Energy-thirsty Bitcoin miners seek ways to dump fossil fuels

HELENA, Mont. (AP) – Last year, a cryptocurrency company “exploited” what appeared to be the ideal place for its thousands of energy-thirsty computers working all day to verify bitcoin transactions: the land of a power plant. of coal in rural Montana. .

But with the cryptocurrency industry under increasing pressure to control the environmental impact of its massive electricity consumption, Marathon Digital Holdings has made the decision to package its computers, called miners, and move them to a wind farm in Texas.

“For us, it’s just reduced to the fact that we don’t want to be operating on fossil fuels,” said company CEO Fred Thiel.

In the world of bitcoin mining, access to cheap and reliable electricity is everything. But many economists and environmentalists have warned that as the digital currency is still very misunderstood growing in price – and with it popularity – the mining process that is fundamental to its existence and value is increasingly energy intensive and potentially unsustainable.

Bitcoin was created in 2009 as a new way to pay for things that would not be subject to the supervision of central banks or government. Although not yet popularized as a payment method, it has seen its popularity as an increase in speculative investment despite the volatility that can cause its price to change uncontrollably. In March 2020, a bitcoin was worth just over $ 5,000. This rose to a record high of more than $ 67,000 in November 2021 before falling to just over $ 35,000 in January.

The process by which transactions are verified and then recorded in what is known as a blockchain is critical to bitcoin technology. Computers connected to the bitcoin network run to solve complex mathematical calculations that verify transactions, with the winner earning newly minted bitcoins as a reward. Currently, when a machine solves the puzzle, its owner is rewarded with 6.25 bitcoins, with a total value of about $ 260,000. The system is calibrated to release 6.25 bitcoins every 10 minutes.

When bitcoin was invented, it was possible to solve puzzles using a normal home computer, but the technology was designed to make problems more difficult to solve as more miners work on them. Today’s miners use specialized machines that have no monitors and look more like a high-tech fan than a traditional computer. The amount of energy that computers use to solve puzzles grows as more computers add to the effort, and puzzles become more difficult.

Marathon Digital, for example, currently has about 37,000 miners, but expects to have 199,000 online early next year, the company said.

Determining how much energy the industry uses is difficult because not all mining companies report its use, and some operations are mobile, moving storage containers full of miners across the country in pursuit of low-cost energy.

Cambridge Bitcoin’s electricity consumption index estimates that bitcoin mining used about 109 terabytes an hour of electricity over the past year, close to the amount used in Virginia in 2020, according to the U.S. Energy Information Center. The current utilization rate would be 143 TWh for a full year, or approximately the amount used by the state of Ohio or New York in 2020.

The Cambridge estimate does not include the energy used to extract other cryptocurrencies.

A key moment in the debate over bitcoin’s energy use came last spring, when a few weeks after Tesla Motors said it was buying $ 1.5 billion in bitcoins. and would also accept digital currency as payment for electric vehicles, CEO Elon Musk joined critics in denouncing the industry’s energy use and said the company would no longer take it as payment.

Some want the government to intervene with regulation.

In New York, Gov. Kathy Hochul is being pressured to declare a moratorium on the so-called working test mining method – which uses Bitcoin – and to deny an air quality permit for a project on a power plant. adapted coal. plant which runs on natural gas.

A New York State judge recently ruled that the project would not affect the air or water of nearby Lake Seneca.

“Repowering or expanding coal and gas plants to make fake money in the midst of a climate crisis is literally crazy,” Seneca Lake Guardians vice president Yvonne Taylor said in a statement.

Anne Hedges, with the Montana Environmental Information Center, said that before the Digital Marathon appeared, environmental groups were waiting for the coal-fired power plant in Hardin, Montana, to close.

“He was a death watcher,” Hedges said. “We were getting their quarterly reports. We were looking at how much they were operating. We saw that it kept declining year after year, and last year that changed completely. It would disappear if not for bitcoin.”

The cryptocurrency industry “needs to find a way to reduce its energy demand” and it needs to be regulated, Hedges said. “That’s all there is to it. This is unsustainable.”

Some say the solution is to move from working test verification to participation proof verification, which some cryptocurrencies already use. With the participation test, the verification of digital currency transfers is assigned to computers, rather than making them compete. People or groups who bet more on their cryptocurrency are more likely to get the job and the reward.

Although the method uses much less electricity, some critics argue that participation test block chains are less secure.

Some companies in the industry recognize that there is a problem and are committed to achieving zero net emissions (not adding greenhouse gases to the atmosphere) from the electricity they use by 2030 by signing a Crypto Climate Agreement, inspired by the Paris Climate Agreement.

“All cryptographic communities should work together, as a matter of urgency, to ensure that cryptocurrency does not further aggravate global warming, but becomes a net positive contributor to the vital transition to a low-carbon global economy,” the agreement said.

Marathon Digital is one of several companies that are committed to harnessing excess renewable energy from Texas solar and wind farms. Earlier this month, Blockstream Mining and Block, formerly Square, announced that they were making their way into Texas in a small off-grid mining facility that used solar panels and Tesla batteries.

“This is a step in proving our thesis that bitcoin mining can finance zero-emission electrical infrastructure,” said Adam Back, CEO and co-founder of Blockstream.

Companies argue that cryptocurrency mining can provide an economic incentive to build more renewable energy projects and help stabilize power grids. Miners give renewable energy generators a guaranteed customer, which makes it easier for projects to get financing and generate energy at full capacity.

Mining companies can hire energy at lower prices because “all the energy they use can be turned off and returned to the grid at any time,” Thiel said.

In Pennsylvania, Stronghold Digital is cleaning up hundreds of years of burning coal waste to create what the state classifies as renewable energy that can be sent to the grid or used in bitcoin mining, depending on energy demands.

The Pennsylvania Department of Environmental Protection is a partner in the workplace, using relatively new technology to burn waste coal more efficiently and with less emissions. Left alone, waste coal piles can burn and burn for years, releasing greenhouse gases. When wet, the residual coal leaches the acid into the waterways in the area.

After using the coal waste to generate electricity, what is left is “non-toxic fly ash,” which is state-registered as a clean fertilizer, Stronghold Digital spokeswoman Naomi Harrington said.

As Marathon Digital gradually moves its 30,000 miners out of Montana, it is leaving behind tens of millions of dollars in mining infrastructure.

Just because Marathon doesn’t want to use more coal power doesn’t mean there won’t be another bitcoin miner to take its place. Thiel said he assumes power plant owners will find a company to do so.

“There’s no reason not to,” he said.

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