Cryptocurrency mining industry seeks the fastest energy that can serve its needs and looks for minimal regulation and oversight.
Transaction fees for crypto currencies can be next to nothing, and the traceless, decentralised monetary system has certainly caused a lot of buzz. But scientists are increasingly concerned about its environmental costs.
Cryptocurrency mining has grown explosively in the US since 2020. Today, an estimated 38 percent of Bitcoin is mined in the US, resulting in nearly 30 million tons of excess CO2 emissions in the last year alone.
Environmentalists warn that the currency is not only devastating to the planet but o communities living close to mining farms - especially as crypto-currencies run primarily on fossil fuels.
Stress
Bitcoin consumed 36 billion kilowatt-hours of electricity from 2021 to 2022, — as much as all the electricity consumed in Maine, New Hampshire, Vermont, and Rhode Island put together in that same time period.
The massive energy consumption of cryptocurrency mining threatens to undermine decades of progress toward achieving climate goals and reducing local pollution.
Reports also warn that cryptocurrency mining practices raise costs and risks for utilities and their ratepayers, can stress electric grids, and flood communities with noise.
Oversight
The cryptocurrency mining industry already uses half the electricity of the entire global banking sector, and it will overtake the sector in two years if current trends continue.
Meanwhile, the ratio of Bitcoin's energy consumption to humans who have Bitcoin is extremely high.
Rather than investing in long-term energy infrastructure that benefits the grid, the cryptocurrency mining industry seeks the fastest energy that can serve its needs and looks for minimal regulation and oversight.
In practice, that translates to mining cryptocurrency at coal and gas plants, straining the electric grid in Texas, and tapping into power grids that are often fossil-fuel heavy.
Most mining facilities draw their power from the grid – this means electricity is generated by whatever existing energy is in place in the region.
Wasted
Defenders of crypto claim that mining is spurring new renewable development and stabilising the grid. But no grid anywhere in the US is 100 percent renewable yet.
Clean energy allocated to cryptocurrency mining doesn't do anything to decarbonise the grid, and there are few mining facilities that are building renewables to even power their own operations, let alone send to the grid.
Cryptocurrency mining proponents claim that mining only uses "wasted" energy from solar or wind overproduction.
But mining operations consume energy 24 hours a day, not just when there is excess solar or wind — meaning mining operations would fail to be profitable using only the hours when wasted energy is available.
Red flags
Cryptocurrency mining industry seeks the fastest energy that can serve its needs and looks for minimal regulation and oversight.
Per coin climate damages from Bitcoin were increasing, rather than decreasing as the industry grew, a Scientific Reports study called Economic Estimation of Bitcoin Mining's Climate Damages Demonstrates Closer Resemblance to Digital Crude than Digital Gold had found.
On average, each $1 in Bitcoin market value created was responsible for $0.35 in global climate damages, which as a share of market value is in the range between beef production and crude oil burned as gasoline.
According to the paper, "taken together, these results represent a set of sustainability red flags." And while proponents refer to cryptocurrency as 'digital gold,' from a climate damages perspective it operates more like 'digital crude', the study has also pointed out.
Incorrect
By mid-September 2022, approximately 199.65 million metric tons of CO2 were attributed to the Bitcoin network, and 92 percent of those emissions occurred since 2018, according to a University of Cambridge's Judge Business School paper called A Deep Dive Into Bitcoin's Environmental Impact.
Coal is the largest single energy source for Bitcoin mining worldwide, accounting for 36.6 percent of it, findings also found. Fossil fuels account for nearly two-thirds of Bitcoin mining's total electricity mix.
This finding deviates wildly from the industry's likely incorrect estimate that 59.5 percent of mining comes from sustainable energy sources.
Proof-of-work cryptocurrency mining is an extremely energy intensive process that threatens the ability of governments across the globe to reduce our dependence on climate-warming fossil fuels.
Cooling
Mining requires thousands of machines whirring constantly to solve complex equations. The more machines that are running, the faster a coin is mined. Each one of these machines requires energy to run, plus more energy for cooling.
Globally, Bitcoin mining consumes more energy each year than the entire country of Argentina. In the US alone, Bitcoin mining produces an estimated 40 billion pounds of carbon emissions each year.
Cryptocurrency mining facilities are major emitters of air pollutants. And when cryptocurrency miners rely on the public grid, they can stick everyday people with the bill.
A 2021 study estimates "the power demands of cryptocurrency mining operations in upstate New York push up annual electric bills by about $165 million for small businesses and $79 million for individuals."
Action
Without action to limit cryptocurrency mining, we will not meet the goals set forth by the Paris Agreement and Intergovernmental Panel on Climate Change to limit warming to two degrees Celsius.
Cryptocurrency mining operations harm local communities, including by increasing local pollution and impacting electricity rates and delivery.
If you wish to read more on this subject, Earthjustice and the Sierra Club released The Energy Bomb: How Proof-of-Work Cryptocurrency Mining Worsens the Climate Crisis and Harms Communities Now.
The guidebook informs on the negative environmental impacts of cryptocurrency mining in the United States, including a mythbusting section that tackles the industry's greenwashing talking points to justify its massive energy use.
This Author
Yasmin Dahnoun is assistant editor at The Ecologist. This article is primarily based on a report from Earthjustice, a nonprofit public interest environmental law organisation.
