Bulletin: How bitcoin makes burning fossil fuels more profitable than ever

The road to the village of Dresden, New York, on Seneca Lake’s western shore, is lined with wineries. Neat rows of spindly grape vines cover the rolling hills as far as the eye can see. Deepest of the state’s Finger Lakes, this long and narrow water body warms the region in winter and cools it in summer—making for an ideal microclimate for viticulture, and a popular tourist destination.

Just as the road drops down to the village, an old power plant looms. Behind the chain link fence and “Posted” signs thrum thousands of computer servers, or miners; by September they will number close to 50,000 (Greenidge 2022). This is where a new industry has taken root, alarming climate activists around the country: bitcoin mining.

Greenidge Generation first came online as a coal-fired plant in 1937, but by 2011, like so many other coal plants, it was no longer profitable. The owners shut it down, presumably for good, and declared bankruptcy. But a few years later, a private investment firm acquired the plant and converted it to gas, only to find selling energy to the grid still wasn’t very profitable (Christensen 2019) Since coming back online in 2017, Greenidge has sent very little energy to the grid. In fact, since 2020, instead of powering people’s homes and businesses, most of the energy the plant produces has been used to mine the digital cryptocurrency bitcoin.

In March 2020, the plant was using 14 megawatts of power to mine bitcoin (Kharif 2020); by October 2021, it was up to 45 megawatts (Greenidge 2021a). The company plans to use 85 of the plant’s 106-megawatt capacity to mine bitcoins by the end of the year.

It is now well understood that bitcoin mining uses vast amounts of energy. Alex de Vries, one of the leading experts on bitcoin and energy, estimates that the network uses 204.50 terawatt hours annually, about as much as Thailand. A more conservative estimate by the Cambridge Center for Alternative Finance puts it closer to 115.4 terawatt hours, or more than the Netherlands.

Bitcoin’s electricity guzzling has increased dramatically in the past decade. In 2021, de Vries said energy usage had roughly doubled since 2017 to between 78 terawatt hours and 101 terawatt hours (Bambrough 2021), and his current estimate means that the network’s energy usage doubled again in little over a year.

Climate activists see Greenidge as a canary in a coal plant; if one retired fossil fuel plant can be brought back to life to mine bitcoin, what is to prevent the same thing from happening at other retired or idle plants? Other companies have already made moves to follow Greenidge’s lead—including mining companies making moves to buy power plants, and energy companies looking to get into bitcoin.

Bitcoin is giving new life to fossil fuels in even more insidious ways. In some places, miners are burning the dirtiest of dirty fuels—waste coal—to mine bitcoin, and they don’t only have the state’s blessing: They’re getting subsidies for it. Some of the biggest companies have started using the gas that escapes during the oil drilling process to mine bitcoin, claiming it mitigates their climate impact. Even more alarming, some companies are trucking in mobile generators and miners directly to stranded gas wells and burning fossil fuels that otherwise would have stayed in the ground to power miners on site.

If the first decade of bitcoin’s existence was characterized by the mad rush for cheap power, the second looks to be dominated by fossil fuel companies whose assets are quickly depreciating—in terms of both financial and cultural capital—desperate to wring out a bit more profit while they still can.

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