Bitcoin’s Popularity Has a Downside: It’s an Energy Glutton that Could Hurt Earth’s Climate, Study Finds

November 01, 2018

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by Chris Mooney and Steven Mufson (Washington Post) The new research finds that bitcoin’s greenhouse gas emissions are already comparable to those of a midsize country. But critics aren’t so sure. -- ... There’s no doubt bitcoin is notorious for its high energy use — the consequence of miners having to compute highly difficult problems to make a “blockchain” of transactions and win new bitcoin. This, in turn, requires high-powered, energy-hungry equipment.

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These miners are well known for flocking to places with cheap electricity so that they can get a better return on mining. Sometimes, that means setting up near hydroelectric dams, in which case mining would not produce any greenhouse gas emissions. But in other cases, miners tap into electricity grids powered largely by coal plants.

Because bitcoin is a currency not maintained by banks but by a network of individuals, it relies on a technology called blockchain that is decentralized and depends on a vast number of users, called miners, to compute a record of transactions. The computer users who do the laborious calculations are paid in bitcoin, which encourages yet more computing. No single entity manages the entire system, which eats tremendous amounts of energy from computers constantly solving problems to build the blockchain.

The problem is that as the price of bitcoin rises, there is more incentive to mine — after all, there’s a better chance of making a good return. But the way bitcoin is set up, when this happens, the problems that must be solved also become more computationally difficult, requiring still more machinery and, thus, more energy use.

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The study, published in Nature Climate Change, seeks both to compute the current energy use of bitcoin mining and what it could be in the future if the technology continues to grow. And it finds not only country-size present-day emissions but also potentially planet-size affects from further growth.

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“Extrapolation using the other commonly used technologies will be speculative, but not unreasonable,” David Malone, a lecturer at Maynooth University in Ireland, said in an email. Malone previously calculated that bitcoin’s energy demand was equal to that of Ireland itself.

Challenges faced by bitcoin could limit its use, Malone noted, rendering the analysis less accurate.

“They talk a little bit about the problems that bitcoin has to overcome (for example, squeezing more transactions into a block and these might improve efficiency),” he wrote. “However, it is also possible that these limitations might limit Bitcoin’s growth, and so limit the growth in CO2 emissions.”

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Is there a solution? Mora (Camilo Mora, a researcher at the University of Hawaii who published the work with his students) says that, simply put, bitcoin has to change the way it operates. For instance, changing the difficulty of the problems that must be computed, or including more transactions in each calculation.

The world could also switch entirely to renewable energy, and then bitcoin mining would be as green as anything else — but we’re hardly there yet.

“This is a good time for the people who have the power to operate these things to be aware of this potential threat that bitcoin is having,” Mora said. “And they have choices that are viable to reduce those emissions considerably right now.” READ MORE

Energy cost of 'mining' bitcoin more than twice that of copper or gold (The Guardian)

Bitcoin Miners Are Giving New Life to Old Fossil-Fuel Power Plants: The lofty prices of cryptocurrencies have investors sinking money into electricity generation, risking a backlash (Wall Street Journal)

Bitcoin miners align with fossil fuel firms, alarming environmentalists -- “When people don’t see pollution, they don’t think it’s there,” one expert said. (NBC News)

ON HOUSE ENERGY’S RADAR: (Politico's Morning Energy)

Top EU regulator urges ‘ban’ on crypto mining that he claims is sucking up renewable energy (Market Watch)

EMPIRE STATE OF CRYPTOMINING: (Politico's Morning Energy)

DEMS PROD CRYPTOMINING'S ENERGY HABITS (Politico's Morning Energy)

How Energy Usage Is Driving Lawmakers' Crypto Concerns (Law360)

What Is the Role of Blockchain and Cryptocurrency in a Low-Carbon Future? House Hearing Tackles the Energy Impacts of Blockchain (Energy and Environmental Study Institute)

HEARING ON "CLEANING UP CRYPTOCURRENCY: THE ENERGY IMPACTS OF BLOCKCHAINS" (House Committee on Energy and Commerce)

NO EXCEPTIONS FOR CRYPTO: Some of the country’s biggest environmental groups are calling on the Biden administration to subject cryptomining to environmental regulations including the Clean Air Act (Politico's Morning Energy)

Excerpt from Politico's Morning Energy: ON HOUSE ENERGY’S RADAR: The House Energy and Commerce Committee’s oversight subpanel will be meeting next Thursday (January 20, 2022) for a hearing on the impacts of cryptocurrency on energy and the environment. Cryptocurrency can use enough electricity to rival entire towns, and the committee will look into “how proof of work blockchains, in particular, may migrate toward cleaner alternatives and renewable energy solutions.” READ MORE

Excerpt from Politico's Morning Energy: EMPIRE STATE OF CRYPTOMINING: New York state is facing a showdown on whether to allow fossil fuels to generate the enormous amounts of electricity used in the state’s crypto-mining, POLITICO New York’s Marie French reports. Environmentalists are fearful over the added emissions it would produce while crypto backers are decrying any delay in the blossoming industry. Groups including Earthjustice, the New York Public Interest Research Group and Sierra Club are backing a three-year moratorium on the use of fossil fuel generation, particularly as the state pursues a net-zero economy.

Crypto-mining found welcome territory in upstate New York with low cost hydropower, cheap land and underused transmission infrastructure, Marie reports. New York City’s new mayor, Eric Adams, is also a vocal supporter of cryptocurrency. But with more power demand, the state could be called to tap into reserve fossil power plants usually only used a few times per year.

“It’s an absolute priority,” state Sen. Kevin Parker said of the moratorium. “Anything that does not fall in line with the [climate law] can’t continue to operate and so no one has made an argument to me from the crypto side that their projects are sustainable.” Read more from Marie on the balance state lawmakers are seeking between supporting a booming industry and upholding their climate commitments. READ MORE

Excerpt from Politico's Morning Energy: DEMS PROD CRYPTOMINING'S ENERGY HABITS: Sen. Elizabeth Warren, along with seven of her Democratic peers, is demanding details from some of the biggest cryptocurrency miners on their power consumption and environmental impact. Cryptomining is extremely energy intensive, with its high footprint drawing increased scrutiny from climate-conscious lawmakers.

“The extraordinarily high energy usage and carbon emissions associated with Bitcoin mining could undermine our hard work to tackle the climate crisis — not to mention the harmful impacts crypto mining has on local environments and electricity prices,” Warren said in a statement.

Signatories to the letters include Sens. Sheldon Whitehouse (D-R.I.), Jeff Merkley (D-Ore.), Maggie Hassan (D-N.H.), and Ed Markey (D-Mass.), as well as Reps. Katie Porter (D-Calif.), Rashida Tlaib (D-Mich.), and Jared Huffman (D-Calif.). Sam Sutton has more for Pros. READ MORE

Excerpt from Energy and Environmental Study Institute: Cryptocurrency mining accounts for about 0.59 percent of global electricity consumption—more than the entire nation of Argentina. Much of this energy is fossil fuel-based. For example, Kazakhstan generates some of the dirtiest energy in the world, and is also the second-biggest crypto-mining country, making its cryptocurrency especially carbon intensive. READ MORE