Imagine, for a moment, that you spend the weekend cleaning your house and some random dog jumps on the couch, shakes mud on the walls and steals your roasted chicken on the way out.
“Where did that dog come from, and who let it in?!”
That’s how I feel about cryptocurrency.
New York State has an ambitious goal of having 70 percent of our electricity by 2030 provided by renewable sources such as solar and wind — while simultaneously trying to electrify everything. Now comes a wrench thrown into the gears: a growing demand for energy to power computers for digital currency “mining.”
If you are not familiar, cryptocurrency is digital money that is exchanged outside of a traditional central authority, such as a bank. Instead, transactions are managed by a decentralized network of its users. In the case of the best known digital currency, Bitcoin, transactions are accounted for in a public ledger that anyone can examine.
This ledger is vast, and anyone in the world, whether individuals or companies, can compete to validate a transaction by guessing the solution to complex mathematical problems, and part of the security of the currency is that it takes a large amount of energy and hardware to do this. The method is known as “proof of work” and the entities, which often combine forces, are known as “miners.” If they win the race to validate, they are rewarded with Bitcoin, which they can divide.
This is where the tremendous energy use comes in — you are playing a guessing game to find and quickly validate to earn the reward. One study calculated that every Bitcoin transaction consumes 1,173 kilowatt hours, more than the average American household uses in a month.
Fossil fuels power 60 percent of Bitcoin mining. But even if these operations could be switched to 100 percent renewables, that would mean that power wouldn’t be available for homes, businesses or transportation. What’s happening now is that many upstate New York communities are grappling with crypto-mining operations, or warehouses filled with servers operating 24/7 that must be cooled. In some cases, miners have purchased and restarted former fossil-fuel plants, generating power “behind the meter.”
A bill in the state Legislature that is co-sponsored by Sandy Galef (a Democrat whose district includes Philipstown) and Jonathan Jacobson (a Democrat whose district includes Beacon) would ban new crypto-mining facilities that don’t rely on renewable energy. It also would place a two-year moratorium on the issuance of air permits and permit renewals for existing crypto-mining facilities that generate electricity through fossil fuels.
The bill passed in the Assembly on April 26 and was sent to the Senate. An earlier version passed the Senate, 36-27, in June with “nay” votes from Sue Serino, a Republican whose district includes the Highlands, and James Skoufis, a Democrat who is running for re-election in a district that may next year include the Highlands.
The bill would require the state to conduct an environmental review of mining operations. “We must understand the impact of these operations on our state’s ambitious plans to mitigate climate change,” Galef said this week.
Jeremy Cherson is the senior manager of governmental affairs at Riverkeeper, one of many local environmental organizations that support the bill. “The last thing we want to see in the Hudson River watershed is old decommissioned power plants, fossil-fuel plants, being purchased and turned on for the sole purpose of proof-of-work cryptocurrency mining,” he said.
There is also the matter of the e-waste produced by mining operations. The computers are used so intensely that they last only 18 to 24 months before being discarded. By one estimate, cryptocurrency mining produces 30,700 tons of e-waste annually. The facilities also use large amounts of water for cooling, and the water returned to water bodies or wastewater treatment is hotter than what is withdrawn — fluctuations that can affect aquatic species.
“We have climate change warming the water, salt fronts are moving farther north [up the Hudson River] and a rise in invasive species — the last thing we need is another fish blender,” said Cherson.
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