Cryptocurrencies are bad for the environment — at least it seems to be believed by most people online. Posting cryptocurrencies on social media is often flooded with angry comments about the industry's significant contribution to greenhouse gas emissions. Studies show that Bitcoin mining, the process of protecting the Bitcoin network, uses more electricity per yearworldwide than most countries, including the Philippines and Venezuela.
On the other hand, members of the crypto community claim that crypto mining is actually good for the environment in some important ways. They say it offers a new, energy-hungry market that will encourage renewable projects. In the long run, they say cryptocurrencies will revolutionize the energy grid and absorb extra energy that would otherwise have been wasted.
Cryptocurrency mining hopes for rapid expansion in the United States when New York officialsrefused a greenhouse gas permit on June 30, as lobbyists argued on both sides., the June 30 Bitcoin mining business cites "substantial greenhouse gas (GHG) emissions associated with the project". This decision may set a precedent for how local jurisdictions across the country will tackle the hotly contested topics.
In other words, which side is correct?
To investigate, TIME has spoken with several energy and environmental experts to analyze some of the main discussions in the crypto community. Some experts say that cryptocurrency mining could have a positive impact, but most agree that there are few signs that the industry is heading in the right direction.
"There are narrow paths that could help the energy system, but I don't think it's happening," says Joshua Rhodes, an energy researcher at the University of Texas at Austin. And now he says the damage has already taken place. "Largely, they are probably increasing carbon emissions now."
Claim: Cryptocurrency mining relies on renewable energy
The Bitcoin network relies on groups of computers around the world to perform complex mathematical formulas. These computing centers do not act like "minors" in the literal sense, but like network watchdogs used for security and stability. Known as Proof of Work, this process consumes a lot of energy by design to prevent hacking and attacks.
Crypto proponents claim that the proof of work process is more energy efficient. An increasing number of miners are looking to renewable energy sources such as wind, solar and hydro, rather than coal and natural gas. However, a peer-reviewed studyearlier this year shows the opposite. The use of renewable energy in the Bitcoin network decreased from an average of 42% in 2020 to 25% in August 2021. Researchers believe in China's crackdown on cryptocurrencies, which were rich in hydroelectric mining, were the main catalyst for this decline.
Currently, there is a great deal of controversy over the proportion of cryptocurrency miners using renewable energy sources. The Bitcoin Mining Council, an industry group, claims that60 percent of mining is from renewable resources,20 percent higher than the numbers listed by the Cambridge Alternative Finance Center. I am. George Kamiya, an energy analyst at the International Energy Agency, said the Bitcoin Mining Council is likely to have access to more data, but its numbers have not been peer-reviewed and methodological details are lacking. It is from a survey and states that it encouraged sharing with underlying data and methodologies with external researchers such as Cambridge.
Regardless of which statistics are close to the truth, there is still a lot of mining work using non-green energy sources. In New York, Greenwichreused a previously closed coal-fired power plant. It is currently powered by fossil fuel-based natural gas. Yvonne Taylor, vice president of the Seneca Lake Guardian, an environmental non-profit organization, said atTIME in Aprilthat Greenwich would generate more than1 million tonnes of CO2 equivalent each yearinto the atmosphere. He said he would release it inside. In addition to harmful particulate matter. In an email to TIME, a representative of
Greenidge suggested that the company reduce40% from the currently allowedlevel by 2025, 2035. By "Zero Carbon Emission Power Generation Facility". The company will also continue to operate, appealing for refusal of air permits.
Claim: Cryptocurrency mining leads to a renewable energy boom
If cryptocurrency mining is not currently maintained on renewable energy, so in the future There is a possibility of becoming. Fred Thiel, CEO of crypto mining company Marathon Digital Holdings, announced his intention to make the companycompletely carbon-neutral by the end of this year, saying companies like him could have a big impact. I am saying. About the future of the renewable energy industry.
Note that many cryptocurrencies already use processes that consume much less energy than Bitcoin's Proof of Work. Small blockchains like Solana and Avalanche use a security mechanism called Proof of Stake. Researchers at the Ethereum Foundationclaim to reduce energy usageby more than99%compared to the Bitcoin system. Ethereum, the second largest blockchain after Bitcoin, is in the process of switching from Proof of Work to Proof of Stake this year.
Bitcoin does not seem to move from Proof of Work immediately. But renewable energy developers need customers to grow, and Proof of Work miners claim that they are exactly what they offer. As an example, Thiel suggested that there are wind farms in Vermont that cannot sell energy due to remote areas and lack of power lines. Placing a cryptocurrency mining plant on a farm would theoretically give them immediate income. "If the country's goal is to convert most of our energy use to green or sustainable energy forms by 2050, the only way it will happen is for power plants to build power plants. Whether you have an incentive or not, "says Thiel.
However, Thiel refused to reveal the name of the Vermont wind farm, and a follow-up email asking marathon representatives for the name of the operation or a similar operation was unanswered. Most experts TIME disputed the idea that cryptocurrencies are causing some sort of boom in renewable energy. "I don't know of a concrete example of a major cryptocurrency mining project directly boosting renewable energy production," Kamiya writes.
"Evidence is in pudding. I've never seen it work in Montana," said Dave Stro, Commissioner of Missoula County, where the county hosted aenergy-intensive mining project. Meyer statesIt ranked the local community and led local governments to limit the ability of miners to launch new businesses.
Joshua Rhodes states that even before the surge in Bitcoin mining, Texas counties were "packed to build and operate renewable projects." He also argues that even if crypto spurs the renewable energy boom, it may not even be able to help the right place. For example, western Texas is rich in wind and solar energy, but returning power to cities in desperate need of electricity, such as Houston and Dallas, requires extensive infrastructure and power lines. "All of the cheap electricity can't come out," he says.
And it's true that cryptocurrency mining is accelerating the demand for solar and wind power plants, which doesn't seem to be the case yet, but where to put it. There is a problem. Many communities and organizations oppose them for a variety of reasons, from aesthetics to protection.In New York, Congressman Anna Keres, who led the bill to impose amoratorium on the state's crypto mining, states that the influx of crypto-based solar and wind power businesses "competes directly". .. Agricultural land in New York at a time when it was becoming an increasingly national bread basket due to climate change.”
With great resistance and long schedules to build wind and solar projects, impatient crypto miners use other less clean forms of energy. It is more likely to set up a store. In Kentucky, abandoned coal mines arereused,crypto mining centers
Claims: Cryptominers improve power networks
If crypto companies haven't supercharged the renewable energy boom yet, they're helping other ways, such as increasing the resilience of power networks. It's possible. Thiel argues that cryptominers are uniquely suitable for assisting the grid for several reasons, for example, peak energy usage in ways not possible with thermosters. Sometimes it can be turned off quickly. It can absorb energy from the grid, otherwise it is wasted. They can be placed very close to the energy source.
"The grid needs energy. Whenever we do, we voluntarily reduce, "says Thiel. “This acts as this ideal buffer for the grid.” During peak energy usage in Texas, the marathon reduced or completely shut down the grid for a couple of hours a day.
He said that if crypto miners are willing to reduce energy usage during peak hours to reduce their annual load by 13-15%, companies will reduce carbon emissions, under heavy load. We have found it to help improve the resilience of the grid in. It helps to facilitate periods of stress and also the transition to renewable energy.
However, Rhodes and others are skeptical that most miners are willing to operate on someone else's schedule. Cryptocurrency miners have shown that they want to operate 24/7 to maximize profits. Strohmaier, Montana, said that when he met with crypto miners operating in his county about their activities, the topic of resilience and reduction of the grid "never came up." Even the nanoseconds of what they were doing never felt motivated to shrink. “We need to keep all of these machines up and running, and if we can keep them viable, we need to add more,” he says.
Thiel partially supplements with natural gas from the grid if there is not enough energy to power the marathon plant from the wind farm (because the wind does not always blow) Is called. When asked for a breakdown of the marathon's energy usage, the representative wrote in an email: It's hard to estimate what the final mix will be.
Claim: Cryptographic miners are simply using energy that would have been wasted.
A lot of electricity is wasted in the United States, and cryptocurrency miners want to use it. For example, the process of oil extraction produces by-products of natural gas. Many companies choose to simply flare (burn out) rather than build the infrastructure to capture it. However, in North Dakota, crypto minerssigned a contract with Exxonto set up a store directly on site and instead used flared gas for new mining operations.
Some experts say that this process can still cause serious damage. Anthony Ingraffea, a professor of civil engineering at Cornell University, co-authored a paper onin 2011, stating, "I don't think it's a benefit. They're still burning gas." Environmental hazards from extracting natural gas.
In addition, Ingraffea argues that by providing Exxon with additional business at its oil rig site, crypto mining theoretically motivates the fossil fuel industry to continue investing in oil rigs. I am. Kamiya argues that flare gas has other productive uses, such as selling electricity back to the grid, but cryptocurrency mining is "another use of gas that can drive higher emission reductions. Finding a market can motivate operators. "
And crypto miners are also facing problems in ideal energy environments. A paper published this month by the Coinbase Institutestates that in Iceland, the "new gold rush" of mining activity minimizes the environmental impact of the country's "abundant geothermal energy." Insist. However, in December, the country experienced aserious power shortage, and its major power company announced that it would reject all future cryptocurrency mining power demands.
Claim: Some crypto mining operations are already carbon neutral.
Last year, New York's crypto mining facility, Greenidge Generation, sought to calm criticism of its environmental impact by announcing its intention to be carbon-neutral. In a press release, the company said it would buy carbon offsets and invest in renewable energy projects to account for gas-based emissions.
Replacing fossil fuel-based energy with renewable energy is undoubtedly good for the environment. However, carbon offsets are not so clear. The offset industry has been criticized by many scientists. Many scientists say that many of these projects are poorly defined and not as useful as they look. Projects that do not have a positive impact on the environment are generally technically rewarded. Offsets essentially allow businesses to pay to continue pollution. Greenpeace, even, called the entire systema "distraction from the actual solution of climate change."
Carbon offsets "do not reduce global emissions, they only move around the world," says Ingraffea. He argues that they should only be used in cases of emissions that cannot be reduced.
Read more:The crypto industry was heading towards change in the carbon credit market until it hit a major obstacle{138. }
Claim: Data centers are as harmful to pollution as cryptocurrency mining operations.
Many crypto miners feel unfairly targeted for environmental impacts, and far less scrutinized data centers increase carbon emissions I believe in the same responsibility.
Multiple experts disagree. “Cryptocurrency mining consumes about twice as much power as Amazon, Google, Microsoft, Facebook, and Apple,” says Kamiya.
Jonathan Kumei, a researcher who has been studying information technology and energy use for over 30 years, says that the two categories of machines are moving in opposite directions in terms of efficiency. According to his co-authored2020 survey, the computing power and power of a typical data center increased significantly between 2010 and 2018, but power usage increased mostly. I have not. In Bitcoin mining, on the other hand, "there is a structural incentive that the efficiency of the entire system declines over time," he says. He generally mentions the fact that Bitcoin miners are forced to solve increasingly difficult puzzles over time in order to maintain the functionality of the blockchain. The computing power to perform these tasks requires more and more energy.
Claim: Christmas lights use more power than Bitcoin.
Thisclaimwas repeatedand aboveandand above by Bitcoin mining defenders, including Thiel, in our interview. rice field. Focus on Bitcoin mining and other large-scale power usage. Also, it is completely unfounded. The latest major study of holiday lights comes from the 2008 paperpaper, which consumes 6.63 terawatt-hours of electricity annually in the United States. (The paper stated that the numbers only decrease as LED bulbs become more common). By comparison, the Bitcoin network consumes an estimated 91 terawatt hours per year
A popular online post on this topic isDigital Mining Operator Morson. Including, we are defending Bitcoin. Do not cite the data sourceor confuse thecredible agency findings.
Claim: The added value of Bitcoin to society is worth it.
Koomey and other experts say that in the last decade, there is only one sure reason that the environmental impact of cryptocurrencies can sometimes diminish. :When cryptocurrency prices fallDuring these declines, miners are discouraged from staying in the market or buying new equipment, some closing stores and reducing greenhouse gas emissions. Reduce. In fact, as Bitcoin's value dropped from $ 40,000 to $ 20,000 from late April to June, the industry's electricity usage is also according to theCambridge Bitcoin Power Consumption Index
. It has been reduced to one-third. If they are harmful to the environment, crypto miners will continue. Cryptographic enthusiasts argue that the long-term social and economic benefits of their industry offset their electricity usage, as the computer revolution did earlier.
Koomey states that it is important to take a wide-angle approach when considering the potential impact of cryptography on the environment. It's about thinking about how cryptography affects society as a whole compared to other energy guzzlers.
"Sure, Google uses a measurable amount of electricity, but I argue that it's a pretty good use of that electricity," he says. "So, apart from how much power they use, you have to go back to this question for crypto people: what business value do you offer? How does this technology perform better than the technology it replaces? Is it worth it? "
ContactLetters @ time. com