Energy-hungry bitcoin is moving to the scenes of the American environmental movement

When China banned bitcoin mining last year, it unleashed a gold rush in the United States, with states like New York, Kentucky and Georgia becoming major mining hubs.

New York State Assembly member Clyde Vannell couldn’t be happier.

“It’s a blessing that this is happening here,” he said, referring to the jobs the industry could create.

But Anna Kellis, associate member of the association, is pushing legislation that would curb some forms of energy-hungry mining in New York, and put a two-year hold on new mining operations that bring new fossil-fuel-based energy sources online.

The legislation will also task the state with studying the environmental impact of mining.

“We have an industry that will soon derail our climate goals,” she warned.

Controversy over the environmental impact of bitcoin mining is growing in the United States, with major environmental groups recently escalating a national pressure campaign criticizing its use of fossil fuels as the country tries to reduce its emissions to meet climate change goals.

Bitcoin miners maintain the decentralized digital currency through a network of energy-intensive computers — whose precise energy consumption and carbon emissions are difficult to measure.

A 2021 estimate from industry group CoinShare found the network responsible for less than a tenth of a percent of global emissions, while a separate report from New York Digital Investment Group said it could reach at most 1% of global emissions by 2030.

But a study published by economist Alex de Vries, a frequent critic of bitcoin’s energy use, in the energy journal Joul in March estimated that it produced carbon dioxide equivalent to the Greek nation.

“We should push bitcoin mining to decarbonise, just like any other industry,” said Margot Baez, a climate change scientist at the Bitcoin Policy Institute, a think-tank.

“But the reality is that compared to other industries, bitcoin uses a tiny amount of energy,” she said.

Bitcoin promoters say that other activities – such as turning on Christmas lights – consume roughly equivalent amounts of energy as the network, and that Bitcoin’s social function is worth the energy burden.

They also point to a few operations that run on renewable energy – notably in Texas where solar and wind farms are brought online to power bitcoin mining.

But in places like New York and Pennsylvania, miners are reviving closed fossil fuel stations to power their work — and environmental groups have mobilized.

“We are in a climate crisis,” Tefere Gebre, chief program officer at Greenpeace USA, said at a press conference organized by environmental groups critical of cryptocurrency.

He said bitcoin mining is “pushing us in the wrong direction at the wrong time.”

New York regulations

The law, written by New York Assembly member Kells, which exited the state’s Natural Resources Commission in March, will halt new fossil-fuel-powered bitcoin operations there.

“New York will signal that it is closed for business,” said Kyle Schnepps, director of public policy at New York-based Bitcoin and the consultancy Foundry, which opposes the bill, if passed.

The Bitcoin logo inside a cryptocurrency booth in Madrid on March 17. | Bloomberg

The fight over bitcoin mining erupted in New York last year after residents of the small town of Torrey protested when a bitcoin miner seized a coal-fired power plant there and turned it into a natural gas-fired mine.

Environmental group Earth Justice has identified a number of other plants across the state and said they could be subject to similar conversions — and legislator Kelles has brought together more than 40 co-sponsors for legislation imposing a ban on such activity.

Schneps, with Foundry, notes that some bitcoin mining is driven by renewable energy, including hydropower, and that it can bring economic benefits.

He said his company has more than 115 employees in New York, working in a range of roles from software engineering to sales.

New York Representative Vannell, who opposes a mining moratorium, worries that it could turn miners off, saying lawmakers should work with industry to address any environmental concerns.

But Kelis said that without regulation to enforce a ban on new fossil-fuel mining of bitcoin, more dirty power plants would be brought back online in the state, undermining emissions reduction targets.

“Let’s stop this now,” she said. “We’ve spent 30 years removing these filthy plants from the net.”

Scientists say global fossil fuel emissions must fall by a whopping 45% by 2030 to avoid the worst effects of climate change, including wildfires, floods and extremely dangerous heat waves.

But despite many pledges to cut emissions, carbon pollution continues to rise, with the United Nations forecasting a 16% increase by 2030 over 2010 levels, even if the government’s current plans to cut carbon are met.

A wall of power-hungry supercomputers inside a crypto mining operation in Texas.  |  ELI DURST / The New York Times
A wall of power-hungry supercomputers inside a crypto mining operation in Texas. | ELI DURST / The New York Times

Those on both sides of the bitcoin divide agree that what happens in New York will have repercussions across the United States.

“When it comes to climate policy on a national scale, New York is a strong player,” said Mandy Deruchi, an attorney with Earth Justice.

He’s challenging the weather permits for the Torrey bitcoin mine, arguing, among other things, that the mine goes against state climate laws.

Code Fight

The confrontation in New York coincides with a nationwide campaign by major environmental groups, including the Environmental Working Group and Greenpeace USA, to draw attention to the impact of bitcoin on the environment.

Groups are calling for changes to bitcoin’s software code to replace their “Proof of Work” protocol — which generates new coins and maintains the network by powering power-hungry computers — with a lower-emissions “Proof of Stake” mechanism that would reward those who own currency already.

The campaign, which featured major advertisements in national newspapers, was funded by a $5 million donation from Chris Larsen, co-founder of the proof-of-stake cryptocurrency Ripple.

“We are very serious about this. This problem must be resolved,” said Ken Cook, chair of the Environmental Working Group.

He said the mainstream environmental movement has been slow to recognize the threat of bitcoin mining, but the groups are now working.

“We are on the way to a good transition” away from fossil fuels – but fossil-fuel-powered Bitcoin mining “could offset that transition in a very important way,” he said.

Bayes, of the Bitcoin Policy Institute, opposes carbon-based bitcoin mining, but said critics do not understand that mining is inherently incompatible with climate goals, pointing to US mining operations that fund new wind and solar energy.

Gloria Zhao, a developer working on the Bitcoin platform software, said the community has “essentially treated as a joke” the recent proposal to change the Bitcoin code, noting that it was not even introduced through the current mechanism for hashing changes to the Bitcoin software.

Zhao and other Bitcoin proponents argue that the power-intensive design of cryptocurrencies is critical to maintaining the security and decentralization of the network, allowing anyone with access to a computer and electricity to participate.

But Larsen, who funded the environmental campaign, said that as more and more mainstream financial institutions invest in bitcoin, the pressure will increase on software developers to align the cryptocurrency with broader environmental, social, and governance goals.

“This will put pressure on core developers to make this change,” he said. “That’s the goal.”

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