Bitcoin ‘mining’ is growing dirtier than coal. Here are 5 things the U.S. can do about it – San Francisco Chronicle


Until two months ago, cryptocurrency mining mainly occurred at farms like this one in China seen in March.
One issue you didn’t hear about at the Glasgow COP 26 is that Bitcoin is rapidly becoming one of the world’s largest polluters. People are surprised to learn that Bitcoin “miners” use more energy than Amazon, Google, Facebook, Microsoft and Apple combined. That’s because Bitcoin miners use sophisticated computer hardware — and a huge amount of energy — to create and validate new coins.
Until May, 44% of the world’s Bitcoin miners were in China, where almost 60% of the nation’s energy comes from coal. But since then, China has called for a severe crackdown on Bitcoin mining because it was creating energy shortages that were forcing the country to fire up dirty coal plants. Then, just two weeks ago, Swedish officials sent an open letter to the European Union asking it to ban bitcoin mining throughout Europe.
The result has been a massive migration of Bitcoin mining to the U.S., causing some American utilities to turn on their most polluting older facilities and straining our national grid. From May to July alone, the U.S. went from hosting 18% of all Bitcoin miners to hosting 35% of all Bitcoin mining operations. And that number is only increasing.
How does Bitcoin work? And why does it use as much energy annually as the Netherlands and its 17 million people?
Bitcoin mining requires high-powered computers to solve a new cryptic puzzle every 10 minutes to add new currency to the blockchain. The process often requires thousands of computers, which consume an enormous amount of energy. The “mining” process that Bitcoin uses is called “Proof of Work,” and it is the most popular type of mining used by cryptocurrency companies. Unfortunately, it’s also the dirtiest, requiring huge amounts of energy that often force utilities to start up dormant coal plants to meet demand. Last summer, the cryptocurrency company Stronghold Digital Mining bought an entire Pennsylvania coal-powered plant — which burns 600,000 tons of coal each year — to power 1,800 computers for Bitcoin mining. The increased use of electricity by Bitcoin mining also has a huge impact on local businesses and residents. One study found that small businesses and households paid between $79 million and $165 million extra in upstate New York because of increased electricity use by crypto miners. While Bitcoin itself is not the problem, popular mining processes like “Proof of Work” are accelerating climate change and adding tons of greenhouse gases a day.
There are alternative processes already available. While the U.S. has a cleaner utility energy generation profile than China, there is no need to allow Bitcoin coin miners to continue to use the dirtiest form of mining like the “Proof of Work” process. Inexpensive, clean alternatives exist. “Proof of stake” mining, for example, is faster and consumes less energy by using existing tokens as collateral to validate new transactions. This cleaner mining method passes transactions through an independent, distributed network of computers that runs an automated process to determine which transactions are valid. Transitioning to an alternative validation method like “Proof of stake” saves megatons of emissions and costs significantly less per transaction. We need a concerted global effort to incentivize all cryptocurrencies to convert to cleaner mining processes.
Here are five smart things we should be doing to clean up Bitcoin mining now:
Plan for the next global COP. Leaders at COP26 missed a large opportunity to clean up Bitcoin. Signees of the next COP should tax or ban proof-of-work coins around the world. The Swedish parliament has voted on legislation to do just this and is asking the EU to follow suit. The United States and others should immediately follow their lead.
Tax dirty crypto mining. Congress should pass legislation taxing any energy-guzzling crypto transactions in the country. Progressive crypto companies like Ripple, Solana, Cardano and Polkadot have already made the transition to cleaner cryptocurrencies. Bitcoin and others, using energy intensive “dirty” mining, should pay steep taxes for polluting our air.
Set emission standards. The EPA should set emissions standards for crypto transactions traded on U.S. exchanges. We already set standards for many industries, like those for passenger cars.
Enact state and local laws. In the absence of broader congressional action, states should also introduce their own regulations. The New York Senate was ahead of the curve passing a moratorium on proof-of-work authentication for blockchain transactions last summer (this bill died in the Assembly largely because of lobbying by the electrical workers union). Progressive states, like California, can lead by imposing taxes on crypto firms that don’t evolve to cleaner technologies.
Empower public utility commissions. PUCs have the authority to raise rates and should actively penalize any companies using dirty mining technologies and producing unnecessary carbon emissions.
On the current trajectory, Bitcoin miners will surpass coal miners as a major contributor to greenhouse emissions. That’s why we need to act now. The good news is that technologies to make securing cryptocurrency less energy-intensive are already here. If the Chinese and Europeans know this, Americans should too. Cryptocurrencies are not going away, so smart government, technology and financial leaders need to provide the right incentives for these companies to “come clean.” The U.S. should show the world that cleaning up Bitcoin is just as important as cleaning up coal — and a lot easier.
Steve Westly is the founder of the Westly Group, a leading venture fund focusing on sustainable energy and smart buildings. He is the former California state controller.


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