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Los Angeles: When China banned bitcoin mining last year, it launched a gold coin in the United States, with states like New York, Kentucky and Georgia becoming major mining hubs, according to Reuters.
New York State Assemblyman Clyde Vannell couldn’t be happier.
“It’s a blessing that this is happening here,” he said, referring to the jobs the industry could create.
But Anna Kellis, associate member of the association, is pushing legislation that would severely curb energy-starved mining in New York, and halt new mining operations that bring new fossil energy sources online.
“We have an industry that will soon derail our climate goals,” she warned.
Controversy over the environmental impact of bitcoin mining is growing in the United States, with major environmental groups recently escalating a national pressure campaign criticizing its use of fossil fuels as the country tries to reduce its emissions to meet climate change goals.
Bitcoin miners maintain a decentralized digital currency through a network of power-intensive computers — whose precise energy consumption and carbon emissions are difficult to measure.
A 2021 estimate from industry group CoinShare found that the network is 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 percent of global emissions by 2030.
But a study published by economist Alex de Vries, a frequent critic of bitcoin’s energy use, in the energy journal Joul in March estimated that it produced carbon dioxide equivalent to the Greek nation.
“We should push bitcoin mining to decarbonise, just like any other industry,” said Margot Baez, a climate change scientist at the Bitcoin Policy Institute, a think-tank.
“But the reality is that compared to other industries, bitcoin uses a tiny amount of energy,” she said.
Bitcoin promoters say that other activities – such as turning on Christmas lights – consume roughly equivalent amounts of energy as the network, and that Bitcoin’s social function is worth the energy burden.
They also point to a few operations that run on renewable energy – notably in Texas where solar and wind farms are brought online to power bitcoin mining.
But in places like New York and Pennsylvania, miners are reviving closed fossil fuel stations to power their work — and environmental groups have mobilized.
“We are in a climate crisis,” Tefere Gebre, chief program officer at Greenpeace USA, said at a press conference organized by environmental groups critical of cryptocurrency.
He said bitcoin mining is “pushing us in the wrong direction at the wrong time.”
New York regulations
A law drafted by New York Assemblyman Kellys, who walked out of the state’s Natural Resources Committee in March, would halt new fossil-fuel-powered bitcoin operations there.
“New York will signal that it is closed for business,” said Kyle Schnepps, director of public policy at New York-based Bitcoin and Foundry Consulting, which opposes the bill, if passed.
The fight over bitcoin mining erupted in New York last year as residents of the small town of Tory protested against a bitcoin mining company that had seized a coal-fired power plant there and turned it into a natural gas-fired mine.
Environmental group Earth Justice has identified a number of other plants across the state and said they may be undergoing similar shifts — and legislator Kelles has brought together more than 40 co-sponsors for legislation that would ban such activity.
Schneps, with Foundry, notes that some bitcoin mining is driven by renewable energy, including hydropower, and that it can bring economic benefits.
He said his company has more than 115 employees in New York, working in a range of roles from software engineering to sales.
New York Representative Vannell, who opposes a mining moratorium, worries it could turn miners off, saying lawmakers should work with industry to address any environmental concerns.
But Kelis said that without regulation to ban fossil-fueled bitcoin mining, more dirty power plants will come online in the state, undermining emissions reduction targets.
“Let’s stop this now,” she said. “We’ve spent 30 years removing these filthy plants from the net.”
Scientists say global fossil fuel emissions must fall by a whopping 45 percent by 2030 to avoid the worst effects of climate change, including wildfires, floods and increasingly dangerous heat waves.
But despite many pledges to cut emissions, carbon pollution continues to rise, with the United Nations forecasting a 16 percent increase by 2030, compared to 2010 levels, even if the government’s current plans to cut carbon 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 on a national scale, New York is a strong player,” said Mandy Deruchi, an attorney with Earth Justice, which is filing a lawsuit to block the expansion of the Torrey bitcoin mine on environmental grounds.
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 the impact of bitcoin on the environment.
Groups are calling for changes to the Bitcoin software code to replace the “Proof of Work” protocol — which generates new coins and maintains the network by powering power-hungry computers — with a lower-emissions “Proof of Stake” mechanism that would reward those who already own the coin .
The campaign, which featured major advertisements in national newspapers, was funded by a $5 million donation from Chris Larsen, co-founder of the proof-of-stake cryptocurrency Ripple.
“We are very serious about this. This problem must be resolved,” said Ken Cook, chair of the Environmental Working Group.
He said the mainstream environmental movement has been slow to recognize the threat of bitcoin mining but that the groups are now starting to act.
“We are on the way to a good transition” away from fossil fuels — but fossil-fuel-powered bitcoin mining “could offset that shift in a very important way,” he said.
Bayes, of the Bitcoin Policy Institute, opposes carbon-based bitcoin mining but said critics do not understand that mining is inherently inconsistent with climate goals, pointing to US mining operations that fund new wind and solar energy.
Gloria Zhao, a developer working on the Bitcoin platform’s platform, said the mining community was “primarily treated as a joke” by environmentalists to make changes to Bitcoin’s software, in part because it was not introduced through an official mechanism.
Zhao and other Bitcoin proponents argue that Crytocurrency’s energy-intensive design is important to maintaining the security and decentralization of the network, allowing anyone with access to a computer and electricity to participate.
But Larsen, who funded the environmental campaign, said that as more and more mainstream financial institutions invest in bitcoin, pressure will increase on software developers to align the cryptocurrency with broader environmental, social, and governance (ESG) goals.
“This will put pressure on core developers to make this change,” he said. “That’s the goal.”
– Thomson Reuters Foundation