The Daily Populous Friday May 14th, 2021 day edition
Authored by qz.com and submitted by mauigaia

Cryptocurrency is a notorious climate culprit. A Cambridge University study in February concluded that the global network of Bitcoin “miners”—operating legions of computers that compete to unlock coins by solving increasingly difficult math problems—sucks about as much electricity annually as the nation of Argentina. In terms of greenhouse gas emissions, according to a Mar. 10 article in the journal Joule, that’s equivalent to the emissions of the London metro area as Bitcoin mining volumes have surged along with prices.

That’s a lot of carbon pollution for a service that benefits a relatively tiny number of miners, traders, and cryptocurrency investors. And it’s a potential liability for companies like Square, or Elon Musk’s Tesla, that purport to be climate-friendly but own a significant volume of Bitcoin. So a small but growing number of companies are looking at ways to clean the Bitcoin market up. Unfortunately, the way digital currency works today rewards energy waste—and it’s not clear that even a good-faith effort to use cleaner sources could justify the market’s insatiable appetite for power.

Bitcoin is trying to be environmentally friendly

The latest stab at green Bitcoin comes from Norway. On Mar. 8, the country’s second-richest person, oilfield services billionaire Kjell Inge Røkke, launched a new venture called Seetee. In a letter to shareholders, Røkke said the company’s goal is to “establish mining operations that transfer stranded or intermittent electricity without stable demand locally—wind, solar, hydro power— to economic assets that can be used anywhere.” Bitcoin, he writes, is “a load-balancing economic battery, and batteries are essential to the energy transition required to reach the targets of the Paris Agreement.”

The plan, in other words, is to situate Bitcoin mining centers in places where renewable energy farms overproduce electricity during times of low demand, and soak up that excess power for mining. The mine gets low-cost, zero-carbon power; the wind or solar farm gets a reliable big customer.

This approach has a fatal flaw, said Alex de Vries, a digital currency economist who authored the Joule article. It assumes that the mining operation can pause when that electricity is needed for other, more socially-beneficial purposes. But mining only works when it runs 24/7. Each time miners unlock coins by successfully verifying transactions on the blockchain, the next set of calculations automatically becomes a little bit harder to crack. It’s a race against time: The only way to get an edge over competitors is to run more machines more frequently, with the cheapest source of power. (Seetee did not respond to a request for comment.)

“Every time you shut down, you lose a level of income that you never get back” and fall behind forever, de Vries said.

The “battery” analogy is thin, as well, since that same energy could in theory be used to charge actual batteries, hydrogen fuel cells, or other systems that help decarbonize the broader grid once they become more widely available. Still, some Bitcoin operations are already using zero-carbon energy, at least part of the time. In China, some mining operations shift seasonally to take advantage of low-cost hydropower in the summer—but then go back onto coal in the winter. Bitcoin miners also chase cheap hydro in Canada and the US Pacific Northwest. In a 2019 Cambridge survey of 280 Bitcoin companies, 39% reported that their mining activity was powered by renewable energy.

In some cases, especially with large hydropower dams in China, Bitcoin mines may well use energy that would otherwise go to waste. Gazprom, the Russian state-owned natural gas company, also has a division that sells Bitcoin miners power generated from flare gas, a waste byproduct of oil and gas drilling and processing that would otherwise be emitted (although to use it for Bitcoin creates a profit incentive to drill more).

As mining activity greatly outpaces the availability of “leftover” energy, even the best-intentioned, most credible efforts to use green energy ultimately run into the ethical conundrum: Is cryptocurrency really the best use of capital and natural resources when the whole world is racing to decarbonize?

“If you wait long enough the grid will become greener, but in the meantime, Bitcoin will cause a lot of displacement,” de Vries said. “Renewable energy that we could have used to clean up the grid will go to Bitcoin mining instead.”

More solutions, including energy-efficient digital transaction methods, may be achievable within the code itself, said Roberto Rigobon, a professor of applied economics at the MIT Sloan School of Management. Bitcoin’s approach to mining “is a very bad system where competition to overuse energy determines the winner,” he said. But, “this is purely a Bitcoin issue, not a cryptocurrency issue.”

Still, the fundamental changes that would make guilt-free digital currency widely available—for example, scrapping the mining process altogether for a less computationally demanding blockchain approach—would require consensus within the mining community, and risk triggering a collapse in the currency’s value. Bitcoin’s main rival, Ethereum, is planning to make such a technology shift at an undetermined date.

Meanwhile, the digital payment platforms that accept cryptocurrency are just beginning to look into its climate footprint. A spokesperson for PayPal said the company is studying the problem and “looks forward to the much-needed emergence of related best practices and standards to help thoughtfully measure and address these emissions.” Its competitor Square announced in December a $10 million “Bitcoin Clean Energy Investment Initiative” to support green-minded Bitcoin companies, but hasn’t named any yet.

The carbon footprint is only rising along with the Bitcoin price. Every new computer brought online in pursuit of a big payday is likely to lock in energy demand even if the price dips. If things get too hot, de Vries said, some governments may choose to just pull the plug, as grid regulators in the Bitcoin hotspot of Inner Mongolia decided to do this month. Or they could levy new taxes on miners’ electricity use, or on the handful of companies that manufacture cryptocurrency mining hardware. The key, de Vries said, is ”making the community realize this is something we need to address.”

PolyDudeNYC on May 14th, 2021 at 05:05 UTC »

Even if it is green and sourced from renewable energy, what is the opportunity cost of all those chips and all that energy? What other complex computational equations could those chips solve? What other energy intensive operations are being passed over?

XitsatrapX on May 14th, 2021 at 04:04 UTC »

Isn’t there a finite number of bitcoins? How much more is out there to mine

egowritingcheques on May 14th, 2021 at 01:37 UTC »

Of course it could be green. If all the bitcoin miners just bumped enough non-mining users off green energy and used it themselves then bitcoin would be 100% green energy.

Saving the planet here guys [taps head]