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LOS ANGELES: When China banned bitcoin mining last year, it sparked a gold rush in American cryptocurrencies, with states such as New York, Kentucky and Georgia quickly becoming centers major mines, according to Reuters.
New York State Assemblyman Clyde Vanel couldn’t be happier.
“It’s a blessing that it’s happening here,” he said, pointing to the jobs the industry could create.
But fellow Assemblywoman Anna Kelles is pushing for legislation that would severely restrict energy-intensive mining in New York, placing a moratorium on new mining operations that bring new energy sources online. fossil.
“We have an industry that will soon derail our climate goals,” she warned.
Debate over the environmental impact of bitcoin mining is heating up in the United States, with major environmental groups belatedly mounting a national pressure campaign criticizing its use of fossil fuels as the country tries to cut emissions to meet climate change goals.
Bitcoin miners maintain the decentralized digital currency through a network of power-hungry computers – whose exact power consumption and carbon footprint are difficult to measure.
A 2021 estimate from industry group CoinShare found the network was responsible for less than a tenth of a percent of global emissions, while a separate report from New York Digital Investment Group said it could reach at most 1. % of global emissions by 2030. .
But a study published by economist Alex de Vries, a persistent critic of bitcoin’s energy consumption, in the energy journal Joul in March estimated that it produced the carbon dioxide equivalent of the nation of Greece.
“We should be pushing bitcoin mining to decarbonize, like any other industry,” said Margot Paez, a climate change scientist at the Bitcoin Policy Institute, a think tank.
“But the reality is that, compared to other industries, bitcoin uses an insignificant amount of energy,” she said.
Bitcoin boosters say that other activities – such as running Christmas lights – consume roughly equivalent amounts of power as the network, and that bitcoin’s social function is worth the energy charge.
They also point to a few operations powered by renewable energy, particularly in Texas, where solar and wind farms are coming online to power bitcoin mining.
But in places like New York and Pennsylvania, miners have revived shuttered fossil-fuel power plants to fuel their work — and environmental groups have stepped up.
“We are in a climate crisis,” said Tefere Gebre, Program Director of Greenpeace USA at a recent press conference hosted by environmental groups critical of cryptocurrency.
And bitcoin mining, he said, is “pushing us in the wrong direction at the wrong time.”
New York regulations
Legislation drafted by New York Assemblyman Kelles, who quit the state’s Natural Resources Committee in March, would impose a moratorium on new fossil fuel-powered bitcoin operations.
If passed, “New York will signal that it is closed for business,” said Kyle Schneps, director of public policy at New York-based bitcoin and advisory firm Foundry, which opposes the bill.
The fight against bitcoin mining in New York City began last year when residents of the small town of Torrey protested when a bitcoin mining company took over a closed coal-fired power plant and converted it into a a natural gas-fired mine.
Environmental group Earth Justice has identified a number of other factories in the state that it says could undergo similar conversions – and lawmaker Kelles has rallied more than 40 co-sponsors for legislation that would ban a such activity.
Schneps, with Foundry, noted that some bitcoin mines are powered by renewable energy, including hydroelectricity, and can bring economic benefits.
His own company has hired more than 115 employees in New York, working in a range of roles from software engineering to sales, he said.
New York Assemblyman Vanel, who opposes the mining moratorium, fears it will scare away miners, saying lawmakers should work with industry to address any environmental concerns.
But Kelles said that without regulations prohibiting fossil fuel-powered bitcoin mining, more dirty power plants would come back online in the state, jeopardizing its emissions reduction goals.
“Let’s pause on that now,” she said. “We spent 30 years removing these dirty factories from the network.”
Scientists say global fossil fuel emissions must fall by 45% by 2030 to avoid the worst impacts of climate change, including ever more dangerous wildfires, floods and heat waves.
But despite legions of emission reduction pledges, carbon pollution continues to rise, with the United Nations predicting a 16% rise by 2030, compared to 2010 levels, even though current government plans in reducing carbon emissions are met.
Those on both sides of the bitcoin divide agree that what happens in New York will have implications across the United States.
“When it comes to climate policy nationally, New York is a powerful player,” said Mandy DeRoche, an attorney at Earth Justice, who is now suing to block the expansion of Torrey’s bitcoin mine on grounds environmental.
The confrontation in New York coincides with a nationwide campaign by major environmental groups, including the Environmental Working Group and Greenpeace USA, to draw attention to bitcoin’s environmental impact.
The groups are calling for changes to Bitcoin’s software code to replace its “proof-of-work” protocol – which generates new coins and maintains the network by running power-hungry computers – with a “proof-of-stake” mechanism at low emissions that would reward those who already own the currency.
The campaign, which received major advertisements in national newspapers, was launched with a $5 million donation from Chris Larsen, co-founder of cryptocurrency Ripple.
“We are deadly serious about this. This problem needs to be addressed,” said Ken Cook, president of the Environmental Working Group.
He said the mainstream environmental movement had been slow to recognize the threat of bitcoin mining, but groups are now shifting into high gear.
“We’re on the way to a good transition ‘away from fossil fuels,’ he said — but fossil fuel-powered bitcoin mining “could really offset that transition in a very significant way.”
Paez of the Bitcoin Policy Institute opposes carbon-based bitcoin mining, but said critics fail to understand that mining does not inherently defeat climate goals, pointing out that US mining operations are funding new wind and solar generation.
Gloria Zhao, a developer who works on the bitcoin system’s core software, said the mining community has “basically treated as a joke” proposals from environmentalists to modify the bitcoin software, in part because they didn’t been submitted through a formal mechanism.
Zhao and other bitcoin proponents say the cryptocurrency’s energy-intensive design is important for maintaining network security and decentralization, which allows anyone with access to a computer and electricity to participate.
But Larsen, who funded the environmental campaign, said that as more traditional financial institutions invest in bitcoin, pressure will increase on software developers to align the cryptocurrency with environmental goals, governance (ESG) issues.
“This will put pressure on the core developers to make this change,” he said. “That’s the point.”
—Thomson Reuters Foundation