Cratering Bitcoin prices over the last year haven’t dampened interest from cryptocurrency miners—or the persistent scrutiny from regulators and environmental groups over the climate effects and local impacts of the energy-guzzling facilities.
A report published Wednesday by the Environmental Working Group documents the air, climate, water, and noise pollution caused by cryptocurrency mining in six US communities. The report comes as federal and state officials and lawmakers debate whether to welcome or discourage the nascent industry in the wake of New York’s two-year ban on some new crypto mines pending a state environmental review.
Environmental groups argue crypto mining is a climate and community risk as it draws heavily on electricity sourced from fossil fuels. One case study in the EWG report, a Blockstream mining facility in Adel, Ga., generates so much noise from cooling fans and other equipment that local resident Annette Tiveron has had to install 11 layers of insulation on her bedroom wall in a fruitless attempt to block the sound.
The facility has been shut down for the last eight months, but when on, “it sounds like 1,000 jet engines taking off at one time,” Tiveron said. “You can hear it five miles away from here. It ripples our pond from the vibration with the machines. It’s literally shaking your brain.”
Chris Cook, Blockstream’s chief information officer, said the company has completed acoustic studies by third-party engineering firms that demonstrate it’s in compliance with local sound ordinances. He also said the company has spent more than $250,000 in sound mitigation measures, including the construction of sound berms and the planting of trees to absorb sound.
No Signs of Slowing Down
The industry doesn’t show signs of tapering off despite market and regulatory pressures.
Mines, or mining farms, may consist of thousands of servers stacked in warehouses. They deploy raw computing power to solve a series of complex math problems, consuming more electricity each year than many individual countries, including Pakistan and Finland, according to the Cambridge Bitcoin Electricity Consumption Index.
Last November, Bitcoin prices dipped below $16,000, a dramatic fall from a high of about $64,000 just one year prior. That same month, FTX, a cryptocurrency exchange, collapsed, and New York Gov. Kathy Hochul (D) announced the halt of new crypto mining facilities powered by fossil fuel plants.
Yet, this month, global cryptocurrency power demand rose close to an all-time high at nearly 16 gigawatts, the index estimated. The annualized consumption of 139 terrawatt-hours is roughly equal to all the lights and televisions in the US combined, the index estimates. Mining difficulty—a measure of how many people are trying to buy Bitcoin—recently hit an all-time high.
Mining activity overall may not necessarily shrink as it faces lower prices and comes under scrutiny from regulators, said David Zell, founder of the Bitcoin Policy Institute. Larger, more efficient firms that have better power agreements usually buy up the assets of these distressed miners that didn’t have cheap enough power to compete, Zell said.
As the industry consolidates, miners have options: incentives and friendlier rhetoric offered in other states, such as Montana, Mississippi, and Missouri, that are pursuing “right-to-mine” bills that block any efforts to raise power prices or create zoning restrictions on miners, Zell said.
And prices are up some 70% since November, bouncing back to about $28,000.
Some industry players say the environmental harm they’re causing has been overstated. One of the companies mentioned in the EWG report, Greenidge Generation Holdings Inc., operates a natural gas plant in the Finger Lakes region of upstate New York to power a commercial crypto mining operation. The report notes that the plant creates water pollution in Seneca Lake.
But Dale Irwin, Greenidge’s president, said the former coal-fired plant also delivers power to the state’s grid, and helps the local economy.
Federal Intervention
Environmental groups continue to oppose crypto mining. In March, Greenpeace USA activists brought an 11-foot-tall art installation to two Fidelity Investments offices in New York City to demand the financial firm cut its support for Bitcoin.
The Biden administration has started taking steps to rein in the sector, including a proposed 30% excise tax on electricity for digital mining in the White House’s fiscal 2024 budget request. The tax would be phased in, starting at 10% in the first year, then rising to 20% in the second and 30% thereafter.
Ali Zaidi, the White House’s national climate adviser, recently said the crypto market “has to get its act together on being clearer about disclosing its environmental footprint and making sure that, from here on forward, the path forward has to be done in a way that does not contribute to the climate crisis that we have.”
But the White House also finds itself in a tricky spot because President Joe Biden released an executive order last March outlining its commitment to secure the position of the US in digital assets, including supporting technological advances that promote their growth.
Federal agencies are still weighing how to carry out recommendations laid out by the White House Office of Science and Technology Policy in September. The Environmental Protection Agency is studying the issue. The Energy Department declined to comment on whether it would pursue the White House-recommended efficiency standards for cryptocurrency mining.
About two dozen signatories recently sent a comment letter to the EPA urging it to treat cryptocurrency mining operations that violate air, water, and noise laws as a special target for enhanced enforcement.
Congressional Democrats are also trying to rein in the sector. A bill from Sen. Ed Markey (D-Mass.) and Rep. Jared Huffman (D-Calif.) would require energy-intensive miners to disclose their emissions. The measure would further require the EPA to lead a comprehensive study about the sector’s environmental impacts.
But those efforts seem likely doomed, given Republican opposition to crypto regulation. During a March Senate subcommittee hearing, Sen. Pete Ricketts (R-Neb.), the panel’s top Republican, said cryptocurrency mining should be allowed to grow because it boosts the economy and creates jobs.