Bitcoin miners are pressing the Environmental Protection Agency not to crack down on their operations amid pressure from Democratic lawmakers to tackle the industry’s carbon emissions and e-waste.
It is the latest accumulation of bitcoin mining stocks. Companies like
Digital Holdings Marathon (Stock ticker: MARA),
Blockchain riot (riot) and
Scientific basic (CORZ) is down nearly 50% this year as the cryptocurrency remains extremely low.
Congressional Democrats signed a letter to the Environmental Protection Agency on April 20, urging the agency to evaluate mining facilities for compliance with the Clean Air Act and the Clean Water Act, and to investigate miners for “any harm” they might cause to local communities from e-waste and noise pollution.
“We have serious concerns regarding reports that cryptocurrency facilities across the country are polluting communities and contributing significantly to greenhouse gas emissions,” Representative Jared Hoffman (D-Calif.) said in the letter. “As cryptocurrency continues to gain popularity and demand for more mining, we must ensure that communities are not left with the toxic burdens associated with this technology.”
Nearly two dozen House Democrats signed the letter.
The Bitcoin Mining Council, a trade group specializing in the cryptocurrency industry, fought back with its own letter to the Environmental Protection Agency on Monday. The letter was signed by a list of industry heavyweights, including
micro . strategy (MSTR) CEO Michael Saylor,
to forbid (SQ) “Head” Jack Dorsey, and investment firms such as Fidelity, SkyBridge Capital and Fortress Investment Group.
The group said that bitcoin mining is no different from data centers owned by tech giants such as
ID pads (META), a Google parent
the alphabet (GOOGL) and
“All data centers use electricity generated from abroad,” the council said. Digital asset miners simply buy electricity from the grid, just like
Microsoftand other data center operators.
Bitcoin mining is the process by which dedicated computers, known as ASICs, try to guess an alphanumeric string of characters to validate a block of transactions, earning Bitcoin if they guess correctly. This process is called “Proof of Work,” or POW, and miners use huge amounts of electricity to compete – equivalent to the total annual energy consumption of countries like Greece or Poland, according to the Cambridge Bitcoin Index of Electricity Consumption.
POW is not the only way to validate transactions on the blockchain. The newer system, called Proof of Stake, or POS, uses a mechanism to roll out tokens as security for transaction authentication rights. POS uses much less power than POW and has other benefits – reasons why the Ethereum network aims to move to POS from POW later this year.
Congressional Democrats point out that POS is 99.9% more energy efficient than Bitcoin’s POW system. They also argue that bitcoin miners are generating huge amounts of e-waste – 30,700 tons per year of it – because the ASIC must be constantly upgraded to remain competitive.
The Bitcoin Mining Council says these claims are deeply flawed. They argue that miners do not produce carbon emissions, saying that the electricity comes from the same sources as traditional data centers. Miners claim that 58% of the global grid’s electricity comes from renewable sources, much higher than the 21% sustainable mix in the US, and they are making progress in reducing the industry’s carbon footprint.
Miners also argue that e-waste is much lower than Democrats claim, based on their own industry depreciation figures, rather than an academic study cited by Democratic lawmakers. Miners claim that it is misleading to compare the energy consumption of POWs with POS. They argue that POW blockchains are more secure and decentralized, while POS blockchains turn networks into “pure plutocracies,” controlled by a few large entities.
The Environmental Protection Agency did not immediately respond to a request for comment.
Environmental pressures are just the latest problem for mining companies. Stocks slumped as Bitcoin price remained well below its 2021 peak near $69,000, and was recently trading around $39,000.
Miners are also spending heavily on new equipment and plant expansions, even as the cost of capital rises as interest rates rise. The network’s hash rate – a measure of difficulty – has risen, increasing the electricity required to mine each coin and affecting miners’ profit margins.
Most miners can still turn a profit with operating costs of less than $20,000 per coin. But investors may need more convincing that their business models are sustainable and will not require constant capital expenditures to maintain profitability.
The bitcoin price rebound is sure to help. A campaign by the Environmental Protection Agency would not do that.
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