As Bitcoin prices continue to skyrocket, a heated debate is unfolding in the United States regarding the cryptocurrency’s energy consumption and its impact on the environment.
The Biden administration is urging the cryptocurrency industry to disclose the amount of electricity used by mining operations. At the same time, cryptocurrency advocates are pushing for laws that would protect mining activities from local regulations aimed at curbing their growth.
Bitcoin mining operations have come under scrutiny due to their environmental impact. Mandy DeRoche, an attorney with the environmental advocacy group EarthJustice, expressed concerns that the high levels of electricity consumption required for Bitcoin mining could hinder efforts to achieve clean energy targets. EarthJustice has actively sought legal measures to impede the permitting of new mining facilities.
On the other hand, the cryptocurrency industry argues that it should be treated like any other energy consumer. Tom Mapes, founder of the Digital Energy Council, which includes major bitcoin miners, questions the fairness of singling out the industry for its energy usage.
Complicating matters further, the Biden administration has proposed a 30% excise tax on the energy used by bitcoin mining in its March budget proposal. Wyoming Senator Cynthia Lummis, an advocate for the mining sector, criticized the tax proposal, warning that it could have devastating effects on the industry in the United States.
Environmental data indicates a troubling trend in emissions from Bitcoin mining. The Cambridge Blockchain Network Sustainability Index predicts a significant increase in greenhouse gas emissions, with estimates reaching up to 90 million tons in 2024, compared to 48 million metric tons in 2022.
Despite the concerns, obtaining reliable data on the total electricity usage of the mining industry remains challenging. While some publicly traded bitcoin mining companies disclose their energy consumption, the estimate provided by the U.S. Energy Information Administration is not based on direct reports from mining facilities. These facilities can use as much energy as entire towns, with some environmental groups citing a Riot Blockchain facility in Texas that uses enough energy to power 300,000 homes.
Bitcoin mining companies argue that they help balance energy demand by participating in “demand response” programs, where they temporarily shut down operations to alleviate grid stress during peak periods. They emphasize their role in supporting grid stability.
The industry received a significant boost in investment when the Securities and Exchange Commission approved a Bitcoin-ETF fund in January. This move drew criticism from environmental groups concerned about the energy consumption of the sector.
In response to the growing scrutiny, the Department of Energy issued notices to 82 bitcoin miners in February, demanding that they report their energy usage. However, Riot Blockchain and the Texas Bitcoin Council successfully challenged these demands in court, temporarily halting the government’s survey.
Conflicts over the establishment and expansion of Bitcoin mining operations are escalating across the United States as the government seeks more information about the industry. EarthJustice is currently involved in a lawsuit aimed at preventing the issuance of permits for a mining facility in New York. Communities in Arkansas have also filed nuisance lawsuits citing the disruptive noise generated by these facilities.
In response to these disputes, the Arkansas legislature has proposed two bills that would introduce stricter licensing and noise regulations for mining operations within the state. New York took a more stringent approach, imposing a temporary moratorium on new Bitcoin mining operations that rely on fossil fuels.
In Pennsylvania, a community group launched a lawsuit against a local Bitcoin mine and the government regulators who approved it. They argue that the operation violates a state constitutional right that guarantees citizens a clean environment. The lawsuit highlights concerns about increased air and water pollution from the mining activities.
Despite the controversies, some Bitcoin industry advocates are pushing for state-level legislation that would limit the ability of local governments to regulate mining activities independently. The Satoshi Fund, a proponent of such measures, has seen these proposals introduced in several states.
In contrast to the push for deregulation, Tom Mapes from the Digital Energy Council argues that mining companies must strive to gain the support of the communities where they operate. He points out that there are exemplary companies within the industry that act as responsible stewards of their communities. Marathon Digital Holdings, despite facing a lawsuit, has chosen not to comment on the matter.
