Bitcoin Facts and Myths – Greenpeace USA
Greenpeace USA is proud of our long history of action to expose and deter global environmental degradation and unjust social and economic systems. Bringing the truth about ecological and social injustice to light means exposing these abuses and dispelling the swirl of misinformation surrounding many issues— including Bitcoin mining and its current impact on the climate and communities living near mining rigs.
What is the problem with Bitcoin mining?
Bitcoin is the largest cryptocurrency that uses the outdated and high-energy “Proof of Work” (PoW) consensus mechanism. The “work” is specialized computers racing against each other to solve algorithms and validate transactions on a digital ledger. Once the algorithms are solved and transactions are validated, new digital assets are rewarded to the “miner” in the appropriate ledger, which is then added to the blockchain ledger.
The faster a computer works to solve the algorithmic puzzle, the greater the chances of winning the digital asset. Speed requires enormous amounts of energy to power banks of computers, collectively called mining rigs. As the puzzles get harder to solve, more computing power requires more energy. Recent reports estimate that by 2020, Bitcoin mining used 75.4 TWh/year of electricity, which is more energy than used by the whole of Austria in 2020.1
Attempting to improve PoW’s inherently wasteful process, either by using renewable energy and most other means rather than changing the code, is like putting lipstick on an energy pig.
Let’s take a look at some of the misinformation—and facts—surrounding Greenpeace USA’s campaign to clean up Bitcoin.
Myth: Greenpeace USA is against cryptocurrency.
Fact: We are not against cryptocurrency. We are against the destruction of our climate. As of October 2022, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI), in 2022 Bitcoin mining emitted 48.35 MtCO2e of greenhouse gas emissions (GHG).2, equal to over 285,000 railway wagons of coal burned in one year or over 10,300,000 car miles driven in one year3. We want Bitcoin and other Proof of Work cryptocurrencies to switch to a low energy consensus mechanism. We are agnostic, but any protocol change should be at least as efficient as Proof of Stake, which uses 99.5% less power than Proof of Work. We are fully aware of the barriers to doing so, but that is technically and politically possible to change the code, as the recent Ethereum merger demonstrated.
We are also against environmental pollution and other impacts, such as increases in electricity prices that affect communities living near mining rigs. As the demand for electricity increases from the mining of crypto-assets, more coal-fired and natural gas-fired plants are used to supply electricity for the mining operations. These facilities often cost more to operate and create noise, water and air pollution. Burning coal produces fine particles of sulfur dioxide, nitrogen oxides and other air pollutants.
Pollution controls are rarely implemented by the cryptocurrency mining company that uses the power from these fossil fuel plants unless they are pushed to do so by regulators.4 These local consequences can also exacerbate existing environmental injustices that burden neighboring communities. This article about the environmental working group summarizes local impacts and cites local organizations fighting for a healthy environment.
Myth: Bitcoin mining uses renewable energy
Fact: Global Bitcoin mining is overwhelmingly dependent on coal power. In accordance Cambridge Bitcoin Electricity Consumption Index (CBECI) research, Bitcoin mining’s single largest energy source is coal.5 The research found that coal and other fossil fuels (such as oil and gas) make up almost two-thirds of the total electricity mix (62.4%), with only 26.3% coming from renewables and 11.3% from nuclear.6
In accordance The Energy Bomb: How Proof-of-Work Cryptocurrency Mining is Exacerbating the Climate Crisis and Harming Communities Now, a September 2022 guidebook by Earthjustice and the Sierra Club, cryptocurrency mining companies and advocates often say the rigs are running on renewable energy simply because they are located near wind or solar farms. However, these mining companies do not have a contractual relationship with those who operate renewable energy sources7
The guidebook explains, “But simply locating new demand in a region rich in renewable resources does not mean that the new demand is served by the renewable resources in that region. When a load is added to the grid, it is served by the generation available on the grid at the time electricity is consumed (unless it specifically results in new generation being built for its exclusive use). Large loads, such as cryptocurrency mining, can cause changes in the generation mix as network shipping patterns change in response to the demands of the new load. In almost all circumstances, new demand drives an immediate increase in the production of fossil generators.8“
Even if Bitcoin mining could be powered entirely by renewable power, the amount of clean generation needed by insatiable mining operations simply does not exist. Residential, commercial and industrial buildings, transport and material production, among other important areas, must be prioritized for this future use of renewable generation.
Myth: Cryptocurrency mining can store energy to be used when power consumption is high, such as during a prolonged heat wave.
Fact: Electricity used by a mining operation cannot be exported or redeployed elsewhere, nor can it provide energy storage capacity or optimize the operation of the grid.9 When miners increase demand on the electrical grid, they typically increase electricity prices for all customers. For example, in Plattsburgh, NY, residents and small businesses collectively paid $244 million more in higher electricity bills in one year due to Bitcoin mining in their area10. Also, by increasing demand on the electrical grid, miners incentivize demand response programs and associated costs.11 ERCOT, Texas’ independent market monitor, estimates Texans could pay an additional $1.5 billion for electricity in 2022, in part to cover payments to cryptocurrency miners who shut down operations during high demand.12
When an industrial entity such as a Bitcoin mining operation needs large amounts of a limited resource, it increases demand and electricity costs and reduces grid reliability for everyone customers.
Myth: Bitcoin mining helps the climate by using natural gas that would normally be burned in a process known as flaring, which releases greenhouse gases.
Fact: Using flared gas may be better than letting it release climate-polluting gases, but it is a pollutant that should be regulated and controlled by state and local governments. September 2022 White House Office of Science and Technology Policy report found that while using flared gas can reduce the amount of methane released, another option is to use existing vapor capture technologies at oil and gas wells, which could reduce global methane emissions by up to 50% by 2030.1. 3
Instead, Bitcoin mining’s use of flared gas incentivizes more oil and gas drilling, as it converts what would be a loss to drillers into a new source of income14. Additionally, when regulators find and inspect wellheads used by miners, they find violations. For example, in January 2022, Pennsylvania Department of Environmental Protection inspectors found that 30 methane gas-fired generators used for cryptocurrency mining were not authorized to do so.15
Myth: Buying carbon credits, renewable energy certificates or using verifiable renewable energy can offset greenhouse gas emissions from Bitcoin mining.
Fact: Carbon credits or offsets allow the credit holder to emit a certain amount of greenhouse gases. One credit corresponds to one tonne of carbon dioxide emissions or the equivalent of other greenhouse gases. Renewable Energy Certificates (RECs) are issued when one megawatt-hour (MWh) of electricity is generated and delivered to the grid from a renewable energy resource. Both displacements and RECs can help reduce greenhouse gas emissions. However, they are increasingly seen as a “complementary or additional tool” that should not delay or replace greenhouse gas emission reductions within a company’s or industry’s activities.16
Bitcoin miners often claim to be “carbon neutral” after purchasing these offsets or renewable energy certificates. Credits can be controversial, verification is complex, and may not reduce carbon pollution in many cases.17 While a mining operation using renewable energy can be independently verified to do so, other important essential energy needs, such as industrial production, should be prioritized as we need to transition to a clean energy economy quickly. The key is to reduce the huge amounts of energy used for Bitcoin mining in the first place, not create a problem, and seek creative new ways to improve efficiency.18
1 Page 2 Jones, BA, Goodkind, AL & Berrens, RP Economic estimation of Bitcoin mining’s climate damage shows closer resemblance to digital crude oil than digital gold. Sci Rep 12, 14512 (2022).https://doi.org/10.1038/s41598-022-18686-8.
2https://www.jbs.cam.ac.uk/insight/2022/a-deep-dive-into-Bitcoins-environmental-impact/
3 US Environmental Protection Agency Greenhouse Gas Equivalencies Calculator: https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator#results
4 pp. 15. DeRoche, M., Fisher, J., Thorpe, N., and Wachspress, M., The Energy Bomb: How Proof-of-Work Cryptocurrency Mining is Exacerbating the Climate Crisis and Harming Communities Now (Sept. 2022).
5 https://www.jbs.cam.ac.uk/insight/2022/a-deep-dive-into-Bitcoins-environmental-impact/
6 Ibid.
7 pp. 21. DeRoche, M., Fisher, J., Thorpe, N., and Wachspress, M., The Energy Bomb: How Proof-of-Work Cryptocurrency Mining is Exacerbating the Climate Crisis and Harming Communities Now (Sept. 2022).
8 Ibid.
9 pp. 24. DeRoche, M., Fisher, J., Thorpe, N., and Wachspress, M., The Energy Bomb: How Proof-of-Work Cryptocurrency Mining is Exacerbating the Climate Crisis and Harming Communities Now (Sept. 2022).
10 Laura counts, Power-hungry cryptominers are driving up electricity costs for local residentsBerkeley Hass (3 August 2021), Mateo Benetton et al., When Cryptomining Comes to Town: High Power Consumption to the Local EconomySSRN (May 14, 2021), https://newsroom.haas.berkeley.edu/research/power-hungry-cryptominers-push-up-electricity-costs-for-locals/#:~:text=By%20looking % 20at%20fluctuations%20in,and%20%2412%20for%20small%20companies
11 pp. 25. DeRoche, M., Fisher, J., Thorpe, N., and Wachspress, M., The Energy Bomb: How Proof-of-Work Cryptocurrency Mining is Exacerbating the Climate Crisis and Harming Communities Now (Sept. 2022).
12 Ibid.
1. 3 P. 24. OSTP (2022). Climate and Energy Implications of Crypto Assets in the United States. White House Office of Science and Technology Policy. Washington, DC September 8, 2022.
14 pp. 12. DeRoche, M., Fisher, J., Thorpe, N., and Wachspress, M., The Energy Bomb: How Proof-of-Work Cryptocurrency Mining is Exacerbating the Climate Crisis and Harming Communities Now (Sept. 2022).
15 pp. 13. DeRoche, M., Fisher, J., Thorpe, N., and Wachspress, M., The Energy Bomb: How Proof-of-Work Cryptocurrency Mining is Exacerbating the Climate Crisis and Harming Communities Now (Sept. 2022).
16 P. 28. OSTP (2022). Climate and Energy Implications of Crypto Assets in the United States. White House Office of Science and Technology Policy. Washington, DC September 8, 2022.
17 pp. 22. DeRoche, M., Fisher, J., Thorpe, N., and Wachspress, M., The Energy Bomb: How Proof-of-Work Cryptocurrency Mining is Exacerbating the Climate Crisis and Harming Communities Now (Sept. 2022).
18 pp. 23. DeRoche, M., Fisher, J., Thorpe, N., and Wachspress, M., The Energy Bomb: How Proof-of-Work Cryptocurrency Mining is Exacerbating the Climate Crisis and Harming Communities Now (Sept. 2022).
