‘Cryptocurrency Mining Is Poisoning Our Communities,’ US Rep. Says

Rhetoric dividing crypto critics and proponents has been galvanized by dueling letters sent to the Environmental Protection Agency, which put a spotlight on crypto mining.

On one side, 23 Democratic members of Congress co-signed a scathing rebuke of the mining industry’s purported environmental and community impact.

Their letter, submitted last month by Rep. Jared Huffman, D-Calif., asked the EPA to ensure that crypto mining outfits across the US are operating within environmental regulations, particularly the clean air and water acts.

Huffman said the crypto-inspired reopening of gas and coal power plants, such as Greenidge in upstate New York and the Hardin plant in Montana, “undermine our battle to combat the climate crisis.”

“While some facilities claim to be ‘cleaner’ by creating energy from coal refuse, these coal-fired power plants still emit hazardous air pollutants and leak toxic contaminants into our waterways,” Huffman wrote. “Cryptocurrency mining is poisoning our communities.”

It sounds dramatic, but that “poisoning” doesn’t just relate to the potentially outsized greenhouse gas emissions of crypto mining outfits. Residents across the US (“from New York, Tennessee, to Georgia”) have complained about noise pollution tied to new bitcoin mining facilities which house hundreds of raucous mining rigs.

Another crypto criticism from Huffman was proof-of-work’s (PoWs) supposed problem with electronic waste. The two most popular cryptocurrencies, bitcoin and ether, are mined using PoW algorithms, which rely heavily on spent electricity to distribute new cryptocurrency and process transactions.

It has been suggested that mining rigs last on average just 1.29 years due to intentional overuse. This leads bitcoin mining to produce 30,700 tons of electronic waste every year (about as much small IT equipment disposed of by the Netherlands), Huffman told the EPA, citing research from controversial figure Alex de Vries.

De Vries previously worked as a data scientist for the Dutch central bank, focusing on financial economic crime. He now runs Digiconomist, a website that models the environmental sustainability of cryptocurrencies such as bitcoin and ether.

“The industry needs to be held accountable for this waste and discouraged from creating it,” Huffman said.

Mining energy mix is a “red herring,” activist says

Huffman’s letter stated that Bitcoin annually produces carbon emissions similar to that of Greece. Proponents dispute this statistic, citing imperfect retroactive estimates of Bitcoin’s energy consumption.

And so, the Holy Grail for both crypto critics and advocates seems to be an industry that re-enforces robust energy grids powered by renewable energy. After all, Bitcoin may consume lots of energy (and even more in the future, if prices continue rising), but if the electricity consumed is renewable, then it should mitigate environmental concerns.

The Bitcoin industry responded earlier this week with its own letter sent via the Bitcoin Mining Council, a group spearheaded by MicroStrategy CEO and famed bitcoin bull Michael Saylor. It was formed after Tesla stopped accepting bitcoin for payments, for which Elon Musk cited concerns over the network’s carbon footprint.

The group has tasked itself with tracking the energy mix consumed by the industry. Its most recent report, published in April, collated self-reported figures from entities contributing around half of Bitcoin’s hashrate and found the network was powered by nearly 60% sustainable energy sources — up from 37% in the first quarter of 2021.

With this in mind, is there cause for concern? Scott Faber, who spearheads government affairs at activist nonprofit Environmental Working Group, thinks so.

Faber highlighted recent warnings shared by the United Nations’ Intergovernmental Panel on Climate Change (IPCC) that explicitly cited the increasing electricity consumption of cryptocurrencies, such as bitcoin, as a “growing concern.”

IPCC’s recent Mitigation of Climate Change report did admit there was “uncertainty” surrounding the exact carbon footprint of blockchains and conceded that the crypto industry could mitigate damage by decarbonizing. 

Still, Faber noted that crypto’s sharp rise in electricity consumption far outstrips other industries and has diverged from more traditional data centers. He described the climate impact of electricity generators as a red herring; the growing demand for electricity by digital currencies that rely on PoW is cause for alarm strictly among EWG, Greenpeace and the IPCC.

“When you look at electricity demand by data centers, the [International Energy Agency] found that demand has been flat even though internet traffic and data center workloads have increased significantly,” Faber said.

Other data transmission networks, such as mobile communications, are becoming more energy efficient, he explained. The exponential increase in electricity consumption needs to be curbed, and the energy mix powering that consumption is just a detail at this point.

“The really important point is the trend — the 20-fold increase in just five years — especially in contrast to other sectors,” Faber said.

While that sentiment does hold a certain amount of weight, especially among climate activists, moves made by the Bitcoin industry to decarbonize or otherwise go green shouldn’t be understated. 

Swathes of mining outfits around the world have promised to go carbon neutral, with some going to great lengths to ensure they do not use energy grids powered by carbon. Their reliance on fossil fuels could hurt in the long run, should regulations be imposed that might mess with electricity supply, mining expert Alejandro de la Torre said. Uzbekistan recently moved to inspire miners to set up their own solar panels, for example, charging them double to plug into the standard grid.

In any case, there’s a problem: Faber doesn’t believe the claims of the Bitcoin Mining Council. “I think until a government body or a trusted third party is given the job of measuring, reporting, and verifying those claims, they are simply that,” he said.

Faber explained there are plenty of examples of government-required reporting, through legislation or other means. For example, the EPA requires manufacturers to annually report the volumes of toxic chemicals they release into the environment.

Is it realistic for the Bitcoin industry to accept operational interference from the government? De la Torre said the Texas power grid, ERCOT, already publishes such information, allowing third parties to verify energy mixes. He said that more avenues to verify the energy mixes powering a grid would be a good thing.

Castle Island Ventures’ Nic Carter was more pointed in his response: “Completely ludicrous and unrealistic, and an insane standard compared to every other industry.”

“Buying electricity from the grid and doing computation isn’t exactly similar to producing toxic chemicals.” 

But if environmental activists get their way, it could very well be in the eyes of regulators.

---

Get the news in your inbox. Explore Blockworks newsletters:

• The Breakdown: Decoding crypto and the markets. Daily.
• 0xResearch: Alpha in your inbox. Think like an analyst.