ANALYSIS-Bitcoin environmental battles heat up in the US

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Bitcoin has reached record prices in recent weeks

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Biden administration proposes bitcoin energy tax

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Fighting over mines spreading across the country

By Avi Asher-Schapiro

LOS ANGELES, – With bitcoin prices breaking new records in recent months, battles over the cryptocurrency’s energy use and environmental impact are escalating across the United States.

President Joe Biden’s administration is demanding that the industry disclose how much electricity mining operations use, while cryptocurrency groups are pushing for legislation to protect mines from local regulations that limit their expansion.

Bitcoins are awarded to miners who compete against each other to complete energy-intensive calculations.

On April 19, Bitcoin underwent what is known as a “halving” – cutting in half the rewards cryptocurrency miners receive for creating new tokens, making it more expensive for them to put new bitcoins into circulation.

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How this will affect bitcoin production and its energy consumption is not yet clear, but miners have been buying equipment to prepare for more intense competition.

“We’re not going to meet our clean energy goals if we continue to incentivize this kind of electricity use,” said Mandy DeRoche, an attorney with the environmental group EarthJustice, which has sued to block permits for mining facilities.

The industry, for its part, has long argued that it should be treated just like any other power consumer.

“Why do we have to pick winners and losers from whom we can use energy?” asked Tom Mapes, founder of the Digital Energy Council, which counts major bitcoin miners among its members.

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In his budget proposal released in March, Biden proposed a 30% excise tax on bitcoin energy use — a move that Wyoming Senator Cynthia Lummis, a supporter of bitcoin mining, said would hurt the industry in the United States. destroy.

Estimates from a model developed by the Cambridge Blockchain Network Sustainability Index found a steady increase in the greenhouse gases emitted by mining operations – from 48 million metric tons in 2022 to 61 million in 2023.

The emissions for 2024 could be as much as 90 million tonnes, the model estimates.

HOW MUCH ENERGY?

While some publicly traded bitcoin mining companies disclose details of their energy use, there is no reliable data on exactly how much electricity the industry as a whole consumes.

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The US Energy Information Administration estimated that digital currency mining in the United States could consume between 0.6% and 2.3% of all power, but that data is not based on direct reporting from facilities – some of which use as much energy as a whole can consume town.

A Riot Blockchain facility in Rockdale Texas, for example, consumes as much energy as the surrounding 300,000 homes – a figure that environmental groups often use to paint the industry as wasteful.

Bitcoin mining companies point out that unlike homeowners, miners participate in “demand response” programs that allow them to shut down their machines to support the network during times of stress.

“We are a tool in the toolbox to balance our energy system,” said Mapes.

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In January, the Securities and Exchange Commission approved a bitcoin ETF fund, injecting several billion dollars of new investment into the industry, a move that infuriated environmental groups.

The following month, the Department of Energy sent notices to 82 bitcoin miners demanding they disclose their energy usage, but Riot Blockchain and the Texas Bitcoin Council won a lawsuit that temporarily blocked the survey.

LOCAL STRUGGLES

As the government seeks more data on the industry, battles over building and expanding bitcoin mining facilities are spreading across the country, DeRoche with EarthJustice said.

Her group is litigating an ongoing case to block permits for a mining facility in New York. Communities in Arkansas brought nuisance claims against mines earlier this year because of the noise they make.

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In April, the Arkansas legislature advanced two new laws that would impose new licensing requirements and noise restrictions on mines in the state.

Last year, New York became the first state in the United States to place a temporary moratorium on new bitcoin operations that rely on fossil fuels.

Mapes, along with the Digital Energy Council, said lawmakers shouldn’t be the “power police,” choosing which industries can tap into energy resources.

In March, a community group in Pennsylvania filed a lawsuit against a bitcoin mine and the government regulators who approved it, arguing that it violates a constitutional provision that guarantees citizens a right to a clean environment.

“We’re dealing with more air pollution and more water pollution,” said Linda Christman, president of the nonprofit group Save Carbon County that filed the lawsuit against regulators and Marathon Digital Holdings, a mining company that burns coal waste and tires to fuel its mining operations. drive. in the area.

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The company declined to comment on the pending lawsuit.

Some bitcoin industry groups have pushed state-level laws that would make it harder for local communities to independently regulate mining operations in their areas.

The Satoshi Fund, the group behind the efforts, did not respond to a request for comment.

These rules — known as the Blockchain Basics bill — have already been enacted in more than half a dozen states.

Mapes said that mining operations have an obligation to win over communities in which they do business: “There are companies that are doing it right,” he said. “And they can be stewards of the community.” Riot Platforms Inc. Marathon Digital Holdings Inc

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