Fights over bitcoin’s energy use escalate across the US
With bitcoin prices breaking records in recent months, fights over the cryptocurrency’s energy usage and environmental impact are escalating across the US.
President Joe Biden’s administration is demanding the industry disclose how much electricity mining operations use, while cryptocurrency groups are pushing for legislation to shield mines from local regulations that limit their expansion.
Bitcoins are awarded to miners competing against each other to complete energy-intensive computations.
Bitcoin underwent what is known as “halving” on April 19 — cutting by half the rewards cryptocurrency miners receive for creating new tokens, making it more expensive for them to put new bitcoins into circulation.
How that will affect bitcoin production and its energy use is not clear, but miners have been buying up equipment to prepare for more intense competition.
ENERGY GOALS
“We are not going to meet our clean energy goals if we continue to incentivise this kind of electricity use,” said Mandy DeRoche, a lawyer at the environmental group Earth-Justice, which has sued to block permits for mining facilities.
The industry has long argued that it should be treated just like any other power consumer.
“Why should we be picking winners and losers of who gets to use our energy?” asked Tom Mapes, founder of the Digital Energy Council, which counts major bitcoin miners among its members.
In his budget proposal released in March, Biden proposed a 30% excise tax on bitcoin energy use — a move that Wyoming senator Cynthia Lummis, a supporter of bitcoin mining, said would destroy the industry in the US.
Estimates from a model developed by the Cambridge blockchain network sustainability index show a steady uptick of the greenhouse gases emitted from mining operations
— from 48-million tonnes in 2022, to 61-million tonnes in 2023.
The emissions for 2024 could be as much as 90-million tonnes, the model shows.
While some publicly traded bitcoin mining companies release details of their energy use, there is no reliable data on exactly how much electricity the industry as a whole consumes.
The US energy information administration has estimated that digital currency mining in the US may consume 0.6%-2.3% of all power, but that data is not based on direct reporting from facilities — some of which can consume as much energy as an entire town.
A Riot Blockchain facility in Rockdale Texas, consumes as much energy as the surrounding 300,000 homes — a figure that environmental groups often use to paint the industry as wasteful.
Bitcoin mining firms point out that unlike homeowners, miners participate in “demand response” programmes that allow them to turn off their machines to support the grid during times of strain.
“We are a tool in the tool chest to balance our energy system,” Mapes said.
DISCLOSE USAGE
In January, the Securities and Exchange Commission approved a bitcoin-ETF fund, which funnelled several billion dollars of new investment into the industry, a move that inflamed environmental groups.
The next month, the department of energy sent notices to 82 bitcoin miners demanding they disclose their energy usage, but Riot Blockchain and the Texas bitcoin Council won a lawsuit that temporarily blocked the survey.
As the government seeks more data on the industry, fights over building and expanding bitcoin mining facilities are spreading around the country, said DeRoche with Earth-Justice.
Her group is litigating a suit to block permits for a mining facility in New York.
Earlier this year communities in Arkansas brought nuisance claims against mines because of the noise they make.
In April, the Arkansas legislature advanced two new laws that would impose new licensing requirements and noise restrictions on mines in the state.
Last year, New York became the first state in the US to put a temporary moratorium on new bitcoin operations that draw on fossil fuels.
Mapes, with the Digital Energy Council, said that legislators should not be the “power police”, choosing which industries get to draw on energy resources.
POLLUTION
In March, a community group in Pennsylvania filed a lawsuit against a bitcoin mine and government regulators who approved it, arguing that it contravenes a constitutional provision that guaranteeing citizens a right to a clean environment.
“We are dealing with more air pollution and more water pollution,” said Linda Christman, president of nonprofit group Save Carbon County that filed the lawsuit against regulators and Marathon Digital Holdings, a mining company that burns coal waste and tyres to power its mining operation in the area.
The company declined to comment on the lawsuit.
Some bitcoin industry groups have been pushing state-level laws that would make it more difficult for local communities to independently regulate mining operations in their areas.
The Satoshi Fund, the group behind the efforts, did not immediately respond to a request for comment.
The rules, known as the Blockchain Basics Bill, have already been introduced in more than half a dozen states.
Mapes said that mining operations had an obligation to win over communities that they do business in. “There are companies that do this correctly,” he said. “And they can be stewards of the community.”