Why some cities are wary of bitcoin mining's high energy toll
| Los Angeles
In mid-April, nearly 150 local environmentalists marched to the gates of Greenidge Generation, a bitcoin mining facility in upstate New York, in a last-ditch effort to block its expansion.
Their objection: that the creation of the cryptocurrency, an energy-intensive process in which computers compete to solve mathematical puzzles, may harm efforts to limit global warming.
Three days later, the planning board in the small town of Torrey voted 4-1 to allow Greenidge Generation to more than double the number of machines it has mining bitcoin.
鈥淓verything we want to do to fight climate change could be erased,鈥� Yvonne Taylor, one of the march鈥檚 leaders, told the Thomson Reuters Foundation.
The showdown in New York 鈥� where a private equity firm turned a moth-balled coal power plant into one fired by natural gas that provides electricity to mine bitcoin onsite 鈥� is part of an increasingly fraught debate over the social benefits and environmental costs of the world鈥檚 most popular cryptocurrency.
Bitcoin consumes almost the same amount of electricity annually as Egypt did in 2019, according to an index compiled by the University of Cambridge.
On Wednesday, Elon Musk, the chief executive of Tesla Inc., said his company would no longer accept bitcoin for car purchases, citing environmental concerns, in a swift reversal of its position on the currency after criticism by some investors.
鈥淎s the price rises, bitcoin could consume as much energy as all the data centers in the world combined,鈥� said Alex de Vries, founder of research platform Digiconomist, which publishes estimates of bitcoin鈥檚 climate impact.
鈥淎t least other data centers are providing us with cloud computing used by billions every day. Hardly anybody is using bitcoin,鈥� he added.
Greenidge spokesman Michael McKeon said in an emailed statement the firm was doing all it could to address environmental concerns.
鈥淣atural gas is a bridge to the future and it鈥檚 an important part of the energy mix for New York State,鈥� he said. 鈥淲e are committed to further investing in ways to enhance our green profile and are looking at various options right now.鈥�
鈥楲et鈥檚 make it green.鈥�
Cryptocurrency boosters say their profits do not have to be at odds with environmental protection.
鈥淵ou can be a bitcoiner and be an environmentalist, just like you can be an environmentalist and get on flights and use a washing machine,鈥� said Nic Carter, a partner at Castle Island Ventures, which invests in cryptocurrency projects.
What really matters is how much of the energy cryptocurrency mining consumes comes from renewable sources, he said.
In April, a nonprofit coalition launched the Crypto Climate Accord, a global, industry-backed initiative urging cryptocurrency enterprises to switch to using renewable energy.
鈥淲e want to help the crypto industry decarbonize,鈥� explained Jesse Morris, chief commercial officer of the Energy Web Foundation, one of the groups that put together the accord.
The idea is to get the industry to net-zero carbon emissions 鈥� offsetting any emissions it cannot cut itself 鈥� by 2040.
Energy Web, for example, plans to roll out a technology tool that will allow cryptocurrency miners to prove they are using sustainable energy, an innovation Mr. Morris said would help link investors with green crypto firms.
鈥淭his industry isn鈥檛 going anywhere, so let鈥檚 make it green,鈥� he added.
But given bitcoin鈥檚 hunger for energy 鈥� and how much money can be made mining it 鈥� there is a concern it could eat up more than its fair share of renewables, pushing other activities to use carbon-intensive power, said Ketan Joshi, a renewable energy industry analyst.
鈥淎 lot of success in reducing emissions could get canceled out by the demand from bitcoin,鈥� he predicted.
Global problem, local solutions
As they guzzle electricity, bitcoin operations generate a substantial amount of carbon dioxide. The industry鈥檚 planet-warming emissions reached more than 22 million metric tons per year in 2018, according to a study in scientific journal Joule.聽
While most cryptocurrency mining takes place in China, major operations have opened up in a number of North American cities, where some officials are alarmed by the industry鈥檚 emissions.
In 2018, Plattsburgh, New York, imposed a moratorium on cryptocurrency mining, after it became the city鈥檚 top power consumer.
And earlier this month, lawmakers introduced a proposal to suspend cryptocurrency mining operations for three years throughout New York state, as it carries out a review of the industry鈥檚 environmental impact.
Officials also recently took steps to limit that impact in Missoula County, Montana, where operations take advantage of cheap electricity from a local hydropower plant.
鈥淎t a certain point, this industry was using about a third of all of the county鈥檚 electricity,鈥� said Diana Maneta, the county鈥檚 sustainability officer.
In 2019, Missoula County used emergency zoning powers to require new cryptocurrency mining operations to offset their energy consumption, such as by agreeing to purchase renewable power directly from new solar and wind projects, or developing their own clean electricity production.
The new zoning restrictions were made permanent this February, making Missoula the first United States county to regulate cryptocurrency mining from a climate perspective, Mr. Maneta said.
Aggressive companies influence local governments
With the price of bitcoin rising over five-fold in the past year alone, mining operations are increasingly attractive for investors, despite the environmental pushback.
The Greenidge mining facility in New York announced in March it would this year become the first bitcoin mining firm with its own power plant to go public on the U.S. stock exchange.
Communities with cryptocurrency mining in their backyard increasingly find themselves in David and Goliath-style clashes, said Ms. Taylor, the activist who opposes the Greenidge expansion.
鈥淪mall local governments are being approached by very aggressive companies and, sadly, they become enamored with the money and pressured,鈥� she said.
Mr. McKeon, the Greenidge spokesman, said the recent planning board vote showed the company had genuine local support.
鈥淭he local community sees the value of the jobs we have created, the taxes we have paid, and the impacts we have had on the local economy,鈥� he said, adding the facility also contributes power to the local grid.
Ms. Taylor鈥檚 cause has recently been taken up by national environmental organizations.
In April, legal campaign Earthjustice and green group Sierra Club wrote a letter to the New York State Department of Environmental Conservation opposing the expansion of the Greenidge facility, partially on climate grounds.
Mandy DeRoche, an attorney with Earthjustice, said the nonprofit had identified at least 30 other former fossil fuel plants in New York that could potentially be turned into data centers that power cryptocurrency mines.
Two are already being converted 鈥� one that will draw power from the grid and the other set to run partly on solar.
鈥淭hey鈥檙e like a bunch of zombies,鈥� Ms. DeRoche said. 鈥淗ow many power plants are going to rise up from the dead before we do something?鈥澛�
This story was reported by the Thomson Reuters Foundation.
