Bitcoin mining in the US has had a huge impact on the power grid, a New York Times investigation reveals. The mines – which are giant computer farms – use far more electricity than the communities around them, and fuel pollution from coal and gas-fired power plants. Cryptomining also makes electricity bills more expensive for neighbors, even though the companies benefit from incentives that grid operators offer to prevent blackouts during an energy crisis.
Bitcoin’s insatiable appetite for energy increases pollution and costs for Americans, report finds
This is the most comprehensive analysis to date of Bitcoin’s impact on the US environment and energy system. And it comes as Democratic lawmakers are pushing federal agencies to require crypto companies to disclose information about their operations. The Times has startling numbers for individual cryptominers and the industry as a whole, which it obtained by pouring over financial records, satellite images and studies it commissioned from outside research groups.
The paper identified 34 of the largest crypto mines in the United States, each operating at 40 megawatts or higher. Each one of them alone uses at least 30,000 times as much electricity as the average home in America. In Rockdale, Texas, the largest and most energy-hungry Bitcoin mining facility in the country burns through as much electricity as the nearest 300,000 homes combined.
In Rockdale, Texas, the largest and most energy-hungry Bitcoin mining facility in the country burns through as much electricity as the nearest 300,000 homes combined
The industry’s expansion in the US has been rapid, another stress factor for US power grids. The US only became the world’s largest hub for Bitcoin miners after China kicked them out in 2021. Times likens the new power demand coming from US crypto-mining to suddenly adding a new “New York City’s housing.”
Bitcoin is an intentionally energy-intensive blockchain. To validate transactions and generate new tokens, Bitcoin “miners” use specialized hardware to solve mathematical puzzles. The amount of energy needed to solve these puzzles is meant to deter bad actors from messing with the ledger. The puzzles become increasingly complex over time as more people try to solve them, requiring more sophisticated software that eats up more power in the process.
To meet the rising demand, the grid may need to turn on backup generators, which typically run on gas or coal. A couple of crypto mining companies have even revived closed fossil power plants to mine Bitcoin. That has made Bitcoin mining attractive to states like Texas and North Dakota that produce a lot of fossil fuels, while sparking outrage from environmentalists and Democratic lawmakers trying to meet the Biden administration’s climate goals.
Pollution stemming from increased energy demand from Bitcoin mining is about as much as the annual emissions from 3.5 million new gas-guzzling cars, Times reports. Industry promises that Bitcoin mining will spur renewable energy growth have not panned out. Coal and gas plants meet about 85 percent of the demand Bitcoin mining adds to power grids, according to an analysis by Times ordered from the non-profit organization Watttime.
In addition to making pollution worse, cryptomining also affects Americans’ energy bills. Sky-high demand increases electricity prices and forces nearby households to compete for limited supply. The energy use has increased other customers’ electricity bills by nearly 5 percent in Texas, according to a Wood Mackenzie analysis commissioned by Times. That amounts to $1.8 billion per year in higher electricity costs for consumers across Texas, which is home to about a third of the cryptominers surveyed.
While running up other people’s bills, crypto companies have managed to game energy systems in their favor. The company that operates the Bitcoin mine in Rockdale, Texas, paid just 2.96 cents per kilowatt-hour last year, it reported to investors. That’s compared to the 13.5 cents residential customers typically paid that year.
How does a crypto mine get electricity for so cheap? In Texas, it can take advantage of a program that pays industrial companies to shut down when the grid is under too much pressure. This happened in February 2021 when a severe cold snap disrupted energy supplies – leaving millions of residents without power and ultimately killing hundreds of people. During the disaster, the state-owned network operator paid one crypto mining company an average of $175,000 an hour to shut down its computers. In 2020, five mines earned at least $60 million from that energy conservation program Times reports.
It’s worth checking out the full story from Timeswhich includes useful maps and data on each of the 34 cryptomines it examined.
