A New York Times, daily US newspaper, investigation reported that Bitcoin mines in the US have an enormous impact on the power supply system. The mines are giant data farms consuming more electricity than the communities surrounding them and are the cause of pollution from coal and gas power plants. Also, the crypto mines make electricity bills highly expensive for their neighbors, even as the companies are making a profit from the facilities that grid operators provide in order to prevent blackouts in times of insufficient energy.
This has been the most extensive investigation on the impact of Bitcoin on the environment and energy system in the US. It also comes at a time when Democratic lawmakers are pushing government agencies to make crypto companies reveal information about their operations. The Times has revealed shocking numbers for individual crypto mines and the industry as a whole, which it got by inspecting financial records, satellite imagery, and studies it paid to outside research groups.
The newspaper found out that there are 34 massive crypto mines in the US, each consuming 40 megawatts or higher. Every mine uses at least 30,000 times of electricity equal to an average home in America. In Rockdale, Texas, where the largest and most energy-consuming Bitcoin mine in the country is located, consumes electricity equal to 300,000 homes.
The industry’s growth in the US though was swift but was a burden for US power grids. After China discarded the US in 2021, the US became the center of attraction for Bitcoin miners. The Times compares the new power demand coming from American crypto mines to suddenly adding another “New York City’s worth of residences.”
Bitcoin is an energy-hungry digital blockchain. Bitcoin “miners” with the help of hardware solve complex mathematical problems to validate transactions and acquire new tokens. The amount of energy required to solve those puzzles has a bad impact on the ledger. The problems become more and more complex with time as more people are attempting to solve them. It requires highly specialized software that consumes more electricity in the process.
Power grids turn on the backup generators that run on gas or coal so that the demands can be fulfilled. A few crypto mining companies had to restart buried fossil fuel power plants to enable the mining of Bitcoin. This has made mining Bitcoin even more lucrative in states like Texas and North Dakota which produce tons of fossil fuels, though it upsets environmental advocates and Democratic lawmakers who are putting in efforts to have an audience with Biden’s administration to draw attention toward the climate goals.
According to the Times reports, the increased pollution caused by the energy-hungry Bitcoin mines produces emissions equal to the annual emissions from 3.5 million new gas-guzzling cars. Bitcoin mines have not stimulated any growth of renewable energy as promised to the industry. According to an analysis, the Times commissioned from the nonprofit Watttime, coal, and gas plants make up about 85 percent of the need for Bitcoin mines to be added to the power grids.
Crypto mines have also had an adverse effect on Americans’ energy bills. The escalating demand for power supply has raised electricity prices and has forced households to struggle for limited supply. According to a Wood Mackenzie analysis commissioned by the Times, the increased consumption of energy has raised other customers’ electricity bills by 5 percent in Texas. This is estimated to be about $1.8 billion every year, resulting in increased electricity prices for consumers in Texas, where a third of the crypto mines are being inspected.
Crypto companies have brought energy systems on their side, while the electricity bills are escalating. In 2022, the company running the Bitcoin mine in Rockdale, Texas, paid 2.96 cents per kilowatt-hour, it informed its investors in comparison to 13.5 cents domestic customers paid that same year.
The question arising here is how crypto mines can acquire electricity at cheaper prices. In Texas, it has helped a program that pays industrial businesses to lower the power when the grid is overloaded. In February 2021, a severe cold snap damaged the energy supply, which left several residents without power and resulted in the death of hundreds of people. During the disaster, The state power grid operator made an average payment of $175,000 to crypto mining an hour to lower the power supply for its computers. The Times reported, five mines earned $60 million from an energy-saving program in 2020.
