Along a dirt road deep in a Texas ranch, crypto company Argo Blockchain is building a powerhouse for the internet age: a cryptocurrency “mining” website with computers that generate New Bitcoins.
But unlike other Bitcoin mining operations, which consume large amounts of fossil fuels and generate carbon emissions, Argo claims they are trying to do something environmentally responsible. When Peter Wall, Argo’s chief executive officer, led a tour of the 126,000 square foot site one morning this month, he pointed to a row of wind turbines a few miles away, the white spokes of They sparkle in the sunlight.
The new facility, an hour from Lubbock, will be fueled primarily by wind and solar energy, he announced. “This is Bitcoin mining nirvana,” said Mr. Wall. “You look into the distance and you’ve got your renewable energy.”
Facing criticism from politicians and environmentalists, the cryptocurrency mining industry has embarked on a rebranding effort to challenge the prevailing view that computers Consumption of electricity is bad for the climate. All five of the largest publicly traded crypto miners say they are building or already operating renewable energy plants, and industry executives have begun to argue that demand from crypto miners will create an opportunity for solar companies to open their own facilities.
This effort – part public relations, part real effort to make the industry more sustainable – has intensified since last spring, when China began cracking down on cryptocurrency mining. death, forcing some mining operations to move to the United States. A trade group called the Bitcoin Mining Council was also formed last year, in part to tackle climate issues, after Elon Musk be censured industry using fossil fuels.
Cryptocurrency mining does not involve any pickaxe or shovel. Instead, the term refers to the verification and currency generation process required for the Bitcoin ecosystem. Powerful computers race against each other to process transactions, solving complex math problems that require numerical guesses in a second. As a reward for this validation service, miners will receive new coins, providing a financial incentive to keep the computer running.
In Bitcoin’s early years, a crypto enthusiast could mine cryptocurrency by running software on a laptop. But as digital assets became more popular, the amount of electricity needed to generate Bitcoin skyrocketed. A Bitcoin transaction currently requires more than 2,000 kilowatt-hours of electricity or enough energy to power an average American household for 73 days, the researchers estimate.
To that end, some miners are resurrecting destroyed coal plants or using low-cost natural gas to power their computers. Last month, a study in the journal Joule found that worldwide Bitcoin mining could generate around 65 megatons of carbon dioxide per year, equivalent to the emissions of Greece.
According to the study, the Bitcoin network’s use of green energy sources also dropped to an average of 25% in August 2021 from 42% in 2020. (The industry has argued that average renewable usage its nearly 60%.) That is partly the result of China’s repressive campaign, cutting off cheap hydroelectric power. But it also reflects underlying economic drivers, said Alex de Vries, one of the authors of the Joule study. Renewable energy is an intermittent source of electricity – the sun only shines for part of the day, and wind speeds fluctuate dramatically.
“What a miner will do if they want to maximize profits is put their machine anywhere it can run all day,” said Mr. de Vries.
Bitcoin’s explosive energy use has long angered environmentalists. But the most dramatic criticism came from Mr. Musk, a longtime Bitcoin advocate who speak on Twitter in May that Tesla, his electric car company, will no longer accept crypto payments because of “the growing use of fossil fuels for Bitcoin mining and trading.”
His tweet sent the mining industry into crisis mode. Michael Saylor, the chief executive officer of software company MicroStrategy, which invests heavily in Bitcoin, has reached out to Mr. Musk to discuss the climate issue. A group of mining executives, including Mr Saylor and Mr Wall, later met with Mr Musk via Zoom.
Saylor recalls: “He wanted to make sure the industry was on the sustainability side and he coached us. “His words of encouragement were: ‘Learn what clean energy is, what is sustainable energy. Find out how much you’re using. ‘” (Mr Musk did not respond to a request for comment.)
Following the call, Mr. Saylor founded the Bitcoin Mining Council, a forum for the industry to share ideas and coordinate environmental strategy. One member, TeraWulf, has committed to running cryptocurrency mining pools using more than 90% zero-carbon energy. It has two projects in operation – a retired coal plant in upstate New York fueled by hydroelectricity and a nuclear-powered facility in Pennsylvania.
“Everybody I talk to now is talking about carbon neutrality,” said Paul Prager, chief executive officer of TeraWulf. “The language has completely changed.”
But financial priorities and technological hurdles in the crypto mining industry, which includes more than a dozen publicly traded companies like Argo, are preventing a full transition to renewable energy. In late 2020, Marathon, one of the largest publicly traded miners, began mining Bitcoin at a coal-fired plant in Montana, citing easy access to cheap energy.
In Illinois, crypto mining company Luxury Systems has relocated an old steel mill in the town of Hennepin. The sangha is run by a former attorney, Spencer Marr, who says he founded the company to promote clean energy. But about half the power of Hennepin activity comes from fossil fuels.
“It was a compromise we had to make,” Mr. Marr said. “It’s a means to an end that allows us to establish ourselves as a company.”
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In recent months, Texas has become a hotbed for crypto mining, attracting more than two dozen companies. The state has an unusual incentive structure that’s well-suited to a nascent industry: the Texas grid operator offers discounts to companies that can quickly pull out power when electricity demand spikes around the world. states, allowing energy to flow to ordinary homeowners. Many cryptocurrency mines can turn on or off in seconds, allowing them to take advantage of the offer with minimal inconvenience.
That deal is part of an attraction for Argo, a London-based company founded in 2017 that operates two other mines in Quebec that use mainly hydroelectricity. Mr. Wall said Argo is also attracted by the abundant green energy in West Texas. The facility outside of Lubbock will be connected to the western portion of the Texas energy grid, where about 85 percent of electricity comes from wind and solar infrastructure, including a set of turbines located nearby. Argo site.
But Mr. Wall could not guarantee that Argo’s new center would be carbon-free. That requires getting on the grid and buying energy directly from a renewable electricity company.
“A lot of renewable energy producers are still a bit skeptical about cryptocurrencies,” he said. “Cryptocurrency miners do not have the credit profile to sign transactions that last 10 or 15 years.”
In the future, he said, Argo plans to build its own solar panels on-site in Texas and broker deals with local renewable energy companies to buy energy directly.
The broader crypto community is divided over whether cleaning up the mining sector is the best path to environmental sustainability. The energy-intensive validation system that underpins Bitcoin is called “proof of work”; Some in the industry are pushing to build the new cryptocurrency on a different system called “proof of stake”, which uses as little as 0.01% of the energy consumed in the mining process.
Mr. Wall said he was not opposed to testing an alternative system. Still, he said, he believes in Bitcoin’s long-term potential for financial transformation, though he does wish that miners are called something less mining, like a “verifier receive”.
It was a battle he couldn’t win. But even in the face of backlash, he said, companies will continue to mine Bitcoin.
“It will happen. It’s a fact,” he said. “We need to do it in an eco-friendly way.”