Crypto Mining Environmental Scrutiny Persists Despite Price Drop

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Bitcoin’s price slump over the past year hasn’t dampened interest from cryptocurrency miners or scrutiny from regulators and environmental groups on the climate effects and local impacts of power-hungry facilities.

A report released Wednesday by the Environmental Working Group documents the air, climate, water and noise pollution caused by cryptocurrency mining in six US communities. The report comes as federal and state officials and lawmakers debate whether to welcome or discourage fledgling industry in the wake of New York’s two-year ban on some new crypto mines pending a state environmental review.

Environmental groups say crypto mining is a climate and community risk because it relies heavily on electricity from fossil fuels. A case study in the EWG report, a Blockstream mining facility in Adel, Ga., generates so much noise from cooling fans and other equipment that local resident Annette Tiveron had to install 11 layers of insulation on the wall from his bedroom in a failed attempt to block out the sound.

The facility has been closed for the past eight months, but when turned on, it looks like 1,000 jet engines blasting off at once, Tiveron said. You can hear it five miles from here. It undulates our vibration pond with machines. It literally shakes your brain.

Chris Cook, Chief Information Officer of Blockstreams, said the company has completed noise studies by third-party engineering firms that demonstrate compliance with local noise ordinances. He also said the company had spent more than $250,000 on noise mitigation measures, including building sound berms and planting trees to absorb sound.

No signs of slowing down

The industry shows no signs of slowing down despite market and regulatory pressures.

Mines, or mining farms, can consist of thousands of servers stacked in warehouses. They deploy raw computing power to solve a series of complex mathematical problems, consuming more electricity each year than many countries, including Pakistan and Finland, according to the Cambridge Bitcoin Electricity Consumption Index.

Last November, Bitcoin prices fell below $16,000, a dramatic drop from a high of around $64,000 a year earlier. In the same month, FTX, a cryptocurrency exchange, collapsed and New York Governor Kathy Hochul (D) announced the shutdown of new crypto mining facilities powered by fossil fuel power plants. .

Yet this month, global cryptocurrency electricity demand rose near an all-time high at nearly 16 gigawatts, according to the index. Annualized consumption of 139 terawatt hours is about equal to all lights and televisions in the United States combined, the index estimates. Mining difficulty, a measure of the number of people trying to buy Bitcoin, recently hit an all-time high.

Mining activity as a whole won’t necessarily decline as it faces lower prices and comes under scrutiny from regulators, said David Zell, founder of the Bitcoin Policy Institute. Bigger, more efficient companies that have better power deals typically buy the assets of those struggling miners who didn’t have enough cheap power to compete, Zell said.

As the industry consolidates, miners have options: incentives and friendlier rhetoric offered in other states, such as Montana, Mississippi and Missouri, which are pursuing bills on the right to mine that block any effort to raise electricity prices or create zoning restrictions for miners. , says Zell.

And prices are up around 70% since November, rebounding to around $28,000.

Some industry players say the environmental damage they cause has been exaggerated. One of the companies mentioned in the EWG report, Greenidge Generation Holdings Inc., operates a natural gas plant in the Finger Lakes region of upstate New York to supply a commercial crypto-mining. The report notes that the plant pollutes the water of Seneca Lake.

But Dale Irwin, chairman of Greenidges, said the former coal plant also supplies power to the state grid and helps the local economy.

Federal intervention

Environmental groups continue to oppose crypto mining. In March, activists from Greenpeace USA brought an 11-foot-tall art installation to two offices of Fidelity Investments in New York to demand that the financial firm reduce its support for Bitcoin.

The Biden administration has begun taking steps to rein in the sector, including a proposed 30% excise tax on electricity for digital mining in the House’s fiscal year 2024 budget request. White. The tax would be phased in, starting at 10% in the first year, increasing to 20% in the second and 30% thereafter.

Ali Zaidi, the White House national climate adviser, recently said the crypto market needs to pull itself together to be clearer about disclosing its environmental footprint and ensuring that from now on the path to follow must be done in a way that does not contribute to the climate crisis that we have.

But the White House is also in a sticky spot as President Joe Biden issued an executive order last March outlining his commitment to securing the United States’ position in digital assets, including supporting technological advancements that promote their growth. .

Federal agencies are still considering how to implement recommendations made by the White House Office of Science and Technology Policy in September. The Environmental Protection Agency is investigating the matter. The Department of Energy declined to say whether it would pursue White House-recommended efficiency standards for cryptocurrency mining.

About two dozen signatories recently sent a comment letter to the EPA urging it to treat cryptocurrency mining operations that violate air, water, and noise laws as a special target for enhanced application.

Congressional Democrats are also trying to rein in the sector. A bill by Sen. Ed Markey (D-Mass.) and Rep. Jared Huffman (D-California) would require underage gas-guzzlers to disclose their emissions. The measure would also require the EPA to conduct an in-depth study of the sector’s environmental impacts.

But those efforts likely seem doomed, given Republican opposition to crypto regulation. At a Senate subcommittee hearing in March, Sen. Pete Ricketts (R-Neb.), the panel’s leading Republicans, said cryptocurrency mining should be allowed to grow because it stimulates economy and create jobs.

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