Bitcoin’s new puzzle: how to give up fossil fuels and go green
Helena, Mont. — A company that “mines” cryptocurrency for the past year, the ideal place for its thousands of power-thirsty computers working round the clock to verify bitcoin transactions: the base of a coal-fired power plant in rural Montana .
But with the cryptocurrency industry under pressure to rein in the environmental impact of its massive electricity consumption, Marathon Digital Holdings decided to pack up its computers, called miners, and move them to a wind farm in Texas. is done.
“For us, it just comes down to the fact that we don’t want to operate 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 warn that as the still-widely misunderstood digital currency grows in value – and with its popularity – the mining process that is central to its existence and value will become increasingly energy efficient. intense and potentially destabilizing.
Bitcoin was created in 2009 as a new method of payment for things that would not be subject to central banks or government oversight. While it has yet to take hold widely as a method of payment, it has seen its popularity as speculative investing grow despite the volatility that can cause its price to swing wildly. In March 2020, one bitcoin was worth just over $5,000. It soared to a record over $67,000 in November 2021 and fell to just over $35,000 in January.
Central to Bitcoin’s technology is the process through which transactions are verified and then recorded on what is known as a blockchain. Computers connected to the bitcoin network race to solve complex mathematical calculations that verify transactions, with the winner receiving newly minted bitcoins as a reward. Currently, when a machine solves a puzzle, its owner is rewarded with 6.25 bitcoins – a total value of about $260,000. The system is calibrated to issue 6.25 bitcoins every 10 minutes.
When bitcoin was first invented, it was possible to solve puzzles using a regular home computer, but the technology was designed so that the problems would become harder to solve as more miners worked on them. Those mining today use specialized machines that have no monitor and look more like a high-tech fan than a traditional computer. The amount of energy used by computers to solve puzzles increases as more computers are involved in the effort and the puzzles are made more difficult.
Marathon Digital, for example, currently has about 37,000 miners, but is expected to have 199,000 online by early next year, the company said.
It is hard to determine exactly how much energy the industry uses because not all mining companies report their usage and some operations are mobile, moving storage containers full of miners across the country chasing low-cost electricity.
According to the US Energy Information Center, the Cambridge Bitcoin Electricity Consumption Index estimates that bitcoin mining has used about 109 terawatt hours of electricity over the past year – close to the amount used in Virginia in 2020. The current usage rate would work out to 143 TWh over a full year, or about the amount Ohio or New York State would use in 2020.
The Cambridge estimate does not include the energy used to mine other cryptocurrencies.
A key moment in the debate over bitcoin’s energy use came last spring, when Tesla Motors said it was buying $1.5 billion in bitcoin and would also accept the digital currency as payment for electric vehicles, said CEO Elon Musk. Critics joined in. Energy use of the industry and said that the company will no longer take it as payment.
Some want the government to step in with regulation.
In New York, Governor Kathy Hochul is being pressured to declare a moratorium on a so-called proof-of-work mining method — one that uses bitcoin — and wind up a project on retrofitted coal-fired electricity. Natural gas-fired plant for denial of quality permit.
A New York state judge recently ruled that the project would not affect the air or water of nearby Seneca Lake.
“It’s really crazy to expand or expand coal and gas plants to make fake money amid the climate crisis,” Seneca Lake Guardians vice president Yvonne Taylor said in a statement.
Anne Hedges with the Montana Environmental Information Center said that before the arrival of Marathon Digital, environmental groups expected the closure of the coal-fired power plant in Hardin, Montana.
“It was a death knell,” said Hedges. “We were getting their quarterly reports. We were seeing how much work they were doing. We were seeing it continue to decline year after year – and last year that completely changed. It would have fallen out of existence but for bitcoin.”
Hedges said the cryptocurrency industry “needs to find a way to reduce its energy demand” and it needs to be regulated. “That’s all it’s for. It’s not sustainable.”
Some say the solution is to switch from proof-of-work verification to proof-of-stake verification, which is already used by some cryptocurrencies. With Proof of Stake, verification of digital currency transfers is entrusted to the computer, not to compete with them. People or groups who stake their cryptocurrencies more are more likely to get a job – and a reward.
While this method uses very little electricity, some critics argue that proof-of-stake blockchains are less secure.
Few companies in the industry acknowledge that is a problem and are committed to achieving net-zero emissions – adding no greenhouse gases to the atmosphere – by 2030 by signing the Crypto Climate Agreement, modeled after the Paris climate accord. make use of.
The agreement states, “All crypto communities must work together to ensure that crypto does not further exacerbate global warming, but instead becomes a net positive contributor to the significant transition to a low-carbon global economy. “
Marathon Digital is one of several companies hoping to harness additional renewable energy from solar and wind farms in Texas. Earlier this month, Blockstream Mining and Block, formerly Square, announced that they were breaking ground in Texas on a small, off-the-grid mining facility using Tesla solar panels and batteries.
“This is a step forward to prove our thesis that bitcoin mining can fund zero-emission electricity infrastructure,” said Adam Back, CEO and co-founder of Blockstream.
The companies argue that cryptocurrency mining can provide an economic incentive to build more renewable energy projects and help stabilize the electricity grid. Miners give renewable energy generators a guaranteed clientele, making it easier for projects to obtain financing and generate electricity at their full potential.
Mining companies are able to contract for low-priced energy because “all the energy they use can be turned off and given back to the grid at a moment’s notice,” Thiel said.
In Pennsylvania, Stronghold Digital is burning hundreds of years of coal waste to clean what the state classifies as renewable energy that can be sent to the grid or used in bitcoin mining, depending on demand for electricity.
Pennsylvania’s Department of Environmental Protection is a partner in the work, which uses relatively new technology to burn waste coal more efficiently and with fewer emissions. Left alone, piles of waste coal can catch fire and burn for years, releasing greenhouse gases. When wet, the waste leaks acid into the coalfield waterways.
Stronghold Digital spokeswoman Naomi Harrington said that after using coal waste to generate electricity, there is “toxicity-free fly ash” left, which has been registered as a clean fertilizer by the state.
As Marathon Digital slowly moves its 30,000 miners out of Montana, it is leaving behind tens of millions of dollars in mining infrastructure.
Just because Marathon no longer wants to use coal-fired electricity doesn’t mean there won’t be another bitcoin miner to take his place. Thiel said he believes power plant owners will find a company to do so.
“There’s no reason,” he said.
Bitcoin’s new puzzle post: How to Quit Fossil Fuels and Go Green appeared first on The Associated Press.
