A ‘Buy Bitcoin Here’ sign is posted at a 7-Eleven store on Nov. 10, 2021, in Los Angeles. (Mario Tama/Getty Images)
As energy-intensive bitcoin mining operations boom across the United States, some members of Congress are considering how to make cryptocurrency generation greener.
It was the central question of a Jan. 20 congressional hearing from the House Energy and Commerce Oversight and Investigations panel.
“Cryptocurrency presence in everyday life will likely continue to expand. As the industry moves forward, it’s crucial for cryptocurrency networks to identify ways to reduce the need for constant high volume energy use and minimize effects on the environment,” Rep. Diana DeGette, the Colorado Democrat who chairs the panel, said during her opening remarks.
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Decentralized currencies reliant on blockchain technology like Bitcoin and Ethereum have increased in popularity and usage over the last few years, as have efforts to mine them.
“Unfortunately, bitcoin mining consumes a massive amount of electricity. Some credible estimates place this consumption today at roughly half a percent of the world’s total electricity supply, more than the entire nation of Argentina,” Cornell University professor and blockchain expert Ari Jules said during his testimony.
Mining is a form of “minting” new bitcoins and verifying transactions. One reason it consumes so much energy is because of the “proof of work” concept that Bitcoin is built on. Bitcoin miners use specialized computers to crack complex puzzles and are rewarded with the currency, but the computing power burns through a lot of energy. Other currencies, such as Ethereum, use a less intensive “proof of stake” process, but Bitcoin is unlikely to transition.
The United States saw a rise in mining operations when China banned the practice last year. The growing industry presents a unique policy question as the Biden administration pushes for its climate change goals, green energy projects and people debate whether Bitcoin holds any value at all.
Energy that would otherwise go to waste
That question of value is important, said Wililam Foxley, the multimedia manager at Compass Mining, which had a partner mining site in Colorado Springs until last year. If people, namely people in power, don’t see the value in cryptocurrency, then they won’t see the value in its mining.
“On the flip side, there’s a large component of people saying Bitcoin has value for multiple reasons, whether that’s financial freedom from the government or for cross-border payments or just as a tech innovation. If those things hold true, then bitcoin mining has value and the question becomes whether that energy usage is worth it?” he said in an interview with Colorado Newsline.
“The step that we saw in Congress that was really interesting was not only is the energy use worth it, but what type of energy should be used? And even if renewable energy is worth it,” he said.
DeGette said during the hearing that while some mining operations have been set up near renewable energy sources, others rely on fossil fuels, even repurposing old coal fired plants to generate power.
“Given our current climate objectives, examples like this are deeply concerning. Our focus now needs to be reducing carbon emissions overall, and increasing the share of green energy on the grid,” DeGette said. “The unique energy demands of the crypto mining industry do present potential benefits, although how these benefits will play out in practice remains to be seen.”
Hearing witnesses argued that cryptocurrency mining could bolster and even encourage renewable energy expansion by providing a place for curtailed, or wasted, energy to go.
“Energy developers are beginning to view data centers as a path to additionality. In other words, our data centers are the catalyst for building a clean power plant that would otherwise not get built,” said John Belizaire, the founder and CEO of Soluna Computing, which builds data centers and buys excess renewable energy to power them.
The concept of using curtailed energy is not revolutionary in the cryptocurrency mining space. Some miners get power off grid with flared or stranded natural gas assets, meaning they use excess natural gas that would otherwise get wasted.
“That natural gas would get burnt no matter what … if you burn it through an engine and do something productive with it like creating an asset like Bitcoin, you essentially monetize what was a net-negative for the environment with something that 10 years ago didn’t exist,” Foxley said.
It is a concept that Colorado-based Crusoe Energy uses. The company “repurposes otherwise wasted energy to fuel the growing demand for computational power in the expanding digital economy,” according to its website.
The congressional hearing on cryptocurrency mining and its environmental impacts did not end with concrete action items, but DeGette said it would be “an increasing issue” for the panel.
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