” Perhaps, if things go his way, Mann will get at least a little bit of clarity.