The real costs of the digital race for Bitcoin

Some in the industry have resisted suggestions that it is directly responsible for any environmental damage.

A May 2022 letter to the Environmental Protection Agency, signed by many of the largest companies, said their operations did not “release” any pollutants. “Bitcoin miners have zero emissions,” it said. “Associated emissions are a function of electricity generation.”

Nic Carter, a partner at a crypto-focused venture capital firm and a prominent Bitcoin lawyer who told The Times he was the lead author of the letter said he was playing a “language game” when he wrote that Bitcoin mining does not cause emissions. At the time, he said, he felt the industry was unfairly singled out.

“Perhaps the more sincere point is that we are already fully aware of the emissions associated with grid-generating utilities,” he said.

Many academics who study the energy industry said Bitcoin mining undoubtedly had significant environmental impacts.

“They’re adding hundreds of megawatts of new demand as we already face the need to rapidly reduce fossil energy,” said Jesse Jenkins, a Princeton professor who studies power grid emissions.

“If you care about climate change,” he added, “that’s a problem.”

Floods in America

Coined in 2008, Bitcoin introduced the concept of cryptocurrencies to most of the world. Instead of trusting banks to track the value of accounts, the system publishes transactions on a public ledger called a blockchain. Proponents said cutting out middlemen would free people from financial institutions, government oversight and fees.

So-called mining is a fundamental part of the system: when a computer guesses correctly, the ledger is updated and six and a quarter new Bitcoins are collected. Then the guessing game starts again.

At first, hobbyists could win with PCs, but as the value of each Bitcoin soared — from less than $1,000 in 2017 to more than $60,000 in 2021 — mining increasingly became an industrial endeavor. (The price has since dropped and was about $28,000 as of publication.)

The only way for miners to improve their chances is to add computing power, which requires more electricity. But as the number of guesses increases, the algorithm makes the game more difficult. This has created an energy arms race.

The scale of the mines may attract the attention of those in the energy industry. A one-megawatt mine consumes more energy every day than a typical American home does in two years. According to federal data, the electricity flowing through a 100-megawatt operation at any one time can power about half of Cleveland’s homes.