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Four US Senators and two Members of Congress have sent a letter to the U.S. Environmental Protection Agency and the Department of Energy urging them to look into the power consumption of US-based facilities that mine crypto. In order to better understand their impact on the environment and the community where the mining facilities are based.
What is their argument for needing to do this
They cite the influx of mining facilities to the US mainland because of the crypto ban in China.
The seven surveyed mining companies consume a large amount of energy, resulting in CO2 emissions of 360,000 cars.
None of the seven companies provided full and complete information in response to their questions.
Bitcoin miners are using huge quantities of electricity that could be used for other priority end uses that contribute to our electrification and climate goals, such as replacing home furnaces with heat pumps.
Mining facilities increase the load on an already overloaded Texan power grid.
A 2021 study from the University of California, Berkeley estimated crypto mining in upstate New York raised annual electricity bills by approximately $165 million for small businesses and $79 million for consumers.
I hope I have not missed any big points. But there was a lot to go through.
Let us take a look at the arguments, point by point
US mainland has seen an influx of mining facilities due to the crypto ban in China. Yes, it is a known fact that many of the mining facilities that were moved from China were moved to the US. And there are also several mining companies looking to expand and build new facilities. The fact that a large portion of China's mining capacity still remains in China does not impact the fact that many new facilities have moved or are looking to establish themselves in the US.
The seven surveyed companies consume a lot of power, much of which comes from unclean energy sources that produce a lot of CO2. I would have to say that this is true. But it is hardly the fault of the mining companies that most of the US power production comes from unclean energy sources. unless they provide their own energy source I can't really see what this argument has to do with the mining companies or mining in general. I do however agree completely that the faster the global energy production can convert to renewables the better it will be for the planet. I will cover the fact they consume large amounts of electricity in a separate section.
The fact that the seven mining companies did not provide all the information the Senators and Members of Congress asked for. I can not judge the severity of this and whether this is commonplace or not. But personally, I think it is severe that they either ignored some requests or were unable to provide the requested information. None of those two are good, but one is worse than the other, in my book at least.
The miners are using electricity that could be used for other things. True, but until those other things exist I do not see this as a problem for the miners or a reason for why miners should be held accountable for using electricity. I would argue that it is up to the US government to either incentivize the people to make the changes to environmentally friendlier products. Like the heat pumps that are mentioned. Or they have to hope the US citizens will figure out that the "new" technology is in fact better financially for them in most cases and better for the environment. But I would not hold my breath on this.
A second argument against the "electricity could be used better elsewhere" is that one could argue that if there were no miners then electricity would be cheaper and that would cause more people to buy the heat pumps, for example. But if they will not buy the now due to the electricity price, would they not then be mad if they buy them because of the cheaper electricity price. Only for the price to go up because everyone got heat pumps? Because it does not matter who consumes the energy, an equal consumption will have an equal impact on the price. While I do agree that having the energy consumed by environmentally friendlier tech would be ideal. I do not see that happening unless the US Government gave away heat pumps for free. Which might not be a bad idea actually.
Overloading the Texas electrical grid. As far as I know, the Texas grid is basically a complete mess and it is a wonder it has not collapsed yet. So while increasing the load would be bad. That is not the problem at hand. A bad electrical grid is still a bad electrical grid even if you don't use it. So not increasing the load, I see that as about as viable as putting a band-aid on a broken bone. It might make you feel better but it will not help you in the long run. I mean if you want to lower the load, just have half the population turn off their power and then alternate the population. That would cut the load in half almost. But it will not fix the underlying problem. Wich is a bad grid. Only investing in the infrastructure will help solve that problem.
Mining causes an increase in price for citizens and businesses. This is most definitely true as well. But let us think a little about where these mining facilities are located. I am willing to bet they are located in places where the electricity is the cheapest. And this is also confirmed in the Berkeley report. The place in New York where the mining facilities are is where the power is cheap. What does this mean then? It meant that instead of much chapter energy, everyone there instead has an energy that is normally priced or maybe slightly more expensive, compared to the rest of the country. Is this so bad?
The report then takes a look at the income these facilities/companies in the area bring in. And they say they only bring in $40M, compared to the $244M in increased electrical costs. The report states that the increased cost is $8 for individuals, and $12 for small businesses, just in case you were curious. The profits from these mining companies are said in the report to not stay locally. But it is instead moved "from upstate New York to Italy or Colombia or China". I do not see companies "moving their profit" as something that is either new or either unique to mining companies. That is just how global companies operate. While I personally think a company should pay tax where they operate, this is not the case. And it is hardly something mining companies should be blamed for or held accountable for. Why not instead go after the big companies that pay close to $0 in tax every year, or the super-rich that put their money in tax havens just to avoid paying tax. That seems like a more productive thing in my book at least. Or we could just all agree to change the corporate tax laws. That would also work for me.
Using a large amount of electricity
As I think this is the main focus and the main argument against crypto mining I decided to put this in its own section. As I will devote more space to this point.
While I don't think anyone will argue against the fact that crypto mining consumes a lot of energy. Simply on the basis of it being a fact, even if that has not stopped some people from arguing against other things. But I digress. I do not see this as a problem per se. The real problem is that most of our energy comes from unclean energy sources.
Back to the energy consumption. I do not see why mining has been singled out like this. Most of the mining is done by companies, meaning they pay tax where ever they are stationed. So why not treat them like any other companies, why single them out like the "bad guys". There are a lot of power-hungry industries, aluminium is an excellent example of this. Why are they not the bad guys? They have been consuming a lot of energy for far longer. Is it because many people use aluminum? If that is the criteria then we should have no new emerging industries or technologies as all of them would be bad because they all have very few users. We would not have the internet for one. So that can not be the reason, right? Especially with cryptocurrencies having around double the adoption speed of the internet, which is the current record holder.
Is it because the mining facilities are located in the "wrong" places? Surely this is not so, just like any power-hungry industry they will be placed where the power cost is low and the supply most likely is plentiful. And as much is confirmed by the report as well.
Is it the fact that they consume such incredible amounts of power that is the problem? Well if that is the case, why do we allow so many server facilities then? I would argue they in most cases are just as bad if not worse. Why worse you ask, well simply because, Facebook, Amazon, and Google track, store and sell user data. Mining facilities do not. And they probably consume as much if not more power than mining facilities.
If we take a look at Sweden, between 2015 and 2020 applications for a total of 1,322 megawatts have been granted. And there are applications filed for an additional 2.015 megawatt. There are two applications that are asking to be able to take out 461 megawatts respective 500 megawatts. That is about the same amount of power that a nuclear powerplant supplies. And 500 megawatts is close to double the amount of power Uppsala, Sweden's fourth biggest city consumes. To put these numbers into proportion, the seven companies have a total power consumption of 1,045.3 megawatts, according to the survey.
And if we take a look at Facebook they have 85 data centers around the world. And the one in Sweden consumed as much power as 7,500 electrically heated homes in 2015. That would put the total power consumption at 637,500 electrically heated homes in Sweden if we estimate all their data centers are of the same size. And sure they say all their data centers are run by 100% renewable energy. I do not think all data centers can claim to do so. Why is no one asking these gigantic tech companies to provide power consumption data for all their data centers? It feels like people are greeting the new company on the block pretty unfair in my book.
It is important to note that I am not arguing against monitoring companies, and given the global environmental situation, we are in. Companies that consume a lot of energy is a good candidates to keep track of. But then we should do it for all of the companies, not just some of them. And if this is already done for data centers, then what is this not done automatically here with mining companies. That makes me think it has in fact not been done at all. And that is my main gripe.
Many of the points being lifted up are basically demanding that crypto mining is supposed to be judged by a completely different set of rules. Mining companies can't move their profits back to their main offices like other companies are doing. Mining companies cant consume large amounts of electricity because then the electrical bill will go up for people living close by. Mining companies cant consume lots of electricity because the electrical grid is so poorly maintained that it will fall apart.
I am not saying these things are not things that are important, I am just saying they are not unique to mining companies. Why are mining companies singled out like this when no one else is?
Thank you for making it all the way to the end. If I have made any bad assumptions please let me know in the comment section down below. And if I have missed any obvious points or made some errors please let me know so I can fix them as well.
See you on the interwebs!
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