NYT A1 Investigation on Crypto-Mining Confirms Industry Requires Oversight

NEW YORK, NY (04/13/2023) (readMedia)-- Earlier this week, the New York Times published an in-depth expose about the negative impacts of proof-of-work Bitcoin mining. The crypto-mining industry has very few regulations or reporting standards, even though it's growing fast and using massive amounts of energy. Across the country, impacted communities – along with scientists, attorneys, elected officials, and advocates - have been working to dispel myths and mitigate the local and climate harms from proof-of-work mining operations. For example, in September 2022, Earthjustice and the Sierra Club released The Energy Bomb – cited by the Times – detailing the environmental, energy and local impacts of cryptocurrency mining. This morning, crypto-mining, energy and climate experts joined with impacted communities to call for more oversight.

Watch the press conference here.

"Cryptocurrency mining operations have real impacts on communities that live nearby and real climate pollution - in the middle of a climate crisis. The IPCC just warned us that we are walking when we should be sprinting to a clean energy transition, and ever-increasing mining has us going backwards," said Mandy DeRoche, Deputy Managing Attorney, Clean Energy Program, Earthjustice. "It's not progress for crypto-miners to receive economic incentives to the detriment of local communities who bear the brunt of their air, water and noise pollution. We need oversight to mitigate the harms of this fast-growing industry."

The Times investigation gives a national accounting of the 34 biggest Bitcoin mining operations in the U.S., and finds that each one of those operations uses at least 30,000 times as much power as the average U.S. home. The story debunks common myths, such as the pervasive one spread by Bitcoin mining proponents that mining often relies on clean energy. According to The Times:

"Many of the Bitcoin operations promote themselves as environmentally friendly and set up in areas rich with renewable energy, but their power needs are far too great to be satisfied by those sources alone. As a result, they have become a boon for the fossil fuel industry: [a study] found that coal and natural gas plants kick in to meet 85 percent of the demand these Bitcoin operations add to their grids."

And when renewables are used for mining, it doesn't reduce overall dependence on fossil fuels - like this case in North Dakota:

"A vast majority of that renewable energy would be used even in the absence of the mines, so fossil fuel plants almost always need to produce additional electricity as a result of their operations."

There is no secret here - North Dakota's commerce commissioner said the quiet part out loud: "The Bitcoin operations' effect on the state's economy is simple, said Josh Teigen, the commerce commissioner: "They are propping up our fossil fuel industry, and that's exactly what we want.""

Meanwhile, Texas incentivizes Bitcoin miners with discounted energy rates and programs that pay them for the possibility they'll be asked to shut down to reduce grid strain. The Times investigation found that Texas-based Riot Blockchain earned $9.3 million in 2022 from participating in Texas's Responsive Reserve Service, even though it was only asked to lower its operations for about 3.5 hours. The Times investigation also found that Riot also earned $18 million by pausing mining to sell its electricity to other customers – at prices much higher than it paid for that electricity. Overall, according to Riot's own press release, the company earned $27.3 million in power credits "through support of the ERCOT grid"f in 2022.

Texas isn't alone – many other states provide discounted energy rates, tax breaks, and economic development funding to Bitcoin miners.

With more attention on cryptocurrency mining's negative impacts, the industry is scared - and retaliating. In response to the Times investigation, Texas based Riot Blockchain put out a press release reiterating many of the myths about Bitcoin mining that both the Times and The Energy Bomb soundly debunked. Riot claimed to have provided the Times with evidence of the "abundant" jobs they've created, but neglected to make any real evidence public.

"Riot Blockchain publicly claimed to the Times that it employs hundreds, but turns around to its shareholders and reassures them they won't hire too many people. So which is it? Show us your payroll records to prove how many jobs you've actually created. We can't just trust your word for it," says Jackie Sawicky, founder of Concerned Citizens of Navarro County - where Riot is building the world's largest Bitcoin mine. "In Navarro County, we have a 16% poverty rate and 17% seniors, many of whom are living on a fixed income. Thirteen percent of Navarro families are headed by single-moms. These folks are already struggling to make ends meet, but are guaranteed higher electric and water bills once Riot's Navarro facility goes online. But Riot chooses to play the victim, ignoring the fact that they're only able to stay online after losing $509 million in 2022 because of the subsidies, incentives, higher bills, and handouts that us are forced to Texans prop them up with."

The Times also found that Riot's electricity cost in 2022 was 2.96 cents per kilowatt hour, while the average price for other industrial businesses in Texas was 7.2 cents per kilowatt hour. The average price for residents was 13.5 cents per kilowatt hour.

"For Texans, Winter Storm Uri was a tragedy. For Bitcoin miners, it was a business opportunity. The Texas grid isn't prepared for crypto mining. The industry exploits our energy market to squeeze value out of ratepayers and raises their already high energy bills. Some top elected officials have invited miners to come to Texas. We must stop handing out invitations and instead impose some restrictions." said Adrian Shelley, Texas Director, Public Citizen.

Earthjustice and the Sierra Club conducted the the first comprehensive accounting of Bitcoin mining in the U.S. with The Energy Bomb, and found that from mid-2021 to mid-2022, cryptocurrency mining operations' energy consumption across the country (all mines - not just the largest 34) was equivalent to that of four states combined, emitting 27.4 million tons of CO2. That's 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 flood communities with unbearable 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 human consumption who actually have Bitcoin is extremely high. Also, the owners and miners of bitcoin are in fact quite centralized.
• Rather than investing in long-term energy infrastructure that benefits the grid and people, the cryptocurrency mining industry seeks the fastest energy that can serve its computational needs, and looks for minimal regulation and oversight. In practice, that translates to mining cryptocurrency at or relying predominantly on coal and gas plants, and tapping into power grids that are 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 anywhere close to 100% renewable yet.
• Miners 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 new 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.

"This investigative piece is consistent with what on-the-ground advocates working to close coal plants and stop the construction of new gas have seen over the past two years–the trajectory of cryptomining is unsustainable for communities, for our energy grid, and for our planet," Sierra Club Director of Climate Policy Patrick Drupp said. "It's clear we need federal and state action to regulate these operations, and we are pleased to see leaders like Senator Markey take initiative to address the glaring lack of transparency in the industry."

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