Earthjustice Backs Sen. Markey Bill to Crack Down on Negative Impacts from Cryptocurrency Mining

WASHINGTON, D.C. (03/06/2023) (readMedia)-- On Friday, Senator Ed Markey and Representative Jared Huffman re-introduced a bill that requires cryptocurrency mining companies to report their emissions and requires the EPA to investigate the industry's environmental impacts. On Tuesday, March 7, the Senate Environment and Public Works Subcommittee on Clean Air, Climate and Nuclear Safety will hold a hearing on the legislation, to which Earthjustice submitted testimony.

Earthjustice's testimony reads:

"In the year prior to July 2022, Bitcoin consumed an estimated 36 billion kilowatt-hours (kWh) of electricity, as much as all of the electricity consumed in Maine, New Hampshire, Vermont, and Rhode Island put together in that same time period. Top-down estimates of the electricity consumption of cryptocurrency mining in the United States imply that the industry was responsible for an excess 27.4 million tons of carbon dioxide (CO2) between mid-2021 and 2022 - or three times as much as emitted by the largest coal plant in the U.S. in 2021.

The past two years have demonstrated that the industry preferentially seeks readily- available energy and minimal regulation, re-starting defunct coal and gas plants, flooding the restructured electricity market in Texas, and tapping into rural power grids where regulators have little oversight. This explosive growth strains energy grids, raises retail electricity rates, and increases total carbon emissions and local air pollution."

And later, "The crypto-asset mining industry continues to be nebulous and opaque, with very little regulation or reporting standards. That makes it difficult to track and get a complete picture of its full impact. The Crypto-Asset Environmental Transparency Act will help us gain a better understanding of crypto's environmental impacts in the United States to better inform our policy solutions."

Read the full testimony attached and pasted below.

The National Coalition Against Cryptomining, made up of communities across the country directly impacted by energy-guzzling cryptocurrency mining facilities, also released testimony in support of the legislation.

In September 2022, the White House sounded the alarm about cryptocurrency mining - the Office of Science and Technology Policy released a report about the industry's climate threats and the need for regulation. But cryptocurrency mining continues to grow rapidly across the country. Earthjustice and the Sierra Club released a Guidebook, finding that in one year from mid-2021 to mid-2022, Bitcoin mining in the U.S. alone consumed as much electricity as four states combined, emitting 27.4 million tons of CO2 - equivalent to the emissions of as much as 6 million cars annually. More highlights from the Guidebook:

• Proof-of-work cryptocurrency mining has grown explosively in the United States since 2020. Today, an estimated 38% of Bitcoin is mined in the U.S, resulting in nearly 30 million tons of excess CO2 emissions in the last year alone.
• From mid-2021 to mid-2022, Bitcoin consumed 36 billion kilowatt-hours of electricity - as much as all of 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. In addition, cryptocurrency mining practices raise costs and risks for utilities and their ratepayers, can stress electric grids, and flood communities with noise.
• 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 actually 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. That means electricity is generated by whatever existing energy is in place in the region. No grid anywhere in the U.S. is 100% renewable yet.
• Proponents also claim that mining is spurring new renewable development and stabilizing the grid. But clean energy allocated to cryptocurrency mining doesn't actually do anything to decarbonize 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.

Read the guidebook here.

Background

In its recent report, the Intergovernmental Panel on Climate Change (IPCC) warned that global warming will reach dangerous levels if we don't drastically reduce our dependence on fossil fuels much faster than we are. But after China banned proof-of-work cryptomining (the process Bitcoin uses), citing, among other things, the environmental threats that mining poses to meeting emissions reduction goals, the U.S. is now hosting many energy-intensive proof-of-work cryptomining operations. While these facilities of automated machines create few new jobs, they threaten the climate, in addition to small businesses, local economies, and natural resources.

Proof-of-work cryptocurrency mining is an energy-intensive process that requires thousands of machines whirring 24/7 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 to for cooling. Globally, Bitcoin mining consumes more energy each year than entire countries. Fossil-fueled mining facilities can also be major emitters of local air pollutants.

About Earthjustice

Earthjustice is the premier nonprofit environmental law organization. We wield the power of law and the strength of partnership to protect people's health, to preserve magnificent places and wildlife, to advance clean energy, and to combat climate change. We are here because the earth needs a good lawyer.

Testimony

March 5, 2023

The Honorable Senator Edward J. Markey-Chair Clean Air, Climate, and Nuclear Safety subcommittee

The Honorable Senator Pete Ricketts-Ranking Member Clean Air, Climate, and Nuclear Safety subcommittee

Re: Support of the Crypto-Asset Environmental Transparency Act

Dear Chairman Markey, Ranking Member Ricketts, and all Committee Members,

We write on behalf of Earthjustice, the premier non-profit environmental law organization, to urge your committee to support the Crypto-Asset Environmental Transparency Act. We represent and partner with many communities and organizations around the country who are negatively impacted by the externalities of cryptocurrency mining operations that have moved into their backyards and which threaten progress in our fights to prevent the worst of the climate crisis in the coming years.

The explosive growth of crypto-asset mining in the United States is impacting utilities, energy systems, emissions, communities, and ratepayers in real-time. Crypto-asset 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. If we do not take action to limit this growing industry now, we will not meet the goals set forth by the Paris Agreement and the Intergovernmental Panel on Climate Change to limit warning to 2°C. Because these operations operate 24/7/365, and are designed to consume enormous quantities of energy, they increase demand for fossil fuel operations – increasing local air, water, and noise pollution, increasing costs on others, and increasing climate pollution at a time when we should be doing everything in our power to move in the opposition direction to mitigate the worst impacts of the climate crisis.

In the year prior to July 2022, Bitcoin consumed an estimated 36 billion kilowatt-hours (kWh) of electricity, as much as all of the electricity consumed in Maine, New Hampshire, Vermont, and Rhode Island put together in that same time period. Top-down estimates of the electricity consumption of cryptocurrency mining in the United States imply that the industry was responsible for an excess 27.4 million tons of carbon dioxide (CO2) between mid-2021 and 2022 - or three times as much as emitted by the largest coal plant in the U.S. in 2021.

The past two years have demonstrated that the industry preferentially seeks readily- available energy and minimal regulation, re-starting defunct coal and gas plants, flooding the restructured electricity market in Texas, and tapping into rural power grids where regulators have little oversight. This explosive growth strains energy grids, raises retail electricity rates, and increases total carbon emissions and local air pollution.

In September 2022, Earthjustice and the Sierra Club released a guidebook, "The Energy Bomb: How Proof-of-Work Cryptocurrency Mining Worsens the Climate Crisis and Harms Communities Now," attached as Attachment A. The guidebook is a comprehensive report on the opaque and little-regulated cryptocurrency mining industry and its negative effects on the climate, local communities, and public health. It also provides a myth-busting section that tackles the industry's greenwashing talking points to justify its massive energy use. The guidebook includes policy recommendations for local and state officials, utility regulators, utilities, environmental regulators, and grid operators to protect energy systems, communities, and ratepayers.

Some highlights, or perhaps low-lights, from the guidebook include:

• Proof-of-work cryptocurrency mining has grown explosively in the United States since 2020. Today, an estimated 38% of Bitcoin is mined in the U.S, resulting in nearly 30 million tons of excess CO2 emissions in the last year alone.
• The massive energy consumption of cryptocurrency mining threatens to undermine decades of progress toward achieving climate goals and reducing local pollution.
• Cryptocurrency mining operations raise costs and risks for utilities and their ratepayers, and can stress electric grids. Our guidebook provides examples of this in Texas, Kentucky, and New York, among other states.
• Cryptocurrency mining operations flood neighboring communities with unbearable noise pollution.
• 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 actually 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. Miners are often given preferential electricity rates – much lower than average Americans pay for their electricity.
• Most mining facilities draw their power from the grid. That means electricity is generated by whatever existing energy is in place in the region. No grid anywhere in the U.S. is 100% renewable yet.
• Proponents also claim that mining is spurring new renewable development and stabilizing the grid. But clean energy allocated to cryptocurrency mining doesn't actually do anything to decarbonize the grid, and there are few mining facilities that are building renewables to even power their own operations, let alone send to the grid. Increased load is increased load, which in nearly every locality, means increased fossil-fueled generation.
• Cryptocurrency mining proponents claim that mining can use "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. That renewable energy needs to get to everyday people as soon as possible, without incentives to be hoarded by for-profit mining that benefits very few. And flared or vented gas from oil and gas production that is used to mine Bitcoin merely incentivizes additional oil and gas production, which is the opposite of what needs to be done in the middle of, and to prevent the worst impacts from, a climate crisis.

The crypto-asset mining industry continues to be nebulous and opaque, with very little regulation or reporting standards. That makes it difficult to track and get a complete picture of its full impact.

The Crypto-Asset Environmental Transparency Act will help us gain a better understanding of crypto's environmental impacts in the United States to better inform our policy solutions. The Act would require the Environmental Protection Agency (EPA) to conduct a comprehensive impact study of U.S. crypto mining activity and require the reporting of greenhouse gas (GHG) emissions from crypto mining operations that consume more than 5 megawatts of power. It would also include crypto mining facilities in energy efficiency and reporting programs that apply to other types of data centers. These would all be important first steps toward addressing the threats posed by this extremely energy-intensive industry. We urge the committee to support the Crypto Environmental Transparency Act.

Respectfully submitted,

Mandy DeRoche, Deputy Managing Attorney

Thomas Cmar, Senior Attorney Clean Energy Program Earthjustice