The 2009 publication of the pseudonymous white paper that made the case for the bitcoin cryptocurrency marked a watershed in financial technology. But that paper did not so much as mention the extraordinary electricity use and potential massive damage to the climate that have dogged bitcoin and similar computer-intensive “proof of work” cryptocurrencies for at least a decade.
EWG has joined the campaign we are launching today to confront bitcoin’s energy and climate challenges. In the United States, bitcoin is supporting some dirty industries – and it doesn’t have to be that way.
At this point, the “currency of the future” is dragging us back into the past when it comes to saving the planet from climate change – just at a critical period when we’re seeing breakthrough progress to replace dirty, financially sketchy power sources like coal, fracked gas and nuclear with cheaper, cleaner renewables like wind and solar.
It’s hard to name an environmentally damaging source of electric power that U.S. bitcoin miners have not been willing to tap for profit. Of special concern are polluting fossil fuels that need to stay in the ground. But the list also includes waste coal in Pennsylvania and aging nuclear power in Ohio, alongside obsolete coal-burning electric plants in Kentucky and Montana and flare gas “waste” in Texas oil fields. I have to assume some bitcoin miners considered whale oil, but it didn’t quite pencil out.
Faced with the problem of keeping dirty, obsolete power plants or even entire grids profitable, we’ve seen electric utilities go to such extreme lengths as fighting the adoption of rooftop solar, or even bribing state legislators to pass bailout bills for money-losing coal and nuclear plants, as happened recently in Ohio.
Enter bitcoin mining, with its massive, highly portable electricity demands: Now utilities have a plug-and-play option that lets them avoid pesky FBI raids and federal indictments, and still retain or even resurrect electric power assets that would otherwise have been stranded and retired as a result of bungled resource planning, environmental regulation, energy efficiency and cheaper renewables.
Bitcoin mining operations differ in many ways from conventional computer server farms. But for our purposes today, one characteristic stands out: While server farms can and should be operated with optimum efficiency, and ideally with renewable energy – our friends at Greenpeace have campaigned very effectively to advance those goals – the fact is that operating server farms are essential to the online economy.
In the case of bitcoin, there is an alternative to ranks of shipping containers packed with specialized computers and powered by dirty electricity.
Bitcoin can change from its original, computer- and energy-intensive proof of work technology to secure, efficient cryptocurrency systems that require a small fraction of bitcoin’s current electricity needs.
Ethereum, the second-ranked proof of work–based cryptocurrency by market cap, is undertaking just such a transition (“The Merge”) now – changing the code, not the climate, perhaps as soon as this summer.
This campaign is asking the bitcoin community – investors in particular – some simple questions: Do you want your investments to help retain or revive dirty electricity assets in the United States? Do you want your portfolio to offset and delay the transition, now underway, to the cleaner, renewable energy sources we desperately need to save the planet from disastrous climate change? Will you immediately commit to use your investments and your influence to clean up bitcoin?