The Real-World Costs of the Digital Race for Bitcoin
nytimes.com
nytimes.com
"In some areas, this has led prices to surge. In Texas, where 10 of the 34 mines are connected to the state’s grid, the increased demand has caused electric bills for power customers to rise nearly 5 percent, or $1.8 billion per year, according to a simulation performed for The Times by the energy research and consulting firm Wood Mackenzie."
"The additional power use across the country also causes as much carbon pollution as adding 3.5 million gas-powered cars to America’s roads, according to an analysis by WattTime, a nonprofit tech company. Many of the Bitcoin operations promote themselves as environmentally friendly and set up in areas rich with renewable energy, but their power needs are far too great to be satisfied by those sources alone. As a result, they have become a boon for the fossil fuel industry: WattTime found that coal and natural gas plants kick in to meet 85 percent of the demand these Bitcoin operations add to their grids."
And I didn't see any mention of policies that could make coal-sourced electricity more costly. It seems like again, obvious economic policy would improve this situation. But it's just written as BTC = bad.
Carbon aside, it will be interesting to see how this plays out in Texas, where the electrical grid is tenuous.
But to your point, looking at things from sustainability minded perspective (and even opting to ignore value of product as it stands right now), why yes, BTC is bad.
But, of course, when demand goes up, prices go up for everyone; more demand isn't going to lead to the creation of more natural resources, so the benefits of cheap hydro are limited, and usage of them is a zero-sum game. Power companies have no incentives to discourage crypto miners, because obviously increased demand leads to more profits for them, while meanwhile the externalized costs are being paid largely by households and small local businesses.
You could make miners pay more for electricity, but unless you charge them so much that it's no longer profitable and they go away, they're still going to be using that electricity, to the detriment of everyone else in the area. Better to just ban them entirely, IMO, but it's pretty hard for politicians to just unilaterally kill off entire businesses, even bad ones like these.
https://en.wikipedia.org/wiki/Moses-Saunders_Power_Dam
In this specific case, the power can't just easily be routed somewhere else because all the lines were routed directly to the plants. You can literally look on Google Maps and see the lines.
Building new lines could be done but it is super expensive to do that. Up until the bitcoin miners came in and took over the plant, the power was just going unused.
If the Bitcoin miners in upstate NY are just using generation capacity that would otherwise go unused, why does their presence seem to be having such a dramatic effect on local energy prices?
Ripple is a competing blockchain that doesn't use PoW. I'd say that the paper was funded to make Bitcoin look bad. It even starts off with two quotes that are not relevant. Further down in the article it even declares Ripple as a 'top crypto' among BTC/ETH, which in reality, while it does have a large mcap, it is orders of magnitude smaller than BTC/ETH.
There was certainly some issues with the residential and small time miners in upstate new york. Most of that got banned, pretty quickly, in 2018 (5 years ago!).
The larger miners, who took over the old smelters, and the ones drawing the most amount of power (by a lot), are definitely getting their feeds directly from the dam and those feeds were not being used once the smelters had shut down back in 2014.
Why not look at other states that have a huge amount of hydro mining, like WA? They focused on, literally, one portion of one state. Is that enough of a data point?
Another good tidbit... those dams actually need a constant draw of power to remain in service. Bitcoin is helping with that and providing a source of revenue that went away when the smelters shut down.
> By the end of Feb. 14, 2021, nearly 40 people had died, some from the freezing cold.
And you know what? These deaths may not have happened if it wasn't because of Bitcoin.
I look forward to the NYTimes' take on the Christmas lights. Maybe they can somehow let the reader infer someone has died because they made electricity more expensive.
It is Bitcoin’s fault Texas has a neglected power grid and a wildly corrupt power industry that does not use profit to update and maintain their grid. It is Bitcoin’s fault that when their grid failed, their prices skyrocketed further exploiting Texans, while people died from the cold. It is Bitcoin’s fault that Texans have made no real change since this event has happened, neither politically nor with infrastructure, and held none of the leaders in industry nor politicians accountable. It is Bitcoin’s fault that the power industry has an outrageous lobby funneling money from their customers right into the pockets of politicians, to avoid wasting profits on doing their job. It is Bitcoin’s fault that everyone up and down the chain of supply excessively squeezes every ounce of profit from the public without any shame, guilt, or consequence and without contributing an iota of the value they claim to be offering. It is Bitcoin’s fault that the countless billions in the US that go into the power industry are squandered in fraud, waste, and abuse instead of modernization and clean energy.
It is all Bitcoin’s fault. Ban Bitcoin before people paid outrageous sums of money might be forced to actually do their jobs.
But to apply the description "cold-blooded" seems, well, quite weird.
I don't see what's biased or partisan or outrageous at all. It seems like quite a researched and fact-based article to me. And I don't even know what "cold blooded" is supposed to mean.
Perhaps you're having such a strong emotional reaction because you don't like the article's findings? But I can't tell, since you haven't actually responded to the factual claims at all.
I said cold blooded because the authors are aware of how they mislead, and do it nevertheless, because they have an agenda, otherwise an article can't be this biased.
Because I honestly don't know them. Claiming an article is "this biased" doesn't help anyone here if you don't explain why.
Were the authors aware of how tiny Bitcoin usage is and how much waste there is going around? Of course they were. Was this datum useful to the reader? Yes. Did the authors purposefully decide to exclude this datum because it didn't fit the narrative? Of course.
Just imagine your average reader, if at the end of the article they were told, that we can't even agree on whether Bitcoin mining consumes more power than Christmas lights. Apparently that was not the case using the 2008 Christmas lights usage, and we don't know now, because both sides of the argument get wildly different values.
Your average reader leaves the article thinking they know everything they need to know about Bitcoin: it's bad because it makes energy more expensive, and people have died, possibly because energy was expensive.
I got curious, of course. If my math and research is correct, it seems like Bitcoin uses 127 terawatt-hours per year globally [1], and the US does 38% of worldwide Bitcoin mining [2], for 48 TWh/yr. In comparison, total US energy usage is 4,019 TWh [3], so Bitcoin is 1.2%. In comparison, holiday lights use somewhere between 3.5 TWh [4] and 6.63 TWh [5] according to a couple estimates, which is 0.08%-0.16%, or about an order of magnitude less than Bitcoin.
But I don't really see how any of this contradicts the narrative of the article. The article itself was pushing back on the narrative that Bitcoin mining in the US is insignificant and/or powered by renewables. It's clear that 1.2% is quite significant, and most of it is powered by fossil fuels, and it's raising electricity prices for people. Is this a good use of carbon, and of consumer finances? The article does quote people saying it ought to be considered an industry like any other, but of course that has to be balanced against the question of whether Bitcoin can be considered economically "productive" in any sense like other industries, or if it's merely a speculative asset with zero productive value at all.
But in the end, the article isn't attempting to survey the entire landscape of Bitcoin. It's focusing on the fossil fuel consumption footprint in the US which is brand new over the past few years, and it seems to do a good job at raising awareness for that. I certainly hadn't been aware of that until now, and I'm glad I am.
[1] https://www.forbes.com/advisor/investing/cryptocurrency/bitc...
[2] https://www.whitehouse.gov/ostp/news-updates/2022/09/08/fact...
[3] https://www.reuters.com/business/energy/us-power-use-rise-20...
[4] https://www.forbes.com/sites/jamesconca/2020/12/20/the-energ...
[5] https://mrelectric.com/blog/how-much-electricity-do-christma...
How would this be useful? Just comparing it to random things that also use electricity?
You need to do a like-for-like comparison. Bitcoin's ostensible purpose is as a currency, or some sort of financial trading instrument for speculation, so it should be compared to the energy efficiency in other financial systems.
It is, of course, woefully, embarrassingly inefficient when compared on energy use basis. The only thing that matters is: what does this energy inefficiency give you in return? The answer is 'decentralisation'.
As always, the question is about whether or not 'decentralisation' is useful, important, valuable, whatever. For most people, today, it simply is not, as evidence by the fact that absolutely nobody uses Bitcoin for any sort of practical transactional stuff.
Maybe it all comes down to paying off the right people, but I can't assume that until a journalist digs deep enough.
I wonder if these differences such as policy on the allocation of resources and (not) raising the young on social media will have a significant impact on the economic futures of nations.
The most jarring part of the article is the table that attributes 70-90+% of the met energy requirements towards fossil fuels, whilst not providing ANY explanation as to how such conclusions were made other than "We pulled it from WattData's analysis for energy usage from March 9", and are provided NO links or references towards the WattData data used. The percentages themselves aren't backed up with references towards WattData. Nothing concrete from NYT themselves that can be used to say "Here's the exact calculations & sources that we used for this data".
Keep in mind that this is the lynchpin for the entire article. If no references are provided for such a a critical part of the article, then such data cannot be used and the random average case must be used instead:
((Daily energy usage of facility, MWh) / (Average Daily Total Power generated by the state, MWh)) * (Generated from fossil fuels, %) * (Total emissions from fossil fuels for the state, MT of CO^2)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720
tl;dr: they found that the increased electricity rates costs households and small businesses in the area hundreds of millions of dollars per year.
Try watching the video while taking notes, maybe?