While proponents of cryptocurrencies like bitcoin steadfastly claim their operations will be carbon-neutral by 2030, their net impact so far is to keep a fracked gas plant in New York State in operation.
Following a recent analysis anticipating “that electricity producers and bitcoin miners will soon become one and the same,” Grist reports, “that prediction is already being realized” on the shores of Seneca Lake near Dresden, NY. “Greenidge Generation, a former coal power plant that converted to natural gas and began a bitcoin mining operation, is positioning itself as part of the clean energy future,” with PR materials that tout a clean, environmentally sound power plant and its “unique commitment to environmental stewardship.”
There’s just one catch. “If it weren’t for bitcoin, there would almost certainly be no reason to run the power plant in Dresden at all,” writes Grist freelancer Jessica McKenzie. “Without the revenue from mining, Greenidge would have no reason to spew hundreds of thousands of tons of carbon dioxide from the plant’s stacks, discharge hundreds of billions of gallons of hot water into a nearby trout stream, or pipe in and burn billions of cubic feet of fracked natural gas.”
After the plant shut down in 2011 due to low regional demand for electricity, its owners declared the closure permanent and filed for bankruptcy, McKenzie writes. “After belching noxious fumes and dumping toxic coal ash into a nearby landfill for seven decades, the plant was poised to be remediated and reused,” eventually winning a US$2-million regional economic development grant convert to fossil gas.
It reopened in 2017, only to stop producing grid power in 2019, after discovering there was still no public need for its product.
But the plant didn’t have to close. By then, bitcoin had come along, with an outsized appetite for electricity that has quadrupled in four years, earning comparisons to the total energy consumption of Argentina or the global consumption of copper, gold, and platinum combined, and raising concerns that the crypto craze will slow the transition off fossil fuels.
In a bid to recover the tens of millions of dollars its new owner, Atlas Holdings, had invested in the plant, “Greenidge turned to mining bitcoin,” Grist writes. “By March 2020, the plant was reportedly using over 14 megawatts of power, enough for roughly 9,000 homes, to mine around $50,000 worth of bitcoin per day. As of this writing, that same amount of bitcoin is worth about $300,000. The plant is now one of the largest cryptocurrency mines in the country, and it’s angling to get even bigger.”
Along the way, “there was a corresponding jump in its contributions to global warming,” the news story adds. Documents obtained by the Committee to Preserve the Finger Lakes showed the plant’s greenhouse gas emissions growing nearly tenfold between 2019 and 2020, to the equivalent of 220,000 tonnes. The facility is licenced for 580,000 tonnes, and capable of producing a megatonne per year at full capacity.
“And since the plant’s growing appetite is driven entirely by cryptocurrency, these emissions can’t be written off as the price of providing heat and power to homes or businesses,” Grist notes.
McKenzie has more on Greenidge’s expansion plans, and the implications for a technology hyped by self-styled “bitcoin bros” like Twitter’s Jack Dorsey and Tesla/SNL star Elon Musk. “It’s a gold rush,” said Vinny Aliperti, the owner of a winery 10 miles from Greenidge. “We’re just the first, but they’re going to be coming after all these old power plants.”
In the end, cryptocurrency’s carbon footprint may prove to be the decisive vulnerability in a hot, new trend described alternately as “the libertarian cheat code” or “an expression of extreme technological libertarianism”. Late last month, Globe and Mail European bureau chief Eric Reguly said bitcoin’s “ungreen credentials” could give governments the reason they may be looking for to rein in a system in which a single transaction burns through as much electricity as an average U.S. household consumes in a month, with roughly a million times the carbon footprint of swiping a Visa card.
“Governments and central bankers, who generally oppose electronic ‘currencies’ (a flattering and inaccurate description), would be delighted to see bitcoin trashed” during this year’s United Nations climate change conference in Glasgow, Reguly writes. “That’s because slapping a carbon tax on bitcoin or outright banning it would be easier if the measures were done on environmental grounds—perfect cover for governments to save their own currencies from competition.”
The numbers support the kind of action Reguly suggests.
“Bitcoins only exist in the ether, but the mining process is very much an industrial activity with real-world implications,” he writes. “The Cambridge Bitcoin Energy Consumption Index, published by the University of Cambridge’s Centre for Alternative Finance, says the bitcoin network consumes 132 terawatt-hours of electricity a year, equivalent to 0.6% of world consumption. That’s more than the consumption of either Argentina or Ukraine. If bitcoin were a country, it would be the 28th biggest electricity consumer.”
Reguly cites Greenidge as one of several fossil-fueled power plants in the U.S. whose output is already devoted to bitcoin—and the U.S. total accounts for just 7% of the technology’s global output.
With a single bitcoin now worth more than $54,000, up from about $250 in 2015, “the crypto industry is financially motivated to mine more of the coins, hence more energy consumption,” Reguly explains. “Renewable power expansion might not be able to keep up with bitcoin mining demand, and even if it could, moral questions would arise: What is the point of devoting ever-increasing amounts of renewable energy to a socially useless product when that same energy could go to recharging electric car batteries or making clean fuels, such as hydrogen?”
Even before that expansion is in full flight, bitcoin mining can be “classified as an ecological disaster in the making,” he adds. “Most bitcoins are mined where electricity is cheapest, which also happens to be where fossil fuels are prevalent. No surprise that the majority of bitcoin mining is in China, where coal is the dominant fuel. Another mining centre is Iran, where more than 90% of electricity production comes from burning fossil fuels.”
All of which gives governments and central bankers a pathway to regulate a “currency” they see as a potential front for money laundering or other unsavoury pursuits. Their motivation might also be to protect the integrity of real currencies that Reguly notes are as much a political construct as an economic one.
At the same time, though, “most governments have net-zero carbon emission goals by 2050,” he writes, and “those goals are incompatible with ever-rising bitcoin production.” So “governments have a great opportunity to rein in bitcoin on environmental concerns alone” and protect their own currencies at the same time.