Everything is bigger in Texas, including crypto.
Right now, America is the epicenter of Bitcoin, the world’s oldest and largest cryptocurrency. Approximately a quarter of the country’s mining operations are in Texas. where currently, the grid is fragile. In the Lone Star State, heatwaves are ravaging, renewables are under strain, and regulators are asking Texas miners to voluntarily shut down operations, as they overload the grid.
Now, concerns over the energy consumption of Bitcoin has reached the federal level. Due to findings revealing that major U.S. firms are using power on par with major cities, Democratic lawmakers are calling for regulations in a letter to the Environmental Protection Agency (EPA).
In Houston, Texas, the fourth most populous city in the United States, there are nearly 100,000 homes housing 2.3 million people. Seven of the country’s largest Bitcoin mining companies are set to use nearly as much electricity as all 2.3 million people, according to a congressional investigation of the cryptocurrency industry.
Spearheaded by Massachusets Senator Elizabeth Warren, the call to the EPA is co-signed by Senators Sheldon Whitehouse , Ed Markey, and Jeff Merkley and Representatives Rashida Tlaib and Jared Huffman.
Increasingly, crypto companies are feeling the heat as they strain energy grids, contribute to growing carbon emissions, and raise utility bills for consumers, Grist reports.
The reason cryptomining has such an effect on the environment is the amount of energy it devours. “Mining” involves specialized computers running constantly to solve mind-boggling math problems in order to create new virtual coins. Miners are then rewarded in, you guessed it, more virtual coins. In the case of Bitcoin, there is a finite number of coins that can be mined: 21 million.
The more bitcoins mined, the harder the algorithms become, the more specialized the computers needed to solve them become, and the more energy they consume. 19 million Bitcoins have been mined. Warehouses are packed wire-to-wire with mining machines racing in a gold rush to scour the last 2 million. Bitcoin energy consumption is skyrocketing, a phenomenon that’s not new, but steadily exacerbating nonetheless.
This type of 24/7 consumption is the reason cryptomining is currently banned in countries like China, Algeria, and Bolivia and is either prohibited or restricted in 12 other countries. At dozens of terawatts of electricity used in a year, Bitcoin eats up more electricity than entire countries such as Sweden.
After China banned the currency last year, operations moved to countries with cheaper energy and looser regulations. Now, the U.S. is the crypto powerhouse. More than a third of global computing power dedicated to Bitcoin comes from the U.S. reports the lawmakers’ in their letter.
“The results of our investigation … are disturbing … revealing that cryptominers are large energy users that account for a significant – and rapidly growing – amount of carbon emissions,” the letter states. “It is imperative that your [EPA’s] agencies work together to address the lack of information about cryptomining’s energy use and environmental impacts.”
Currently, cryptominers are not required to disclose emissions and energy use. This group of lawmakers are determined to change that, noting to the EPA that regulators know little about the full environmental impact of the industry.
Because of the lack of data surrounding crypto emissions, lawmakers solicited information from seven of the largest U.S. cryptomining companies: Stronghold, Greenidge, Bit Digital, Bitfury, Riot, BitDeer, and Marathon. The information gathered includes their energy sources, consumption, and the climate impacts of their operations. The report’s results are less than surprising, finding that the industry is using a substantial amount of electricity.
Production is ramping up, a predictable outcome as Bitcoin becomes rarer and more difficult to mine. This in turn, creates significant carbon emissions at a time when the U.S. needs to drastically reduce emissions to combat the climate crisis, The Guardian reports.
Fossil fuels now power about 60 percent of Bitcoin mining. This causes Bitcoin mining to produce more greenhouse gases than entire countries. A recent estimate weighed Bitcoin emissions comparable to those of the Czech Republic.
Big players in industry claim they’ve been going green, increasingly relying on renewables like wind, solar, and hydropower. One such firm is Riot Blockchain, a Colorado-based company who highlighted its use of hydropower for its Coinmint facility.
“Bitcoin mining is uniquely beneficial and supportive of renewable energy generation and resilient power grids,” Riot Blockchain wrote to lawmakers. “This fact, along with the technological advancement, job creation, and social and economic value that Bitcoin mining is creating — right here in the United States — means that the industry currently is, and must be, a part of the solution.”
But for the democratic lawmakers, that’s not enough. The group notes that Riot Blockchain’s even larger facility, Whinstone, uses energy from the Texas grid, where 63 percent of generating capacity is powered by coal and natural gas.
A peer-reviewed study from earlier this year shows that as a whole, crypto remains on carbon: Bitcoin network’s use of renewable energy dropped from an average of 42 percent in 2020 to 25 percent in August 2021.
Thus despite claims about clean energy use and climate committments, the lawmakers write the industry’s environmental impact is significant. As reported by The Guardian, data from three companies, Bit Digital, Greenidge and Stronghold, indicated their operations create 1.6 million tons of CO2 annually, an amount produced by nearly 360,000 cars.
One of the companies, New York-based Greenidge Generation Holdings, touts is reliance on natural gas, noting one of its facilities operates in a once coal-firing power plant.
“The Facility has never operated on coal under Greenidge’s ownership, and it will never burn coal again,” the company wrote to lawmakers. However, while burning natural gas results in fewer emissions than coal, the practice emits dangerous levels of methane into the atmosphere, heavily contributing to global warming.
“Bitcoin miners are using huge quantities of electricity that could be used for other priority end uses that contribute to our electrification and climate goals, such as replacing home furnaces with heat pumps,” the letter states. “The current energy use of cryptomining is resulting in large amounts of carbon emissions and other adverse air quality impacts, as well as impacts to the electric grid.”
Moreover, power demands of crypto come at a steep price to consumers. The letter cites a 2021 study that found cryptomining operations in upstate New York have, as a whole, led to a rise in electric bills by roughly $165 million for small businesses and $79 million for individuals.
Despite the potential environmental and public financial damage, not all lawmakers are in agreement. According to E&E Daily, last month Republican lawmakers urged the EPA to back off Bitcoin and hold off on regulations. These lawmakers included House Financial Services ranking member Patrick McHenry and Wyoming Senator Cynthia Lummis. With regulations, they argued, the industry’s economic benefits would be at risk
Nevertheless, the present situation will only become more dire.
In Texas, the industry is expected to swell. Under existing regulations (or lack thereof), the electrical load will increase by 27 gigawatts by 2026, according to a report by The Verge. That’s nearly a third of the grid’s current maximum capacity. The more cryptomining that comes to the state, the higher energy prices are expected to become.
The additional load is “astronomically impossible,” Joshua D. Rhodes, a research associate with the Webber Energy Group at the University of Texas at Austin, told The Verge. Texas barely has enough for what it needs today he said.
According to an analysis by Rhodes, in order to actually reduce carbon dioxide emissions in Texas, cryptomining data centers would have to be willing to power down for about 15 percent of the year when wind and solar generation are low, a caveat requiring cryptominers to be flexible.
But right now, Texan power is struggling to keep with demand. And as crypto explodes, its not clear if the state’s grid or people can take it. Temporarily shutting down mining, helped the Electric Reliability Council of Texas, “successfully meet record power demand by reducing their energy use by 500 megawatts,” reports The Washington Post. But the shut down was voluntary, as crypto companies are not required by law to conserve.
More action is necessary, Rhodes told the publication. “It’s not a good idea to count on someone to just be a good citizen.”
Could the Democratic lawmakers’ demands be the start to action?