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“Cryptocurrency Mining Is Poisoning Our Communities,” US Rep. Says
Democrats are on the offensive over Bitcoin’s potential impact on the environment. Democratic members of Congress have written to the EPA over the rise in energy use by the Bitcoin mining industry.
Himanshu S.
1:01 5th May, 2022
Policy1

Environmentalists claim Bitcoin’s energy mix is a red herring, distracting from its estimated 20-fold increase in energy consumption over just five years

Rhetoric dividing crypto critics and proponents has been galvanized by dueling letters sent to the US Environmental Protection Agency (EPA), which put a spotlight on crypto mining.

On one side, 23 Democratic members of Congress co-signed a scathing rebuke of the mining industry’s purported environmental and community impact.

Their letter, submitted by Representative Jared Huffman (D-CA) last month, asked the EPA to ensure that crypto mining outfits across the US are operating within environmental regulations, particularly the Clean Air and Water Acts.

Huffman said the Bitcoin-inspired reopening of gas and coal power plants, like Greenidge in upstate New York and the Hardin plant in Montana, “undermine our battle to combat the climate crisis.”

“While some facilities claim to be ‘cleaner’ by creating energy from coal refuse, these coal-fired power plants still emit hazardous air pollutants and leak toxic contaminants into our waterways,” wrote Huffman. “Cryptocurrency mining is poisoning our communities.”

It sounds dramatic, but that ‘poisoning’ doesn’t just relate to the potentially outsized greenhouse gas emissions of crypto mining outfits. Residents across the US (“from New York, Tennessee, to Georgia”) have complained about noise pollution tied to new Bitcoin mining facilities which house hundreds of specially-built rigs that can indeed be very loud.

Another classic crypto criticism from Huffman was Proof-of-Work’s (PoWs) supposed problem with electronic waste (e-waste). The two most popular cryptocurrencies, bitcoin and ether, are mined with PoW, which relies heavily on spent electricity to distribute new cryptocurrency and process transactions.

It’s been suggested that mining rigs last on average just 1.29 years due to intentional overuse. This leads the Bitcoin industry to produce 30,700 tons of electronic waste every year (about as much as the small IT equipment disposed of by the Netherlands), Huffman told the EPA, citing research from controversial figure Alex de Vries.

De Vries previously worked as a data scientist for the Dutch central bank, focusing on financial economic crime. He now runs a website, Digiconomist, modeling the environmental sustainability of cryptocurrencies like bitcoin and ether.

“The industry needs to be held accountable for this waste and discouraged from creating it,” wrote Huffman.

Mining energy mix is a ‘red herring,’ says activist

Huffman’s letter stated that Bitcoin annually produces carbon emissions similar to that of Greece. (Proponents dispute this statistic, citing imperfect retroactive estimates of Bitcoin’s energy consumption.)

And so, the Holy Grail for both crypto critics and advocates seems to be an industry that re-enforces robust energy grids powered by renewable energies. After all, Bitcoin may consume lots of energy (and even more in the future if prices continue rising), but if the electricity consumed is renewable then it should mitigate environmental concerns.

The Bitcoin industry responded earlier this week with their own letter sent via the Bitcoin Mining Council, a group spearheaded by MicroStrategy CEO and famed Bitcoin bull Michael Saylor. It was formed after Tesla stopped accepting Bitcoin for payments, for which Elon Musk cited concerns over the network’s carbon footprint.

The group has tasked itself with tracking the energy mix consumed by the industry. Its most recent report published in April, collated self-reported figures from entities contributing around half of Bitcoin’s hashrate and found the network was powered by nearly 60% sustainable energy sources — up from 37% in the first quarter of 2021.

With this in mind, is there cause for concern? Scott Faber, who spearheads Government Affairs at activist non-profit Environmental Working Group, thinks so.

Faber highlighted recent warnings shared by the United Nations’ Intergovernmental Panel on Climate Change (IPCC), which explicitly cited the increasing electricity consumption of cryptocurrencies like bitcoin as a “growing concern.”

IPCC’s recent Mitigation of Climate Change report did admit there was “uncertainty” surrounding the exact carbon footprint of blockchains and conceded that the crypto industry could mitigate damage by decarbonizing.

Still, Faber noted that crypto’s sharp rise in electricity consumption far outstrips other industries and has diverged from more traditional data centers. He described the climate impact of electricity generators as a red herring; strictly the growing demand for electricity by digital currencies that rely on PoW is cause for alarm among EWG, Greenpeace and the IPCC.

“When you look at electricity demand by data centers, the IEA found that demand has been flat even though internet traffic and data center workloads have increased significantly,” Faber said.

Other data transmission networks, like mobile communications, are actually becoming more energy efficient, he explained. It is the exponential increase in electricity consumption that needs to be curbed, the energy mix powering that consumption is just details at this point.

“The really important point is the trend — the 20-fold increase in just five years — especially in contrast to other sectors,” said Faber.

While that sentiment does hold a certain amount of weight, especially among climate activists, moves made by the Bitcoin industry to decarbonize or otherwise ‘go green’ shouldn’t be understated.

Swathes of mining outfits around the world have promised to go carbon-neutral, with some going to great lengths to ensure they do not use energy grids powered by carbon. Their reliance on fossil fuels could hurt in the long run should regulations be imposed that might mess with electricity supply, said mining expert Alejandro de la Torre. Uzbekistan recently moved to inspire miners to set up their own solar panels, for example, charging them double to plug into the standard grid.

In any case, there’s a problem: Faber doesn’t believe the claims of the Bitcoin Mining Council. “I think until a government body or a trusted third party is given the job of measuring, reporting, and verifying those claims, they are simply that,” he said.

Faber explained there are plenty of examples of where the government, through legislation or other means, requires reporting by industry. One example he gave was releases of toxic chemicals into the environment by industry — every year manufacturers have to report to the EPA volumes of toxic chemicals released into the environment.

Is it realistic for the bitcoin industry to accept US government interference in how it operates? De La Torre replied that the Texas power grid, ERCOT, already publishes energy mix data, allowing third parties to verify energy mixes. He said that more ways to verify mixes powering energy grids would be a good thing.

Carter was more pointed in his response: “Completely ludicrous and unrealistic, and an insane standard compared to every other industry,” said Carter. “Buying electricity from the grid and doing computation isn’t exactly similar to producing toxic chemicals.”

But if the activists get their way, it could very well be in the eyes of regulators.

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