Nina H. joy | 02/05/2023 06:45 EDT
POLITICO illustration by Claudine Helmuth / Image via Istock
In the wake of a nationwide resurgence in cryptocurrency mining, local advocates are looking for ways to combat the rapid growth of this energy-intensive industry and are asking Congress to support it.
Cryptocurrencies – clusters of computers that produce digital currency – operate up to 24 hours a day, seven days a week and, depending on the energy source, can emit significant amounts of greenhouse gases.
Since China stopped mining cryptocurrency within its borders a year and a half ago, the industry has thrived in communities with cheap hydroelectric power and carbon sources like natural gas and coal.
"These miners moved to America and spread across the country like a cancer," said Yvonne Taylor, co-founder of the National Coalition, which brings together activists from Georgia to Washington state.
He added: "We need to do something at the national level."
In 2020, before China's crackdown on cryptocurrency mining, the US held just 3.5% of the world's mined bitcoins, the dominant form of cryptocurrency.
This figure will rise to 38 percent by 2022, and according to the White House Science and Technology Policy (OSTP) report, the US is currently home to one-third of the world's cryptocurrency mining resources.
The cryptocurrency boom has caused energy consumption to triple by 2021, which is equivalent to the energy needed to turn on the lights in every home in the United States.
Cryptocurrency mining consumes a lot of energy as small groups of computers compete to solve complex mathematical puzzles to earn digital currency. The more computers you use, the more you earn.
Energy use still accounts for less than 2 percent of total U.S. electricity use, but a White House report warns that the cryptocurrency boom is slowing down the power grid as the country plans to cut emissions from the power sector.
Of particular concern to climate activists close to underground mining is the lack of US legislation regulating the industry. The public cannot see exactly where the facility will be located, or the cumulative climate impact of that location cannot be determined.
Opponents of cryptocurrency mining in some quarters warn that these facilities bring fossil-fueled power plants back online or delay their retirement. In other cases, critics say, utilities buy so much power from renewable sources like hydroelectric dams that residents can't afford to use those sources and buy electricity from fossil fuels.
These shutdowns don't just affect climate change: Communities living near the facilities say the mines need noisy fans and large amounts of water to keep servers cool.
Since there are no federal laws regarding cryptocurrency mining, people who live near these places have a versatile approach to fighting the institutions. Their options are subject to state and local regulations, from changing or enforcing zoning ordinances to paying for the mine's energy costs.
Although the opponents did not immediately dismantle the facilities, they laid the groundwork for future legal problems with the cryptocurrency.
Cryptocurrency contamination has caught the attention of some lawmakers on Capitol Hill. Sen. Ed Markey, D-Mass., reintroduced legislation last February aimed at collecting data on the environmental impact of industry across the country.
Passage of the Cryptoassets Environmental Transparency Act would allow the federal government to collect the data it needs to set performance standards for the industry, as it currently does with everything from air conditioners to cars. Conversely, failure to meet efficiency standards can be grounds for lawsuits by opponents of cryptocurrency mining.
"This is an urgent and urgent problem, and Congress needs to be proactive," Markey said at a recent congressional hearing.
Taylor said federal measures are critical.
He added: "This cannot be a city-by-city or state-by-state battle." "These miners will take their machines and move them to a greener environment, which will not solve our climate problems.
While Congress has rejected federal action, cryptocurrency challengers in environmentally conscious states are using new climate tools to promote mining operations.
For example, environmentalists in New York protested the state's Climate Stewardship and Community Protection Act of 2019 in an attempt to shut down cryptocurrency mining companies in the Finger Lakes region.
Green Edge Generation Holdings Inc. in Torrey, New York. It was built on the site of a former coal-fired power plant on the shores of Seneca Lake. The company switched to burning natural gas in 2017.
"In the middle of this [climate] crisis, it would be crazy to start up old power plants, gobbling up more energy and making us more dependent on fossil fuels," said Taylor of New York's Seneca Lake Guardian newspaper. v. Greenwich Institution.
New York passed a ban last year banning new cryptocurrency mining, and the state has reviewed their environmental impact, but the ban does not apply to GreenDige and other facilities allowed to operate in the state.
In June 2022, the New York Department of Environmental Protection denied a request to renew Greenidge's air permit for the 107-megawatt power plant, which requires a 40 percent reduction in overall emissions by 2030, citing the state's climate law. The administrative judge and mine continued to serve until then.
In response to the ban, Greenidge pledged to cut emissions by 40 percent by the end of 2025 and said the country would be carbon neutral by 2035.
"By building new skills and leveraging the industry's full potential, we can fully meet critical climate goals, and our New York operations are leading the way," Greenedge President Dale Irwin said in a statement.
Greenidge's proposals to reduce emissions are "speculative and arbitrary" and "do not make sense in relation to actual air pollution," Land Court Deputy Prosecutor Mandy Desroches said in an email. He explained that even if the company were to implement the plan, it would allow about 350,000 tons of carbon dioxide emissions each year. According to the EPA, that's equivalent to the electricity used to power about 67,000 homes for a year.
GreenDidge's permit denial comes after several failed attempts by environmental activists to have a court deny the project's water permit and revoke the Torey Planning Board's 2020 permit for the facility. Despite earlier losses, environmental groups continued to fight the project in federal court, this time for violating the Clean Water Act.
The Seneca Lake Guardian and other groups alleged in a lawsuit filed in January that the company did not properly apply to state officials for furlough extensions.
Greenidge expects the case to go to state court, which has already ruled against him.
The company told a federal judge that its opponents' attempts to influence New York's demands and overturn state officials' decisions on the project are "misguided."
In other parts of the country, activists are petitioning state legislatures to raise cryptocurrency mining fees and make their communities less attractive to power-hungry entities.
Benjamin Richards, a 47-year-old retired Army officer, said residents of Pend Ouray County in northeastern Washington want to see a cryptocurrency miner owned by Chinese technology company Bitmain Technology Ltd. and investment company Alirise Capital Inc. He left the quiet society.
Bitmain took over the bankrupt Ponderay Newsprint plant in the US state of Washington last March, handing over water and electricity permits for a 100-megawatt cryptocurrency mining facility. I get it
According to Richards, the mine requires three times more energy than all the other residents and businesses in the region combined. Although the area receives hydroelectric power from a nearby dam, Richards disputed the developer's claim that the cryptocurrency mine would run on renewable energy.
The high demand for energy from cryptocurrency utilities means that the utility district must purchase additional energy each month from the Central Columbia Center, a regional wholesale energy market.
Neither Bitmain nor Allrise could be reached for comment on Usk cryptocurrency mining.
After failing to convince local officials to approve the Bitmain project, Richards and other activists hope Washington lawmakers will pass HB 1416 in 2019, which would amend the state's Clean Energy Transition Act. The law requires utilities to increase their purchases of clean energy. The goal of the law is to achieve 100 percent emission-free electricity by 2045.
But the law does not apply to customer-owned utilities such as the Pend Oreille County Utility District, which provides half of the electricity sold in Washington state. This allows industrial customers, such as Bitcoin crypto funds, to purchase energy off-site, Richards said.
HB 1416 requires customer-owned utilities, such as cryptocurrency miners, to meet the state's clean energy procurement requirements. The bill has passed the state House and Senate and will be sent to the governor for his signature.
The law comes after at least two municipalities took their own measures to limit cryptocurrency mining costs.
"The bill will require bitcoin mining companies to purchase energy from market sources, which will increase energy costs in the future," Richards said.
Glenn Blackman, director of the Washington Department of Commerce's Office of Energy Policy, said the importance of HB 1416 became clear after the state's Clean Power Act took effect.
"Over the past few years, we've seen demand for new, high-volume electricity uses like hydrogen production, data centers and cryptocurrency production, and we know one of them exists," he said. Areas served by consumer-owned utilities are not covered by the Clean Power Act.
Rivals face a tougher fight in countries that support cryptocurrency mining.
Missouri and Mississippi have passed "bill of rights" laws that actively encourage growth in this sector. Kentucky offers incentives for cryptocurrency mining.
According to the White House's OSTP report, the fight is particularly difficult in Texas, where cryptocurrency production accounts for 3 percent of the region's peak electricity demand. This could account for a third of the region's peak energy demand over the next decade, posing energy security challenges, the report said.
Gov. Greg Abbott (R) has called for the Lone Star State to become a global leader in the industry and will soon be home to one of the world's leading cryptocurrency mining companies.
Not all Texans were ready for their arrival.
"They don't care at all," said Jackie Sawicki, founder of Concerned Citizens of Navarro County and a member of the National Coalition. "It's a digital lottery that's heavily supported by taxpayers and energy consumers."
The community of Sawicki in Navarre County in the Dallas-Fort Worth area, Colorado-based bitcoin mining company Riot Platforms Inc. is the site of a $333 million expansion project proposed by The facility with a capacity of 400 megawatts is planned to start operating at the end of this year. Another 600 megawatts are planned for the second stage of construction.
The operation takes place on the Navarro Switch high-voltage transmission line near the Corsicana project site in Texas.
Sawicki said he and other residents are concerned about how cryptocurrency mining is developing and how it will affect their electricity bills. In 2021, Securities and Exchange Commission filings showed that a 700-megawatt facility operated by Riot in Rockdale, Texas, outside Austin, for example, had a cheap electricity contract through April 2030.
Although Savitsky has repeatedly spoken to local authorities and requested dozens of documents related to the Corsicana facility, he said he does not know how to challenge cryptocurrency mining in court.
From an environmentalist perspective, the broader issue is how to build cryptocurrencies around a decentralized operating system called a blockchain. Solving this energy-intensive problem requires the creation of new blocks on the chain.
"As long as the Bitcoin blockchain exists, we will not stop using fossil fuels," Sawicki said.
Although companies use renewable energy sources, emission-free energy "helps keep costs down," he added.
Riot declined to discuss the specific tax incentives it received to develop the Corsicana mine, but said in an emailed statement that the incentives at the Rockdale facility would not exempt the company from taxes and were needed to attract rural jobs.
"Based on our projections, we expect the development of the Corsicana facility to directly create at least 250 full-time, high-paying jobs, making Riot one of Corsica's largest employers and taxpayers," the company said.
Riot said the new project will bring "significant positive economic benefits" to Navarro County, just as the Rockdale facility did for the community.
The company also said it is working with the Texas Electric Reliability Board to prevent grid overload, and that the Rockdale facility provides a wind and solar market that would "otherwise be wasted."
When asked about community members' concerns about mining emissions, Riot said "I have no control" over the power balance on the grid.
"Additionally, the company continues to explore alternative energy sources, including wind and solar, as its long-term plans focus on reducing energy costs," Riot said. Long-term fossil fuel production.
Frustrated by the regulatory backlash against cryptocurrency mining across the country, community advocates have in recent months called on Congress to step up and pass environmental standards that apply to the sector across the country.
At least some federal lawmakers are paying attention.
Legislation reintroduced in February by Marks and Rep. Democrat Jared Huffman of California will strengthen EPA regulations on cryptocurrency mining.
If passed, the bill would require cryptocurrency miners to report their emissions to the EPA's Greenhouse Gas Reporting Program. The White House OSTP report estimates that cryptocurrency mining accounts for less than 1% of US emissions, but cautions that this estimate is uncertain due to rapid fluctuations in the industry's energy use.
The law could also remove uncertainty about the whereabouts of cryptocurrency miners. Activists in several states say developers aren't always clear about what they're trying to include in permit applications.
Rob Altenburg, senior director of energy and climate at Penn Future, told lawmakers at a congressional hearing in March that some companies are installing underground mines directly into natural gas wells without permits.
"We asked the regulator where the cryptocurrency mine was located and they couldn't confirm it," he said.
Earthjustice's Desroches said that in some cases, developers presented the proposed facilities as data centers or research centers, and residents became energy-intensive cryptocurrency miners, not just after approval.
"Communities have been successful when they've been able to pull together a large number of communities quickly before cryptocurrency miners infiltrated," said Taylor of the National Alliance.
The coalition hailed Markey's proposed legislation as an important first step, but activists want to see lawmakers pass more rules that set standards for creating digital books.
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