Mined Campaign Contributions Proposal Sparks Concern From Political Watchdog


November 20, 2018 11:45 PM

Free Speech for People fears that classifying the donation of processing power as volunteering may cause a loophole in campaign contribution requirements. The proposer, OsiaNetwork LLC, has responded, while the Federal Election Commission collects feedback on a draft opinion.

Yesterday, ETHNews reported that the Federal Election Commission (FEC) issued a draft advisory opinion in response to a September proposal submitted by a company called OsiaNetwork LLC.

OsiaNetwork’s proposal outlined the idea of a mining pool in which any individual with an internet-enabled device would be able to donate the processing power to mine digital currency to certain political campaigns.

Specifically, OsiaNetwork wanted the act of donating one’s processing power – or donating fiat currency obtained by selling mined cryptocurrency – to be classified as volunteering rather than as a contribution. However, in its draft advisory opinion, dated November 13, the FEC opined that because mining cryptocurrency does not include communication between two or more parties via the internet, it does not qualify as volunteering; instead, it would be classified as a contribution.

In a letter dated October 5 – before the FEC’s draft opinion was published – political watchdog Free Speech for People outlined concerns about OsiaNetwork’s proposal.

In the letter, Free Speech for People claims that classifying the donation of computing power as an act of volunteering “twists the ‘volunteer’ exception beyond all recognition.” The political reform group states:

“The ‘volunteer’ exception is for volunteer services provided to the campaign, such as making phone calls, communicating with voters, and so forth – not ‘volunteering’ to obtain economically valuable commodities, cash-equivalent resources, or currency, and then donate them to the campaign without being subject to any contribution limits.”

It is the bypassing of contribution limits that seems to be the main concern of Free Speech for People. The group voices concern over the possibility of wealthy donors gaining access to massive amounts of computing power capable of mining huge amounts of digital currency that could be donated anonymously to specific political campaigns. Free Speech for People is worried this loophole would allow for individuals to make multiple contributions without adhering to campaign contribution limits.

Yet the proposal submitted by OsiaNetwork clearly states that individuals who donate their processing power will have no rights, interest, or control over the virtual currency mined from said processing power. This means OsiaNetwork will be the sole owner of the mined crypto and therefore OsiaNetwork will be considered the contributing party and subject to the laws and regulations surrounding political campaign donations. Though, how OsiaNetwork would adhere to these regulations is not discussed in the proposal.

On November 15, OsiaNetwork sent an email to the FEC in rebuttal to the letter written by Free Speech for People saying that its proposal does not twist the meaning of the volunteer exception because of the broad way in which the FEC defines internet activities and equipment and services. It argues, in essence, that certain innovations and advances in technology are covered by the FEC’s volunteer exception.

The letter goes on to argue that the development of such a mining pool has the potential to allow those who are not able to contribute monetarily to a political campaign to give donations in processing power and that it would “help empower ordinary citizens to have a greater voice in the electoral process.” 

Nathan Graham is a full-time staff writer for ETHNews. He lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.

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