Crypto-Mining Advocates: Actually, We’re Not Terrible for the Environment

A blockchain-policy event in Washington delivered a pitch for cryptocurrency mining painted in shades of green—not green as in fiat US currency, but as in environmentally sound. 

The reputation of Bitcoin mining might as well be weighed down by lumps of coal. It uses so much electricity that mining firms have reopened coal-fueled power plants(Opens in a new window) to power it. But speakers at the Chamber of Digital Commerce’s DC Blockchain Summit made a case for enlightened mining, based on and boosting renewable energy.

“We’re able to contribute positively to grid stability,” said Brian Morgenstern, head of public policy at mining firm Riot Platforms(Opens in a new window). Citing plentiful wind and solar power for its Rockdale, Texas, facility, he said Riot ensures it’s not wasted during off-peak hours: “We’ll buy that energy when there otherwise might not be a consumer of it.”

Riot mining facility in Rockdale, Texas
(Credit: Riot)

Texas has one of America’s highest shares of renewable electricity generation—wind, solar and hydro now collectively reach 40.1%(Opens in a new window). Gas, however, still accounts for 41.8% of the total. Riot did not answer a query about energy types at its Texas facilities, but the company said in a September 2022 letter(Opens in a new window) to members of the House Energy and Commerce Committee that it can’t choose generation sources on the Texas grid. 

Morgensten emphasized that when demand spikes, Riot quickly idles its mining rigs: “We’re able to shut down at almost a moment’s notice.” 

The Colorado-based firm has financial incentives to be so polite: The Electric Reliability Council of Texas (ERCOT), which manages the Texas power grid, offers “demand response” rebates to industrial customers that dial back their use. Last July, Riot made more money(Opens in a new window) from these rebates than from Bitcoin mining.

A separate panel featuring three other mining firms added variations on that theme. Matthew Schultz, executive chair of CleanSpark(Opens in a new window), said mining-inflated demand rewards utilities for building extra renewable capacity: “Bitcoin is really the perfect solution to that, in that you can overbuild generation, and we can buy that surplus capacity.” 

Henderson, Nevada-based CleanSpark reports that 94% of the energy it used(Opens in a new window) in its 2022 fiscal year was carbon-free. Spokesperson Eleni Stylianou​ said that it includes renewable energy credits purchased through Georgia Power’s Simple Solar program(Opens in a new window).

Gabriel Ibghy, general counsel of Hive Blockchain Technologies(Opens in a new window), said his company provides “demand response as a service,” automatically turning off mining rigs when demand jumps. “We are integrated with the grid operator so it’s completely automatic, and we are paid for it.”

Hive blockchain infrastructure facility in Iceland
(Credit: Hive)

Vancouver-based Hive has set up facilities in Canada, Iceland, and Sweden because it can tap into 100% renewable energy at each location. Ibghy said Hive, too, buys off-peak power that would otherwise go wasted, ”making utilities a lot of money by monetizing an underused resource.”

Hive has also found customers for the heat byproduct of its mining facilities. In Sweden, for example, one will heat a greenhouse next door that can lower the country’s carbon footprint by requiring fewer food imports: “There won’t be shipping of cucumbers and tomatoes all the way from Spain to northern Sweden.” 

Fred Thiel, chair and CEO of Marathon Digital Holdings(Opens in a new window), said the rural locations of many mining facilities can support the needed buildout of transmission lines. Marathon, based in Fort Lauderdale, is a recent convert to green mining, announcing last April(Opens in a new window) that it would transition to renewable power. It’s since left a Montana coal power plant(Opens in a new window) that it had helped revive in 2020.

An April 2021 report(Opens in a new window) from energy consultancy Wood Mackenzie endorsed the concept of sustainability-minded cryptocurrency mining, saying it could work as “a highly predictable and scalable demand response asset” and could “provide additional demand for cheap, under-utilised electricity generated by independent power producers and utilities.”

Cryptocurrency advocates say most mining already runs on renewable energy. A survey conducted by the Bitcoin Mining Council, a trade group that says it represents 48.4% of the global industry, found that in the fourth quarter of 2022, 63.8% of the electricity used for mining came from sustainable sources.(Opens in a new window) A tracker run by the University of Cambridge’s Center for Alternative Finance, however, puts the renewable share much lower: 37.6%, including nuclear(Opens in a new window).

Either number is better than the share of renewables for overall power generation in the US—21.5% in 2022(Opens in a new window), according to the government’s Energy Information Administration. But the bad actors in cryptocurrency can seem egregiously bad when they put mothballed coal power plants back online, as the private-equity firm Atlas Holdings did in upstate New York, with ugly environmental consequences(Opens in a new window). 

That led New York to pass a law imposing a two-year timeout on new fossil-fueled mining facilities. And at least year’s Blockchain Summit, speakers Sen. Steve Daines (R-Mont.) and MicroStrategy’s then-CEO Michael Saylor denounced that bill as an intrusion on free enterprise(Opens in a new window).