Crypto mining advocates: We’re actually not terrible for the environment

A blockchain political event in Washington gave a pitch for cryptocurrency mining painted in shades of green – not green as in fiat US currency, but as in eco-friendly.

The reputation of Bitcoin mining might as well be weighed down by lumps of coal. It uses so much electricity that mining companies have reopened coal-fired power plants(Opens in a new window) to drive it. But speakers at the Chamber of Digital Commerce’s DC Blockchain Summit argued for lit mining, based on and boosting renewable energy.

“We are able to contribute positively to network stability,” said Brian Morgenstern, head of public policy at mining company Riot Platforms(Opens in a new window). Citing plenty of wind and solar power for the Rockdale, Texas facility, he said Riot makes sure it’s not wasted during off-peak hours: “We’re buying that energy when there might not otherwise be a consumer of it.”

Riot mining facility in Rockdale, Texas (Credit: Riot)

Texas has one of the US’s highest shares of renewable electricity production – wind, solar and hydro combined reach 40.1%(Opens in a new window). However, gas still accounts for 41.8% of the total. Riot did not respond to a request for energy types at its Texas facilities, but the company said in a September 2022 letter(Opens in a new window) to members of the House Energy and Commerce Committee that it cannot select generation sources on the Texas grid.

Morgensten emphasized that when demand increases, Riot quickly idles its mining rigs: “We can shut down at almost a moment’s notice.”

The Colorado-based firm has financial incentives to be so courteous: The Electric Reliability Council of Texas (ERCOT), which manages the Texas power grid, offers “demand response” rebates to industrial customers who scale back their use. Last July, Riot made more money(Opens in a new window) from these discounts than from Bitcoin mining.

A separate panel of three other mining companies added variations on this theme. Matthew Schultz, Executive Chairman of CleanSpark(Opens in a new window)said mining inflated demand rewards utilities for building extra renewable capacity: “Bitcoin is really the perfect solution to that, in that you can overbuild generation, and we can buy that excess capacity.”

Henderson, Nevada-based CleanSpark reports that 94% of the energy it used(Opens in a new window) in the financial year 2022 was carbon-free. Spokeswoman Eleni Stylianou said that includes credits for renewable energy purchased through Georgia Power’s Simple Solar program(Opens in a new window).

Gabriel Ibghy, General Counsel at Hive Blockchain Technologies(Opens in a new window), said his company offers “demand response as a service,” automatically shutting down mining rigs when demand increases. “We’re integrated with the network operator so it’s completely automatic, and we get paid for it.”

Hive blockchain infrastructure facility in Iceland (Credit: Hive)

Vancouver-based Hive has set up facilities in Canada, Iceland and Sweden because it can utilize 100% renewable energy at each location. Ibghy said Hive also buys off-peak power that would otherwise be wasted, “making a lot of money for utilities by monetizing an underutilized resource.”

Hive has also found customers for the heat by-product from its mining facilities. In Sweden, for example, they want to heat up a greenhouse next door, which can lower the country’s carbon footprint by requiring less food imports: “There will be no shipping of cucumbers and tomatoes all the way from Spain to northern Sweden.”

Fred Thiel, Chairman and CEO of Marathon Digital Holdings(Opens in a new window), said the rural locations of many mining facilities can support the necessary development of transmission lines. Marathon, based in Fort Lauderdale, is a recent convert to green mining, announced last April(Opens in a new window) that it will switch to renewable energy. It has since left a coal-fired power plant in Montana(Opens in a new window) that it had helped revive in 2020.

A report from April 2021(Opens in a new window) of energy consultancy Wood Mackenzie supported the concept of sustainability-oriented cryptocurrency mining, saying it could act as “a highly predictable and scalable demand response” and could “provide additional demand for cheap, underutilized electricity generated by independent power producers and utilities.”

Cryptocurrency advocates say most mining operations already run on renewable energy. A survey by the Bitcoin Mining Council, a trade group that says it represents 48.4% of the global industry, found that in the fourth quarter of 2022, 63.8% of electricity used for mining came from sustainable sources.(Opens in a new window) However, a tracker run by the University of Cambridge’s Center for Alternative Finance puts the renewable share much lower: 37.6%, including nuclear power(Opens in a new window).

Both figures are better than the share of renewable energy for total power production in the US – 21.5% in 2022(Opens in a new window), according to the government’s Energy Information Administration. But the bad actors in cryptocurrency can appear extremely bad when they bring mothballed coal power plants back online, as private equity firm Atlas Holdings did in New York state, with nasty environmental consequences(Opens in a new window).

That led to New York passing a law that imposed a two-year timeout on new fossil-fueled mining facilities. And at least year’s Blockchain Summit, speakers Sen. Steve Daines (R-Mont.) and MicroStrategy’s then-CEO Michael Saylor denounced the bill as an interference with free enterprise(Opens in a new window).