Cryptocurrency mining in Pennsylvania must be regulated

In early May, just one day after the Pennsylvania House of Representatives held a public hearing on the cryptomining industry and climate change, the White House called for a new tax on the enormous amount of electricity used by cryptomining companies to minimize the industry’s outsized impact in worsening the climate crisis.

It’s becoming clear that the cryptomining industry, which has exploded in recent years in the U.S., is energy-intensive and operating with little government oversight. And the industry has made its way into Pennsylvania, with various cryptomining companies setting up shop across the commonwealth, burning fossil fuels to power their machines. If we want our state to take the climate crisis and local air pollution — and their health impacts — seriously, we should follow the White House’s lead in regulating the cryptomining industry before it’s too late.

Proof-of-work cryptomining — often mining Bitcoin — entails millions of machines racing to solve a complex mathematical problem. This doesn’t look like individuals on their computers at home — proof-of-work crypto are warehouses or shipping containers lined with hundreds of computing machines. As more mining machines enter the competition, the math problem gets harder, and the electricity required continues to grow exponentially. Cryptomining uses up to 1.7% of our country’s electricity, which is similar to the energy requirements of all home computers or residential lighting in the United States. On a global scale, cryptomining uses more energy than the entire country of Argentina or Australia. As a result, cryptomining companies are turning to cheap, accessible forms of energy to keep up their operations: dirty fossil fuels.

Here in Pennsylvania, cryptomining companies are burning waste coal and fracked gas to power their mining operations — and with little to no regulation or oversight. In just the last few years, Stronghold Digital Mining acquired two old waste coal plants in Pennsylvania, burning piles of coal refuse to generate electricity for their mining. This releases massive amounts of harmful air pollutants such as nitrogen oxide and sulfur dioxide.

Cryptominers are also reopening gas well pads that should otherwise be capped to prevent methane pollution. Diversified Production LLC operates a gas well pad in Elk County and uses fracked gas to fuel their cryptomining operations. Combustion of coal and fracked gas, regardless of what it’s being used for, leads to increased levels of greenhouse gasses, sulfur dioxide, nitrogen oxides, and air toxins — and it doesn’t help that mining crypto requires so much of it. To put it simply, allowing crypto mining companies to expand fossil-fuel combustion will undermine Pennsylvania’s efforts to reduce air pollution and greenhouse gas emissions.

And to add insult to injury, Pennsylvania’s tax code, as it currently stands, incentivizes cryptomining companies to start their operations here. Burning waste coal is not only harmful, but it’s expensive. Coal plants are closing down across the country because they simply cannot compete with cheaper forms of energy. The only reason cryptomining companies, like Stronghold, see burning waste coal as a viable option is because of various subsidies offered by the state. Numerous incentives encourage these companies to burn waste coal. As Stronghold CEO Greg Beard said himself, “waste coal reclamation without the subsidies would not happen.”

Using state resources to invest in the growth of proof-of-work cryptomining is a dangerous investment, and one that threatens the health of all Pennsylvanians. We have a responsibility to our citizens and our climate to act before it’s too late.

Pennsylvania State Rep. Greg Vitali is chair of the Environmental Resources and Energy Committee. Charles McPhedran is a senior attorney in Earthjustice’s Clean Energy Program.