Crypto&x27s Climate Impact: 8 Claims, Fact-Checked | Time

cryptocurrencies are bad for the environment; at least, that’s what most people online seem to believe. Pro-cryptocurrency posts on social media are often flooded with angry comments about the industry’s huge contribution to greenhouse gas emissions. Studies estimate that bitcoin mining, the process that protects the bitcoin network, uses more energy globally per year than most countries, including the philippines and venezuela.

On the other hand, members of the crypto community argue that crypto mining is actually good for the environment in several crucial ways. they say it offers a new energy-hungry market that will encourage renewable projects. In the long run, they say, cryptocurrencies will revolutionize the energy grid and suck up excess energy that would have otherwise gone to waste.

Reading: Bitcoin climate change impact is under

As lobbyists have launched arguments on both sides, crypto mining hopes for rapid expansion in the US. uu. they were affected. on June 30, when New York officials denied air permits for Greenidge Generation, a bitcoin mining operation, citing “substantial greenhouse gas (GHG) emissions associated with the project.” the decision could set a precedent for how local jurisdictions across the country deal with a highly controversial issue.

so which side is correct?

To investigate, time spoke with various energy and environmental experts to break down some of the main arguments from the crypto community. While some experts say there is potential for positive impact from crypto mining, most agree there is little sign the industry is headed in the right direction.

“There’s a narrow path where they could be useful to the energy system, but I don’t see that happening,” says joshua rhodes, an energy research associate at the university of texas at austin. and right now, he says, he’s already hurting himself. “To a large extent, they are probably adding to carbon emissions today.”

claim: crypto mining is based on renewable energy.

The bitcoin network relies on clusters of computers, all over the world, to execute complex mathematical equations. these computing centers act less like “miners” in the literal sense and more like guardians of the network, used for security and stability. the process, known as proof-of-work, is energy-intensive by design, to prevent hacks and attacks.

Cryptocurrency proponents argue that the proof-of-work process is becoming more energy efficient: that more and more miners are turning to renewable energy sources such as wind, solar, or hydropower, instead instead of coal or natural gas. however, a peer-reviewed study from earlier this year shows the opposite: that the bitcoin network’s use of renewable energy dropped from an average of 42% in 2020 to 25% in August 2021. being abundant, was the main catalyst for this decline.

Right now, the rate at which cryptocurrency miners use renewable energy sources is hotly contested. The Bitcoin Mining Council, an industry group, argues that 60% of mining comes from renewable sources, which is 20 percentage points higher than the number listed by the Cambridge Center for Alternative Finance. george kamiya, energy analyst at the international energy agency, says that while the bitcoin mining council is likely to have access to more data, their numbers come from a self-reported survey that lacks methodological details, and he encouraged them to share the underlying data and methodology. with outside researchers like cambridge to increase your credibility.

regardless of which statistic is closer to the truth, there are still many mining operations that use ungreen energy sources. in new york, greenidge repurposed a previously closed coal-fired power plant. it now runs on natural gas, which is also based on fossil fuels. Yvonne Taylor, vice president of Seneca Lake Guardian, an environmental nonprofit, told Time in April that Greenidge would emit “more than a million tons of CO2 equivalents into the atmosphere each year, plus harmful particulate matter.” p >

A Greenidge representative wrote in an email to Time that the company has offered to reduce its greenhouse gas emissions by 40% of currently allowed levels by 2025, and that it plans to be a “power generation facility with zero carbon emissions. ” by 2035. The company also plans to appeal the denial of its air permits and remain operational.

claim: crypto mining will lead to a renewable energy boom.

If crypto mining isn’t powered by renewable energy right now, could it be in the future? fred thiel, the chief executive of crypto mining company marathon digital holdings, has announced his intention to make the company fully carbon neutral by the end of this year, saying that companies like his could have a big impact on the future of renewable energy energy industry.

It’s worth noting that many cryptocurrencies already use processes that consume much less power than bitcoin’s proof-of-work. Smaller blockchains like Solana and Avalanche use a security mechanism called Proof-of-Stake, which Ethereum Foundation researchers say reduces energy use by more than 99% compared to the Bitcoin system. Ethereum, the second largest blockchain behind bitcoin, is in the process of switching from proof-of-work to proof-of-stake this year.

It doesn’t look like bitcoin is going to stop being proof-of-work any time soon. But renewable energy developers need customers to grow, and proof-of-work miners provide exactly that, Thiel argues. As an example, Thiel suggested that there are wind farms in Vermont that don’t have the ability to sell their power due to their remote location and lack of transmission lines. putting a crypto mining plant on top of the farms would theoretically give them immediate income. “If this country’s goal is to convert to green or sustainable forms of energy for the majority of our energy use by 2050, the only way that will happen is if power generators have an incentive to build the power plants,” Thiel says. .

but thiel declined to name the vermont wind farms, and a follow-up email to a marathon representative asking for the name of that operation or any similar operation went unanswered. most experts discussed the idea that there has been some kind of boom in renewable energy due to cryptocurrencies. “I am not aware of any specific examples where a major crypto mining project has directly boosted, and additionally, renewable energy production,” kamiya wrote.

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“The proof is in the pudding, and I haven’t seen that play out in the state of Montana,” says missoula county commissioner dave strohmaier, whose county was home to energy-intensive mining operations that rankled some local communities, which led to local government. to restrict the ability of miners to establish new operations.

joshua rhodes says that texas counties were “filled with renewable projects being built and started up” even before the bitcoin mining rush. he also argues that even if cryptocurrencies fueled a renewable energy boom, they may not even be helping the right places. While wind and solar power is plentiful in West Texas, for example, it requires extensive infrastructure and transmission lines to bring that power back east to cities that desperately need it, like Houston and Dallas. “All the cheap electricity can’t go out,” he says.

And even if it were true that crypto mining is creating a rapidly accelerating demand for solar and wind farms, which, again, does not yet appear to be the case, there is the problem of where to locate them. many communities or organizations have opposed them for various reasons, from aesthetic to conservationist. in new york, assemblywoman anna kelles, who spearheaded a bill to impose a moratorium on crypto mining in the state, says an influx of crypto-driven solar and wind operations would be “directly competing with farmland in the new york state at a time when it is increasingly becoming the nation’s breadbasket due to climate change.

With high resistance and long timelines for erecting wind and solar projects, impatient crypto miners are more likely to settle using other, less clean forms of energy. In Kentucky, abandoned coal mines are being repurposed into crypto mining hubs.

claim: crypto miners improve power grids

If cryptocurrency companies aren’t already fueling the renewable energy boom, then perhaps they’re helping in other ways, like making our power grids more resilient. Thiel argues that cryptominers are uniquely suited to helping networks for several reasons: that they can be quickly shut down during peak power usage hours in a way that, for example, pasteurization machines cannot; that they can draw energy from the grid that would otherwise be wasted; that can be located in close proximity to power sources.

“We voluntarily scale back whenever the grid needs power,” Thiel says. “It acts as this ideal buffer for the network.” During the peak periods of Texas’ energy use, Thiel says, Marathon has reduced or cut off its network use for two to three hours a day.

flexible power charges are actually good for the grid, rhodes wrote in a study last year.

found that if crypto miners were willing to reduce their energy use during peak hours so that their annual load was reduced by 13-15%, then their companies would help reduce carbon emissions, improve the resilience of the network in periods of high stress. and also help encourage the switch to renewable energy.

but rhodes and others are skeptical that most miners are willing to trade on someone else’s schedule. crypto miners have shown that to maximize their profits, they prefer to trade 24/7. Strohmaier, in Montana, says that when he met with crypto miners operating in his county about their activity, the issues of resilience or shrinking the network “never once came up. we never had the feeling that there was a will to reduce even a nanosecond what they were doing. it was all, ‘we have to keep each of these machines running, and add more if we are able to remain viable,’” he says.

Thiel says that when there isn’t enough power from wind farms to power Marathon’s plants, since the wind doesn’t blow all the time, the company partially supplements it with natural gas from the grid. When asked for a breakdown of Marathon’s energy usage, a representative wrote in an email: “We are still in the process of installing miners in Texas. it is difficult to estimate what the final combination will be.”

claim: cryptominers are simply using energy that would have been wasted.

a lot of electricity is wasted in the us. uu. and crypto miners hope to take advantage of it. The oil extraction process, for example, produces a natural gas byproduct that many companies simply choose to burn (burn and waste) rather than build the infrastructure to capture it. But in North Dakota, crypto miners have signed an agreement with Exxon to set up shop directly on the site and use gas that would have been flared for new mining operations.

some experts say this process could still be very damaging. “I don’t see that as a benefit — they’re still flaring the gas,” says Anthony Ingraffea, a professor of civil and environmental engineering at Cornell University who co-wrote a 2011 paper on the environmental dangers of natural gas extraction. .

Furthermore, argues Ingraffea, by giving Exxon additional business at its oil drilling sites, crypto mining theoretically incentivizes the fossil fuel industry to keep investing in oil drilling. Kamiya maintains that there are other productive uses for flared gas, including producing electricity for sale to the grid, but that crypto mining “could discourage the operator from finding other uses and markets for its gas that can deliver further emission reductions.” /p>

and crypto miners are having trouble even under ideal energy circumstances. An article published this month by the Coinbase Institute argues that in Iceland, a “new gold rush” of mining activity has had minimal environmental impact due to the country’s “abundant geothermal energy.” But in December, the country experienced a severe electricity shortage, prompting its main utility provider to announce that it would reject all future crypto mining power requests.

claim: some crypto mining operations are already carbon neutral.

last year, new york crypto mining facility greenidge generation tried to quell criticism about its environmental impact by announcing its intention to become carbon neutral. In a press release, the company said it would buy carbon offsets and invest in renewable energy projects to account for its gas-based emissions.

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Replacing fossil fuel-based energy with renewable energy will surely be an environmental good. but the carbon offsets are not so clear cut. the offsets industry has been criticized by many scientists who say that many of these projects are poorly defined and not as useful as they seem; that it is common for projects that do not have a positive environmental impact to be rewarded on technicalities. offsets essentially allow companies to pay to continue polluting. Greenpeace even called the entire system “a distraction from real solutions to climate change.”

Carbon offsets “don’t reduce global emissions, they just move them around the world,” says ingraffea. she argues that they should only be used for emissions that are impossible to reduce.

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claim: Data centers are just as bad for contamination as crypto mining operations.

many crypto miners feel unfairly targeted for their environmental impact, believing that data centers, which receive far less scrutiny, are equally responsible for increased carbon emissions.

multiple experts disagree. “Cryptomining consumes about twice as much electricity as Amazon, Google, Microsoft, Facebook, and Apple combined,” says Kamiya.

jonathan koomey, a researcher who has been studying information technology and energy use for more than 30 years, says the two categories of machines are moving in opposite directions in terms of efficiency. a 2020 study he co-authored found that while the computing capabilities and output of regular data centers had grown tremendously between 2010 and 2018, their electricity use barely increased. Meanwhile, in bitcoin mining, “there is a structural incentive for the whole system to become less efficient over time,” he says. refers to the fact that, in general, bitcoin miners are forced to solve increasingly difficult puzzles over time to keep the blockchain running, and the computing power to perform those tasks requires ever-increasing amounts of energy.

claim: Christmas lights consume more electricity than bitcoin.

This statement has been repeated over and over again by bitcoin mining advocates, including thiel in our interview, to divert attention from bitcoin mining to other great uses of electricity. it is also completely unfounded. The last major study on Christmas lights came from an article written in 2008, which placed their electricity usage in the US. uu. to 6.63 terawatt hours of electricity per year. (The document noted that the figure would only decrease as LED bulbs became more common.) the bitcoin network, by comparison, consumes an estimated 91 terawatt hours per year.

Popular online posts on this topic defending bitcoin, including from digital mining operator mawson, fail to cite any sources for their data or alter the findings of trusted institutions.

claim: bitcoin’s added value to society will make it all worthwhile.

koomey and other experts say that over the past decade there has only been one surefire reason why the environmental impact of crypto mining can sometimes decrease: when cryptocurrency prices decline. During these dips, miners have no incentive to stay in the market or buy new equipment, and some go out of business, resulting in fewer greenhouse gas emissions. In fact, as the value of Bitcoin fell from $40,000 to $20,000 from the end of April to June, industry energy use also fell by a third according to the Cambridge Bitcoin Electricity Consumption Index.

then why the us? should allow crypto miners to continue, if they are harming the environment? cryptocurrency enthusiasts argue that the long-term social and economic benefits of their industry will offset their electricity use, just as the computer revolution did before it.

koomey says that when weighing the potential environmental impacts of cryptocurrencies, it’s important to take a broad approach: think about what cryptocurrencies could add to society as a whole compared to other energy consumers.

“Sure, Google uses a measurable amount of electricity, but I’d say that’s a good use of that electricity,” he says. “so you have to come back to this question for crypto folks, in addition to how much electricity they use: what business value are you delivering? How does this technology perform better than the technology it replaces? Is it worth it?”

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