Marathon Digital Holdings decided to move its computers (called miners) to a Texas wind farm after the cryptocurrency industry was under increasing pressure to reduce its environmental impact.
Fred Thiel, CEO of the company, stated that "it just came down to us not wanting to be operating with fossil fuels."
Access to reliable and cheap electricity is essential in the world of bitcoin mining. However, many economists and environmentalists warn that the price of the still misunderstood digital money is rising and that the mining process that is so central to its existence is becoming more energy-intensive and potentially unsustainable.
Bitcoin was invented in 2009 to be a new method of paying for goods that were not subject to government supervision or central banks. Although it is not yet widely accepted as a payment method, it has enjoyed a surge in popularity as an investment option. One bitcoin was worth just more than $5,000 in March 2020. This record was set at more than $67,000 in November 2021, before it plummeted to just over $35,000 for January 2020.
The blockchain is the central component of bitcoin's technology. It records transactions and verifies them. The bitcoin network is a race between computers connected to it to solve complicated mathematical calculations to verify transactions. The winner receives newly-minted bitcoins. The current system rewards the owner of a machine that solves a puzzle with 6.25 bitcoins, which is approximately $260,000 in total. The system releases 6.25 bitcoins every ten minutes.
It was possible to solve puzzles with a normal home computer when bitcoin was first created. However, the technology was made so that more people can work on the problems. Today's miners use special machines without monitors that look more like a fan than a regular computer. As more computers join the effort, the amount of energy required by computers to solve puzzles increases and the puzzles become more difficult.
Marathon Digital, for instance, has 37,000 employees, but the company hopes to have 199,000 by next year.
It is hard to determine how much energy is used by the mining industry because not all companies report it and some operations are mobile, transporting storage containers filled with miners across the country in search of low-cost power.
According to the U.S Energy Information Center, bitcoin mining consumed approximately 109 terrawatts of electricity in the past year. This is close to what was used in Virginia in 2020. The current usage rate is 143 TWh for a full year. This would be about the same amount as Ohio or New York used in 2020.
Cambridge's estimation does not include energy required to mine other cryptocurrency.
The pivotal moment in the debate about bitcoin's energy consumption was last spring. Just weeks after Tesla Motors stated it was purchasing $1.5 billion in bitcoin, and would accept that digital currency as payment for electric cars, Elon Musk joined critics and declared that the company would no more be accepting it as payment.
Some people want regulation from the government.
Governor. Kathy Hochul is under pressure to declare a moratorium to the so-called proof of work mining method, which bitcoin uses. Also to deny an air permit for a project at a retrofitted coke-fired power station that runs on natural gaz.
Recently, a judge in New York ruled that the project would not affect the water or air quality of Seneca Lake.
"Repowering and expanding coal and gas plants in order to make fake cash in the middle of a crisis is literally insane," Yvonne Taylor (Vice President of Seneca Lake Guardians) stated in a statement.
Hedges stated, "It was death watch." We were receiving their quarterly reports. We looked at their operating costs. It was continuing to fall year after year. Last year, that all changed. Without bitcoin, it would have been extinct.
Hedges stated that the cryptocurrency industry needs to "find a way to lower its energy demand" and should be regulated. That's it. This is not sustainable.
Some believe that the solution is to change from proof-of work verification to proof-of stake verification. This is already being used by some cryptocurrencies. Computers are able to verify digital currency transfers with proof of stake. This is an alternative to having them compete. Groups or individuals who stake more cryptocurrency are more likely get the job -- and the reward.
Although the method requires less electricity, critics claim that proof-of-stake Blockchains are more secure.
Some companies in this industry recognize that there is a problem. They have signed onto a Crypto Climate Accord to reduce their emissions from electricity by 2030. This agreement is modeled after the Paris Climate Agreement.
The accord states that all crypto communities must work together urgently to ensure crypto doesn't further exacerbate global warming and instead contributes to the vital transition towards a low-carbon global economy.
Marathon Digital is just one of many companies that are aiming to tap into the excess renewable energy generated by Texas' wind and solar farms. Blockstream Mining and Block (formerly Square) announced earlier this month that they would be opening a small off-the grid mining facility in Texas using Tesla solar panels and other batteries.
Adam Back, Blockstream CEO and co-founder, said that this is an important step in proving that bitcoin mining can finance zero-emission infrastructure.
Companies believe that cryptocurrency mining could provide an economic incentive for more renewable energy projects, and stabilize power grids. The guarantee of a customer for renewable energy generators makes it easier to finance them and allow them to generate full power.
Thiel stated that mining companies can contract for lower-priced electricity because all the energy they use "can be shut off and given back into the grid at a minute's notice."
Stronghold Digital in Pennsylvania is cleaning up coal waste from hundreds of years ago and burning it to make what the state calls renewable energy. This can either be used for bitcoin mining or sent to the grid, depending on the power demand.
Pennsylvania's Department of Environmental Protection has been a partner in this effort. It uses relatively new technology that burns waste coal more efficiently and produces fewer emissions. If left alone, waste coal piles can catch fire and burn for many years, emitting greenhouse gases. The waste coal can leach acid into the waterways if it is wet.
Naomi Harrington, spokesperson for Stronghold Digital, stated that after using coal waste to generate electricity the "toxicity-free flyash" is left, which is registered as a fertilizer by the state.
Marathon Digital is slowly moving its 30,000 miners from Montana to California, but it is leaving behind mining infrastructure worth tens of million dollars.
Marathon may not want to use coal-fired electricity anymore, but that doesn't mean there won’t be another bitcoin miner. Thiel stated that he believes the power plant owners will find a company willing to do this.
He said, "No reason to not."