Crypto miners struggle to cut carbon emissions

Companies that mine bitcoin aim to operate their computers on renewable energy or sign up for data centers that rely on the sun or wind. Falling renewable energy prices and rising bitcoin prices still make it possible to make profits.

But most bitcoin mining still relies on fossil fuels, including coal, the cheapest and dirtiest power source. “Crypto has a carbon-intensity problem,” said Paolo Natalie, principal of the Rocky Mountain Institute’s Climate Intelligence Program.

That problem led in April to the creation of the Crypto Climate Accord, a voluntary framework that calls on cryptocurrency firms to reduce net carbon emissions from electricity to zero by 2030. Some 180 companies have signed up, Mr. Natalie said.

Miners say they’re thinking about the environment, but they have other incentives to reduce their carbon emissions: investors, who are increasingly making carbon emissions a part of their research, to do better. exerting pressure.

Legislators in New York state are considering a bill banning the use of fossil fuels to mine bitcoin and calling on miners to document their carbon footprints. The Securities and Exchange Commission is also considering measures requiring publicly traded companies to disclose climate data.

Many of the most lucrative cryptocurrencies, including bitcoin, use an energy-intensive process called proof of work to validate transactions. This requires significant computing power, which requires a lot of power.

The lower the cost of electricity, the higher the profit. The cheapest sources are sometimes the dirtiest, forcing some miners to restart previously dormant coal-fired plants. In places with abundant renewable resources, combining green energy with coal, natural gas or other sources can give miners an edge.

“If you’re mining crypto, you care about the cost of electricity and you don’t have the luxury of caring so much about the climate,” said Alex de Vries, an economist who created the Bitcoin Energy Consumption Index.

Griffon Digital Mining joined the Crypto Climate Accord in May and said it has achieved net-zero carbon emissions. It got there by launching a 21-MW facility powered by hydroelectric power and signing up with a digital hosting company that gets more than half its power from renewable sources. It fills the gap by purchasing carbon offset credits, the same way an airline can offset passenger carbon emissions.

“That’s because we wanted to be the corporate good managers of the world,” said Rob Chang, Griffon’s chief executive.

According to a survey of 280 crypto firms, about 76% of firms mining proof-of-work cryptocurrencies combine green and fossil-fuel energy sources, but less than 40% of the total energy used for bitcoin and other cryptocurrencies is renewable. comes from sources. by the Center for Alternative Finance, University of Cambridge.

Still, the renewable energy used by crypto miners could force utilities to generate additional electricity using fossil fuels, Mr. de Vries said. Bitcoin miners in El Salvador use green energy from the volcanic region to conduct electricity. Despite the abundance of renewable resources, the Central American nation imported about 20% of the fuel used to generate electricity in 2019, according to the International Trade Administration.

“If you put green energy into bitcoin miners, you need to increase your fossil-fuel imports,” Mr. de Vries said. “You are displacing the problem.”

Cryptocurrency mining has increased in the US and Canada after China banned bitcoin and its ilk. According to the Cambridge Center for Alternative Finance, the US and Canada accounted for 45% of global bitcoin-mining activity in August, up from 12% in January. Bitcoin-mining activity declined 20% during that period after miners based in China were shut down.

Some of the most important companies in the crypto world are now focusing on carbon emissions. A spokesperson for publicly traded digital coin exchange Coinbase said the company is now focusing on environmental issues and will announce actions to address climate change in the coming weeks.