Bitcoin mining in the United States has had a huge impact on power grids, a New York Times investigation revealed. The mines – which are giant data farms – use far more electricity than the communities around them, increasing pollution from coal and gas plants. Crypto mines also make electricity bills more expensive for their neighbors, even as companies take advantage of incentives offered by grid operators to avoid blackouts during an energy crisis.
This is the most comprehensive analysis to date of Bitcoin’s impact on the environment and the energy system in the United States. And it comes like Democratic lawmakers pressure federal agencies compel crypto companies to disclose information about their operations. THE Time has startling numbers for individual crypto mines and the industry as a whole, which he obtained by pouring in financial records, satellite images, and studies he commissioned from outside research groups.
The newspaper identified 34 of the largest crypto mines in the United States, each operating at 40 megawatts or more. Each one, on its own, uses at least 30,000 times more electricity than an average home in America. In Rockdale, Texas, the nation’s largest and most energy-intensive bitcoin mining facility consumes as much electricity as the nearest 300,000 homes combined.
In Rockdale, Texas, the nation’s largest and most energy-intensive bitcoin mining facility consumes as much electricity as the nearest 300,000 homes combined
The expansion of industry in the United States has been rapid, another stressor for American power grids. The United States has only become the largest in the world hub for bitcoin miners after China kicked them out in 2021. The Time compares the new electricity demand from US crypto mines to the sudden addition of yet another “New York City home value.”
Bitcoin is a deliberately energy-intensive blockchain. To validate transactions and generate new tokens, Bitcoin “miners” use specialized hardware to solve mathematical puzzles. The amount of energy required to solve these puzzles is meant to deter bad actors from messing with the ledger. Puzzles get more complex over time as more people try to solve them, requiring more sophisticated software that consumes more electricity in the process.
To meet this growing demand, power grids may need to turn on backup generators, which typically run on gas or coal. A few crypto mining companies have even revived closed fossil fuel power plants mine bitcoin. This made bitcoin mining attractive to states like texas and North Dakota which produce a lot of fossil fuels, while provoking the indignation of conservationists And Democratic lawmakers trying to meet the Biden administration’s climate goals.
The pollution resulting from the additional energy demand from Bitcoin mining is roughly equal to the annual emissions of 3.5 million new gas-guzzling cars, the Time reports. Industry promises that Bitcoin mining would spur renewable energy growth have not materialized. Coal and gas-fired power plants meet about 85% of the demand that Bitcoin mining adds to power grids, according to an analysis by the Time ordered from the association Watttime.
In addition to adding to pollution, crypto mines also affect Americans’ energy bills. Soaring demand drives up electricity prices and forces nearby households to compete for a limited supply. Energy consumption has increased electricity bills for other customers by nearly 5% in Texas, according to a Wood Mackenzie analysis commissioned by the Time. This equates to $1.8 billion per year in higher electricity costs for consumers in Texas, home to around a third of the crypto mines examined.
As they drive up other people’s bills, crypto companies have managed to play the energy systems in their favor. The company operating the Bitcoin mine in Rockdale, Texas paid just 2.96 cents per kilowatt hour last year, it reported to investors. That compares to the 13.5 cents residential customers typically paid that year.
How does a cryptocurrency mine get electricity so cheaply? In Texas, he can benefit from a program that pays industrial companies to shut down when the grid is under too much pressure. This happened in February 2021 when a severe cold snap disrupted energy supply — leaving millions without electricity and ultimately killing hundreds of people. During the disaster, the state’s power grid operator paid a crypto-mining firm an average of $175,000 an hour to shut down its computers. In 2020, five mines realized at least $60 million from this energy-saving program, the Time reports.
Worth checking out the whole story of Timewhich includes maps and useful data on each of the 34 crypto mines he investigated.