Crypto’s Climate Impact: 8 Claims, Fact-Checked
Cryptocurrencies are bad for the environment—at least, that’s what most people online seem to believe. Pro-crypto posts on social media are often flooded with angry comments about the industry’s outsized contribution to greenhouse gas emissions. According to studies, Bitcoin mining (the process of protecting the Bitcoin network) consumes more power worldwide per year than many countries including Venezuela and the Philippines.
Members of crypto communities argue that crypto mining can actually be beneficial for the environment in many crucial ways. It creates a market for energy-hungry projects and provides a source of new revenue. They believe that crypto will eventually revolutionize the energy system and absorb excess energy that could otherwise be wasted.
As lobbyists have volleyed arguments on both sides, a blow was dealt to crypto mining’s hopes for rapid expansion in the U.S. on June 30 when New York officials denied the air permits of Greenidge Generation, a Bitcoin mining operation, on June 30, citing “substantial greenhouse gas (GHG) emissions associated with the project.” The decision could set a precedent for how local jurisdictions across the country approach a hotly contested topic.
What side are you on?
To investigate, TIME spoke with several energy and environmental experts to break down some of the crypto community’s main arguments. While some experts say that there’s potential for positive impact from crypto mining, most agree there are few indications that the industry is going in the right direction.
“There is a narrow path upon which they could be useful to the energy system—but I don’t see that happening,” says Joshua Rhodes, an energy research associate at the University of Texas at Austin. According to Rhodes, there is already damage being done. “Writ large, they’re probably adding to carbon emissions currently.”
Claim: Crypto mining depends on renewable energy.
Bitcoin’s network relies on groups of computers, all around the world, to run complex math equations. These computing centers act less like “miners” in the literal sense and more like network watchdogs, used for security and stability. In order to protect against hacks and other attacks, proof of work is a very energy-intensive process.
The proof-of-work method is being made more efficient by crypto advocates who claim that miners now use renewable energy instead of natural gas or coal. However, one peer-reviewed study from earlier this year shows the opposite: that the Bitcoin network’s use of renewable energy dropped from an average of 42% in 2020 to 25% in August 2021. Researchers believe that China’s crackdown on crypto, where hydropower-driven mining operations used to be plentiful, was the primary catalyst of this decrease.
The rate that crypto miners are using renewable energy sources at the moment is highly disputed. A group representing the industry, the Bitcoin Mining Council asserts that 66% of crypto mining uses renewable resources. That is 20% more than the amount listed by The Cambridge Center for Alternative Finance. George Kamiya, an energy analyst at the International Energy Agency, says that while the Bitcoin Mining Council likely has access to more data, its numbers come from a survey that hasn’t been peer-reviewed and lacks methodological details, and encouraged them to share the underlying data and methodology with outside researchers like Cambridge.
No matter which statistic you believe is more accurate, many mines still operate using non-green energy. Greenidge, a New York-based mining company, repurposed the power plants of a former coal plant. It’s now powered by natural gas, which is also fossil-fuel-based. Yvonne Taylor, vice-president of Seneca Lake Guardian, an environmental non-profit, told TIME in April that Greenidge would emit “over a million tons of CO2 equivalents into the atmosphere every year, in addition to harmful particulate matter.”
A representative for Greenidge wrote in an email to TIME that the company has offered to reduce its greenhouse gas emissions by 40% from its currently permitted levels by 2025, and that it plans to be a “zero-carbon emitting power generation facility” by 2035. Additionally, the company plans to appeal its denials of air permits while remaining operational.
Claim: The rise of crypto mining could lead to an explosion in renewable energy.
If crypto mining isn’t sustaining itself on renewables right now, might it in the future? Marathon Digital Holdings CEO Fred Thiel has stated that he intends to completely make his company carbon neutral by the end this year. Companies like Thiel could be a major contributor to the success of the new renewable energy sector.
It’s worth noting that many cryptocurrencies already use much less energy-intensive processes than Bitcoin’s proof of work. Smaller blockchains like Solana and Avalanche use a security mechanism called proof of stake, which Ethereum Foundation researchers claim reduces energy usage by more than 99% compared to Bitcoin’s system. Ethereum is the second-largest blockchain after Bitcoin. This year, it will switch from proof of work into proof of stake.
It doesn’t seem like Bitcoin will transition away from proof of work any time soon. Thiel says that renewable energy developers require customers to thrive, which proof-of work miners do. Thiel said that Vermont has wind farms that cannot sell their electricity due to the remoteness of these locations and lack of transmission line. The crypto-mining plant could theoretically generate immediate income by being placed on top of these farms. “If the goal of this country is to convert to green or sustainable energy forms for the majority of our energy use by 2050, the only way it’s going to happen is if the power generators have an incentive to build the power plants,” Thiel says.
Thiel refused to name the Vermont wind farms. A follow up email sent to Marathon asking the same question received no reply. TIME talked to many experts that disagree with the claim of a crypto-fueled boom in renewable energy. “I am not aware of any specific examples where a major crypto mining project directly—and additionally—boosted renewable energy production,” Kamiya wrote.
“The proof is in the pudding–and I have not seen that play out in the state of Montana,” says Missoula County Commissioner Dave Strohmaier, whose county hosted energy-intensive mining operations that rankled local communities, leading the local government to restrict miners’ ability to set up new operations.
Joshua Rhodes says that counties in Texas were ”chock-full of renewable projects getting built and turning on” even before the Bitcoin mining rush. It is possible that crypto might not have triggered a surge in the number of renewable projects, even though it did. For example, wind and sun energy in West Texas is abundant, but it takes extensive infrastructure and transmission lines for that power to be sent east to those cities most in need, such as Houston and Dallas. “All of the cheap electricity can’t get out,” he says.
And even if it were true that crypto mining is creating rapidly accelerating demand for solar and wind farms—which, again, doesn’t seem to yet be the case—there’s the problem of where to put them. They have been opposed by many communities and organizations for reasons ranging from conservational to aesthetic. In New York, Assemblymember Anna Kelles—who spearheaded a bill to impose a moratorium on crypto mining in the state—says that a crypto-driven influx of solar and wind operations would be “directly competing with farmland in New York State at a time when it’s becoming more and more the breadbasket of the country because of climate change.”
Crypto miners who are impatient will use less-clean energy because of the high resistance to solar and wind power projects and their long lead times. Kentucky’s abandoned coal mines have been turned into cryptocurrency mining centres.
Claim: Cryptominers increase electricity grids
If crypto companies aren’t yet supercharging a renewables boom, then maybe they’re helping other ways, like making our electricity grids more resilient. Thiel argues that crypto miners are uniquely suited to help grids for several reasons: that they can be turned off quickly during peak hours of energy usage in a way that, say, pasteurization machines can’t; that they can soak up energy from the grid that would be otherwise wasted; that they can be located very close to sources of energy.
“We voluntarily curtail whenever the grid needs the energy,” Thiel says. “It acts as this ideal buffer for the grid.” During peak stretches of Texas’s energy usage, Thiel says, Marathon has lowered or completely shut off their usage of the grid for two to three hours a day.
In fact, flexibility in energy load is good for grids, Rhodes stated in a last-year study.
According to him, if crypto-miners are willing to cut down their energy use during peak periods so that their annual loads drop by between 13-15% and 15%, their businesses will reduce carbon emissions, increase grid resilience in high-stress times, as well as foster the switch to renewables.
But Rhodes and others are skeptical that most miners will be willing to operate on someone else’s schedule. The majority of crypto miners would prefer to operate 24 hours a day in order maximize their profit. Strohmaier, in Montana, says that when he met with crypto miners operating in his county about their activity, the topics of grid resilience or curtailment “never came up once. It was not clear that there were any plans to reduce their activity even by a tiny fraction. It was all, ‘We have to keep every one of these machines running—and add more if we are able to remain viable,’” he says.
Thiel says that when there isn’t enough energy from the wind farms to power Marathon’s plants—as wind doesn’t blow all the time—the company then supplements it partially with natural gas from the grid. When asked for a breakdown of Marathon’s energy usage, a representative wrote in an email, “We’re still in the process of installing miners in Texas. It’s hard to estimate what the ultimate mix will be.”
Claim: These crypto-miners use energy that otherwise would be wasted.
There is a lot wasted electricity in America, which crypto-miners want to exploit. Many companies prefer to simply burn the natural gas waste from oil extraction rather than investing in infrastructure that would capture it. Exxon signed an agreement with North Dakota crypto miners to open a shop on the site, and then use any gas left over from previous mining operations.
This process can still prove to be very harmful, according to some experts. “I don’t see that as a benefit: They’re still burning the gas,” says Anthony Ingraffea, a civil and environmental engineering professor at Cornell University, who co-wrote a paper in 2011 on the environmental hazards of extracting natural gas.
Ingraffea further argues that by offering Exxon additional business at their oil-drilling sites, crypto mining theoretically encourages the fossil fuel sector to continue investing in oil extract. Kamiya contends that there are other productive uses for flared gas, including producing electricity to be sold back to the grid, but that crypto mining “could disincentivize the operator from finding other uses and markets for its gas that can drive higher emission reductions.”
But even under ideal energy conditions, cryptocurrency miners run into difficulties. A paper released this month from the Coinbase Institute contends that in Iceland, a “new gold rush” of mining activity has led to minimal environmental impacts due to the country’s “abundant geothermal energy.” But in December, the country experienced a severe electricity shortage, causing its main utility provider to announce they would reject all future crypto mining power requests.
Claim: Crypto mining operations can be carbon neutral.
Greenidge Generation (a New York-based crypto mining company) announced its intentions to go carbon neutral in 2017. According to a press release the company stated that they would buy carbon offsets from renewable energy companies and make investments in projects that reduce their gas-based emissions.
It is sure to make an impact on the environment if fossil fuel-based energy can be replaced with renewable energy. Carbon offsets, however, aren’t as simple to define. The offset industry has come under fire from many scientists who say that many such projects are poorly defined and not as helpful as they seem—that it’s common for projects that have no positive environmental impact to be rewarded on technicalities. In essence, offsets allow corporations to continue to pollute. Greenpeace even called the entire system “a distraction from the real solutions to climate change.”
Carbon offsets “do not reduce global emissions, they just move them around the globe,” Ingraffea says. Ingraffea argues they shouldn’t be used if emissions are not possible to reduce.
Learn more: The Crypto Industry had been on the road to altering the market for carbon credit until it ran into major obstacles
Claim: The pollution from data centers is just as harmful as that of crypto mining operations.
Many cryptocurrency miners believe they are unfairly being targeted for their environmental impacts. They feel that data centers which get far less attention, can just as easily contribute to carbon emission increases.
Multiple experts disagree. “Crypto mining consumes about twice as much electricity as Amazon, Google, Microsoft, Facebook, and Apple combined,” says Kamiya.
Jonathan Koomey (a researcher who’s been researching information technology, energy, and use for over thirty years) says that these two types of machines are going in different directions when it comes to efficiency. Co-authoring a 2020 study, he found that even though the computing power and output of data centers has increased tremendously in recent years, electricity usage was not affected. Meanwhile, in Bitcoin mining, “there’s a structural incentive for the entire system to get less efficient over time,” he says. He’s referring to the fact that, generally, Bitcoin miners are forced to solve harder and harder puzzles over time to keep the blockchain functioning—and the computing power to work through those tasks requires increasing amounts of energy.
Claim: Christmas lights consume more electricity than Bitcoin.
In order to divert attention from Bitcoin miners and other big uses of electricity, Bitcoin mining defenders have repeated the claim repeatedly, Thiel included in our interview. It’s also completely unsubstantiated. A paper published in 2008 based on the most recent major holiday lighting study found that Americans consume 6.63 Terawatts of electricity annually. The paper stated that this figure will only drop as more LED bulbs become common. Comparatively, Bitcoin’s network uses an estimated 91 Terawatt hours per year.
This topic is popular because many online posts defending Bitcoin, even from Mawson the digital miner, don’t cite sources or ignore the findings of respected institutions.
Claim: Bitcoin’s value added to society will make it all worth it.
Koomey and other experts say that over the last decade there’s only been one surefire reason crypto mining’s environmental impact can sometimes fall: when cryptocurrency prices go down. Miners feel less pressure to sell or purchase new equipment during these drop-offs, which can lead to lower greenhouse gas emissions. Indeed, as Bitcoin’s value fell from $40,000 to $20,000 from late April to June, industry power usage also dropped by a third according to the Cambridge Bitcoin Electricity Consumption Index.
So why should the U.S. allow crypto miners to go on, if they’re harming the environment? According to crypto-skeptics, the industry’s long-term economic and societal benefits will compensate for its electricity use. This is similar to what happened with the computer revolution.
Koomey says that when weighing the possible environmental impacts of crypto, it’s important to take a wide-lens approach: to think about what crypto might add to society overall compared to other energy guzzlers.
“Sure, Google uses a measurable amount of electricity—but I would argue that’s a pretty good use of that electricity,” he says. “So you have to come back to this question for the crypto people, aside from just how much electricity they use: What business value are you delivering? Is this technology more efficient than the technology it replaces? Is it worth it?”
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