Bitcoin mining’s toll on El Salvador leaves communities without water · Global Voices

Eight thousand people lost access to running water for more than a month

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Two years ago, fifteen communities from the municipality of Nueva Concepción, north of El Salvador’s central region, gathered to ask the government to halt the construction of a solar power plant along the Gavilán Gorge and Lempa River, worried that access to drinking water would decrease. Neither the mayor nor the city council was informed about the project or its details. The solar plant is just one of many renewable energy projects powering Bitcoin mining in the country. La Geo Power Company began using geothermal energy to mine the cryptocurrency under Bukele’s leadership in September 2021, shortly after the controversial Bitcoin Law was passed in June, making Bitcoin an official form of legal tender across the country .

Bitcoin mining is widely misunderstood as a practice due to the connotation of physical mining. Bitcoin is the world’s first cryptocurrency. The digital asset is detailed in a white paper published in 2008 under the pseudonym Satoshi Nakamoto. Mining Bitcoin involves running programs to maintain the blockchain ledger in the Bitcoin network. This is essentially a link to every single Bitcoin transaction to date. Due to the decentralized nature of Bitcoin, each person on the network has their own version of the ledger. The chain with the most blocks is considered the valid blockchain. Miners who complete an entire blockchain on the network are rewarded an amount of the digital asset as an incentive for miners to maintain the network.

Bitcoin mining relies on an enormous amount of computing power, which is generated with a proportionally enormous amount of electricity. Water is not only used to cool computers that enable Bitcoin transactions, but in the energy plants that provide electricity.

In March 2024, for more than a month, eight thousand people living in the Santa Teresa project in San Martín, east of the capital San Salvador, did not have access to running water despite their complaints about state-owned services. The National Administration of Aqueducts and Sewers (ANDA) sent nine water pipes to the neighborhood shortly after La Prensa Gráfica, one of the most popular newspapers in El Salvador, published their article covering the situation. Eleven kilometers southwest of the municipality of San Martín lies the town of Ilopango, where residents of the Altavista neighborhood have reported no drinking water for almost a week. Both neighborhoods are located in San Salvador province and home to the country’s capital, with the same name. Despite several public complaints over the years, ANDA reported 90 percent drinking water coverage in the district of San Salvador. Salvadorans living without water must rely on foreign aid from family members, bottled water, private services, or whatever means necessary to survive.

ANDA has previously admitted that there is not enough water to meet the public demand for every household in El Salvador. While several experts agree that there is a water shortage in the country, the water crisis is not a priority for the Bukele administration, which instead passed The Water Resources Law favoring the privatization of water. On top of the existing water pollution resulting from volcanic soils, as in the case of Lake Ilopango, Salvadorans face increasing water scarcity due to the resource demands of Bitcoin mining.

The approval of the law came as a shock to most Salvadorans unfamiliar with the cryptocurrency, and critics commented on the involuntary nature of Bitcoin’s implementation. Article 7 of the Bitcoin Law expressly states that economic agents must accept all payment transactions that offer Bitcoin as a form of payment when acquiring goods or services. In 2021, less than 40 percent of Salvadorans had any kind of bank account, which only raised questions about the possibility of mass adoption. In the fall of 2023, the use of Bitcoin or the government-backed Chivo Wallet continued to decline.

The same year that the Bitcoin law went into effect, residents of several cantons in Berlin, Usulután, protested against the construction of wells for geothermal mining due to water scarcity, a mysterious creamy substance polluting their water, and deforestation caused by good construction. Public complaints went unheard as activities at the plant continued.

Volcano Energy, a renewable energy and Bitcoin mining company, announced last fall the launch of Lava Pool, which boasts the use of renewable energy to mine the currency. Users of the service can combine computing resources to mine Bitcoin, and Volcano Energy claims they can potentially offset the overall environmental costs of Bitcoin mining. The company has also listed plans to build a solar and wind farm, but its location has not yet been disclosed. While El Salvador has several renewable energy projects, most go directly to Bitcoin mining, an unsustainable practice due to Bitcoin mining’s resource requirements.

Alex de Vries, researcher and founder of the Bitcoin Energy Consumption Index, stated that more than half of global energy consumption is related to Bitcoin mining. Many cryptocurrency critics and enthusiasts are aware of the power that Bitcoin mining consumes, which is exactly why renewable energy continues to appear alongside Bitcoin mining projects. Even in Iceland, geothermal energy fails to cover the cost of Bitcoin mining.

Water consumption is a lesser-known problem plaguing Bitcoin. It is used for cooling, humidification and the generation of thermoelectric power. According to de Vries, Bitcoin miners in the United States consume up to 120 gigaliters of water annually, but the geographic location has a direct impact on how much water will be consumed. Despite having a significant amount of Bitcoin miners compared to the US, Kazakhstan has a larger water footprint due to its climate. This further raises questions about the viability of mining Bitcoin in the tropical climate of El Salvador.

De Vries also said that using different forms of renewable energy is not a viable solution, as hydroelectric power has the largest water consumption of all power sources. El Salvador currently uses hydroelectricity through the Lempa River Hydroelectric Executive Commission’s (CEL) four plants. The Lempa River basin, where energy is obtained, experiences rampant pollution and contamination.

Although the Bukele administration celebrates Bitcoin gains and progress in the race for “cultural supremacy”, the stark truth remains to be seen in several districts struggling for water equality. A survey conducted in 2023 by the University Institute of Public Opinion (Iudop) of the José Simeón Cañas Central American University (UCA) found that 40 percent of Salvadorans who receive water one day a week spend less than six hours had access. This year, on World Water Day, Salvadoran organizations protested against the General Law on Water Resources, the privatization of water and environmental concerns amid mass deforestation. As El Salvador sets a precedent for crypto investments, neighboring countries such as Honduras, Guatemala and Costa Rica will begin to experience compound water stress. Moreover, increasing regulation by global superpowers will only lead to the strategic placement of mining centers in regions with little environmental oversight. As a result, smaller nations will be forced to bear cryptomining’s toll on water equity as a growing body of literature exposes the effects of the industry on American soil.