Why the Navajo are mining Bitcoin

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With nearly 400,000 people, the Navajo Nation is one of the largest Native American tribes in the United States. It is also one of the poorest, with poverty statistics closer to the world’s least developed countries than its neighboring cities of Phoenix, Arizona, or Santa Fe, New Mexico.

Nearly 50% of Navajo are unemployed, 40% have no running water, 32% live without electricity and more than 30% live below the poverty line, according to April 2021 testimony to Congress.

The generational poverty of Native American populations has been the subject of an abundance of research and government spending. Most of the solutions to the problems focus on injecting federal dollars into local economies through grants, special business licenses, and community service.

But what these solutions do not offer is to provide tools for sustainable individual empowerment to these indigenous populations. Indeed, the Navajo Nation is one of the most visible representations of life in a divided monetary system: one with access to American capital, but lacking formal control over the deployment of capital.

But a silent financial revolution is happening in Navajo lands, and it’s being fueled by the growth of a new industry: Bitcoin mining.

“A Navajo person cannot own the land …”

The shattered Navajo economy is the product of many treaties signed between the United States government and the tribes during America’s westward expansion. Most treaties abdicated direct control of the tribal people to the tribe itself, including government functions, tax rights, and law enforcement. But two major responsibilities remained in the hands of the United States: guardianship of the land and control of the currency.

These stipulations had foreseeable financial consequences.

As a trustee, the federal government leases Indian land for agricultural, forestry or mining purposes. The US government also manages the money from these activities on behalf of the nations. Decades of mismanagement culminated in 2012 with a $ 492 million settlement between 17 tribes and the Obama administration.

Yet the leasing system itself continues to hamper progress in poverty reduction.

“The federal government has taken land rights away from the Navajo people,” Navajo Tribal Authority chairman Walter Hasse told Compass Mining in an interview. “So a Navajo person cannot own the land their house is on. If you don’t own the land, how do you borrow money to build a house on the land? ”

The buckskin curtain

Tribal sovereignty does not extend to money either. As US citizens, Native Americans are taxed in dollars. And while it is difficult to say that the dollar has been a net negative for the tribes, the restrictions on how the money can be used within the existing financial system could be seen as such.

Called “the buckskin curtain,” Indian tribes were not only slow to adopt financial tools, but were also barred from accessing them due to national sovereignty. Only 32 Native American financial institutions exist today, constituting the smallest percentage of deposit-taking institutions owned by comparative minorities. Among other concerns, the tribes fear that accepting a banking charter from the Office of the Comptroller of the Currency (OCC) could interfere with their national status.

For example, where would a banking dispute be heard in court? In reserved courtrooms or in Washington? And what evidence do Native American tribes have that due process would be followed?

These issues have pushed the tribes out of the US financial system, either because they are unable or unwilling to operate in the commercial banking sector.

Uranium and coal

Jobs and currency show only half of the picture of economic damage, however.

During the 20th century, energy companies outside of Navajo lands signed contracts with the Navajo Nation to source and extract its abundant energy resources, particularly coal and uranium.

This coal has been used to power cities in Santa Fe, New Mexico, Los Angeles, California – illuminating, watering, and powering a once sparsely populated part of the United States. Years later, power plants fail, leaving little room for the Navajo to lease their land to outsiders, minus the poisoned groundwater and abandoned coal mines.

Over 4 million tonnes of uranium were also mined on Navajo lands starting in 1950. While it fueled Uncle Sam’s appetite during the Cold War, Navajo uranium is said to have devastating end effects on indigenous peoples and their lands. Some 27% of the Navajo have high levels of uranium in their bodies, according to a 2016 study, while more than 500 surface uranium mines remain in various stages of cleaning up.

Before Bitcoin, “mining” had very negative connotations for most of the Navajo Nation.

Bitcoin mining

In 2017, a small Canadian company named West Block approached the Navajo to harness Navajo energy for a Bitcoin mine on Navajo lands.

Currently using 8 megawatts (MW), the new mine is already doubling in size. This equates to around 3,000 machines of different types powering and protecting the Bitcoin network using Navajo energy.

But it’s not just about machines. It is about the production of these machines in the context of a group of people who have deprived themselves of many of the advantages enjoyed by the nominal American.

For example, the establishment currently employs two full-time employees. With the expansion, that number will increase to eleven. The money created from the mine will then flow into the local economy. It might seem trivial now, but bitcoin mining on Navajo lands is a very real source of future Navajo wealth, jobs, and economic recovery.

The Navajo mines also represent the Navajo nation which creates wealth with its energy. Bitcoin mining brings the demand for energy to where the energy source is. Navajo Energy now has a nonstop and rapidly growing demand brought to their lands with the profits going to the Navajo Nation.

Finally, Navajo Bitcoin mines represent financial inclusion. Bitcoin mining is the small first step towards widespread bitcoin adoption by the Navajo Nation. Opting for a free and open Internet money protocol with a physical presence among the Navajo has unlimited potential for economic growth and wealth creation.

This is a guest article by William Foxley. The opinions expressed are entirely theirs and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

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