Bitcoin mining in the US has had a huge impact on power grids, a New York Times research reveals. The mines – giant data farms – consume much more electricity than surrounding communities, increasing pollution from coal and gas plants. The crypto mines also make electricity bills more expensive for their neighbors, even as the companies benefit from incentives offered by grid operators to avoid blackouts during an energy crisis.
This is the most comprehensive analysis to date of Bitcoin’s impact on the US environment and energy system. And it comes as Democratic lawmakers pressure federal agencies to require crypto companies to disclose information about their activities. The Time has surprising numbers for individual crypto miners and the industry as a whole, which it obtained by swamping financial data, satellite imagery, and studies it commissioned from outside research groups.
The newspaper identified 34 of the largest crypto mines in the US, each with a capacity of 40 megawatts or more. Each of them alone consumes at least 30,000 times more electricity than the average home in America. In Rockdale, Texas, the largest and most energy-hungry Bitcoin mining facility in the country burns as much electricity as the nearest 300,000 homes combined.
In Rockdale, Texas, the largest and most energy-hungry Bitcoin mining facility in the country burns as much electricity as the nearest 300,000 homes combined
Industry expansion in the US has been rapid, another stressor for US power grids. The US just became the largest in the world center for Bitcoin miners after China kicked them out in 2021 Time compares the new demand for power coming from US crypto mines to the sudden addition of another “home worth of New York City”.
Bitcoin is a deliberately energy-hungry blockchain. To validate transactions and generate new tokens, Bitcoin “miners” use specialized hardware to solve mathematical puzzles. The amount of energy required to solve those puzzles should deter bad actors from messing with the ledger. The puzzles become increasingly complex over time as more people try to solve them, requiring more sophisticated software that gobbles up more electricity in the process.
To meet that rising demand, power grids may need to turn on backup generators, which usually run on gas or coal. A few crypto mining companies have even revived closed fossil fuel power plants to mine Bitcoin. That has made Bitcoin mining attractive to fossil fuel-heavy states like Texas and North Dakota, while sparking outrage among environmentalists and Democratic lawmakers trying to meet the Biden administration’s climate goals.
Pollution from the extra demand for energy from Bitcoin mining is about as much as the annual emissions from 3.5 million new gas-guzzling cars, the Time reports. Industry promises that Bitcoin mining would boost renewable energy growth have failed to materialize. Coal and gas plants supply about 85 percent of the demand that Bitcoin mining adds to power grids, according to an analysis by the Time commissioned by the non-profit organization Watttime.
In addition to exacerbating pollution, crypto mines also affect Americans’ energy bills. Skyrocketing demand raises electricity prices and forces nearby households to compete for a limited supply. Energy use has pushed other Texas customers’ electric bills up nearly 5 percent, according to an analysis by Wood Mackenzie commissioned by the U.S. Time. That equates to $1.8 billion a year in increased electricity costs for consumers across Texas, which is home to about a third of the crypto mines surveyed.
While inflating other people’s bills, crypto companies have managed to play energy systems to their advantage. The company that operates the Bitcoin mine in Rockdale, Texas paid just 2.96 cents per kilowatt-hour last year, it told investors. That’s compared to 13.5 cents that residential customers typically paid that year.
How does a crypto mine get electricity so cheaply? In Texas, it could benefit from a program that pays industrial companies to shut down when the power grid is under too much stress. This happened in February 2021 when a severe cold snap disrupted energy supplies, leaving millions of residents without power and eventually killing hundreds of people. During the disaster, the state’s power grid operator paid a crypto mining company an average of $175,000 an hour to shut down its computers. In 2020, five mines earned at least $60 million from that energy-saving program, the Time reports.
It’s worth checking out the whole story of the Timewith useful maps and data on each of the 34 crypto mines it has investigated.