Bitcoin has a well known problem, even if many bitcoin fans would like to ignore it or pretend it isn’t real. The problem is that bitcoin mining uses an enormous amount of electricity. It’s not a large amount, and actually maybe it’s not even an enormous amount — it’s an absurd amount.
Naturally, people who like the concept are eager to brush it off by saying that bitcoin miners can just use renewable energy — solar and wind are cheapest now anyway for new power production, right? However, that misses a few points. There’s only so much solar PV and wind turbine production capacity, and increasing production capacity takes years, and needs clear signals. Production needs to increase rapidly and it has been increasing rapidly, but that increased production is needed to avoid or turn off fossil fuel power plants. Every single serious plan for reducing emissions an adequate amount by 2030 involves cutting energy use — cutting it a lot. We need to retire coal and fossil methane* power plants yesterday (*aka “natural gas,” but we’re starting to drop the use of this term here on CleanTechnica since it’s a greenwashing term). We need new solar and wind power plants to come online to do that. Even if bitcoin miners started gobbling up solar panels and wind turbines to power their mining, that would mean those cleantech power plants would be less available for other markets and those other markets would be powered by fossil fuels longer.
Sure, in 2050, go for it if you want! Go crypto crazy. But we need to shut down hundreds of fossil power plants in the 2020s, and we can’t be delaying that just because some people don’t want to trust the federal governments and organizations that manage monetary policy today.
But let’s get back to the story. It’s a fascinating one.
With their massive, massive energy needs**, bitcoin miners have been known to use enormous amounts of coal power, particularly in China (**and no, this is nothing like the energy needs of ATMs — which I don’t think I’ve used in ~10 years — or online banking; it is far more energy use on a per-transaction basis). As the bitcoin market grows, it needs to find more and more power around the world, and that means more and more dirty power. That brings us to the news. Recently, 200 bitcoin miners and oil & gas execs reportedly met in a private setting in Houston, Texas. CleanTechnica wasn’t invited, so we can’t say for sure if this was about getting more power supply for mining, if it was about investment opportunities of some sort, if it was about money-hiding tactics to avoid paying taxes, or if it was just a benevolent meeting to chat sports, weather, and pumpkin spice lattes. However, reporting from CNBC indicates it was primarily about the first thing — getting dirty electricity to power more bitcoin mining.
“On a residential back street of Houston, in a 150,000 square-foot warehouse safeguarding high-end vintage cars, 200 oil and gas execs and bitcoin miners mingled, drank beer, and talked shop on a recent Wednesday night in August,” CNBC reported last week. “One big topic of discussion: Using ‘stranded’ natural gas to power bitcoin mining rigs, which both reduces greenhouse gas emissions and makes money for the gas providers, as well as the miners.”
Let’s pick apart that last sentence, because it’s the critical one and the second half of it makes no sense. “Stranded assets” in this context are not power plants that are no longer competitive (though, some of them have been revived or kept alive to power bitcoin mining). Bitcoin mining is bringing economic viability back to a dying fossil-power-plant market in another way. What is being tapped, according to the article, is otherwise unused fossil methane at oil sites. Notably, using that “stranded methane” is making oil drilling more economical, and making it easier to keep selling deceptively cheap oil. There is nothing good about this. And that’s not the end of the environmental disaster. The way this stranded methane is being burned is also extremely inefficient and harmful for our climate.
Bitcoin isn’t a joke. It’s a massive, insane climate disaster.
Here are a few more choice quotes from the CNBC story:
Just take Hayden Griffin Haby III, an oilman turned bitcoiner. The Texas native and father of three has spent 14 years in oil and gas, and he epitomizes what this monthly meetup is all about.
Haby started as a surface landman where he brokered land contracts, and later, ran his own oil company. But for the last nine months, he’s exclusively been in the business of mining bitcoin. … [H]e co-founded Limpia Creek Technologies, which powers bitcoin mining rigs with flared, vented, and stranded natural gas assets.
Bitcoin miners care most about finding cheap sources of electricity, so Texas – with its crypto-friendly politicians, deregulated power grid, and crucially, abundance of inexpensive power sources – is a virtually perfect fit. The union becomes even more harmonious when miners connect their rigs to otherwise stranded energy, like natural gas going to waste on oil fields across Texas.
“I just knew Houston would be prime to explode because of the energy connection to mining – if we organized a good meetup,” [Parker] Lewis told CNBC. “It’s also key to Texas being the bitcoin capital of the world.”
Capturing excess and otherwise wasted natural gas from drilling sites and then using that energy to mine bitcoin is still firmly in the category of avant-garde tech.
The article noted that this meeting and the bitcoin miner rush to Texas were triggered in large part by China kicking bitcoin miners out. As noted previously, bitcoin miners have been using an enormous amount of coal power, mostly in China. The plan for many of them now seems clear: forget about Chinese coal, just switch to cheap fossil fuel power in Texas.
Anyone who thinks bitcoin isn’t an environmental and climate catastrophe isn’t paying attention or is putting on some seriously handicapping blinders. Switching to such an enormously energy intensive investment tool (because, come on, no one is spending bitcoin like it’s cash money) is not just a mistake. It’s essentially a crime against humanity. Human society is digging the graves of millions or billions of people because of catchphrases and fanciful idealistic thinking. No cryptocurrency is going to wipe out wealth inequality or solve the world’s problems. All I’m seeing so far is that it’s creating bigger problems. (Side note: the cult-like obsession with crypto is also a bit annoying on social media and various forums around the interwebs, and there is no doubt a ridiculous amount of bot activity and propaganda pumping.)
Oh, and I haven’t even gotten to what seems to be the worst part yet. The way that much of this fossil methane is being burned is about as inefficient as it gets. The “miners” are using generators. Here’s more:
“Chemistry is amazing,” explained Adam Ortolf, who heads up business development in the U.S. for Upstream Data, a company that manufactures and supplies portable mining solutions for oil and gas facilities.
“When CH4, or methane, combusts, the only exhaust is CO2 and H2O vapor. That’s literally the same thing that comes out of my mouth when I exhale,” continued Ortolf.
But Ortolf points out, flares are only 75 to 90% efficient. “Even with a flare, some of the methane is being vented without being combusted,” he said.
This is when on-site bitcoin mining can prove to be especially impactful.
When the methane is run into an engine or generator, 100% of the methane is combusted and none of it leaks or vents into the air, according to Ortolf.
“But nobody will run it through a generator unless they can make money, because generators cost money to acquire and maintain,” he said. “So unless it’s economically sustainable, producers won’t internally combust the gas.”
…
“This is the best gift the oil and gas industry could’ve gotten,” said Ortolf. “They were leaving a lot of hydrocarbons on the table, but now, they’re no longer limited by geography to sell energy.”
Somehow, the CNBC article tries to spin this as a good thing environmentally. I guess the reporter doesn’t know anything about the matter and just bought the bitcoin miners/oil & gas guys’ illogical talking points. Perhaps they even now think that the wonderful CO2 emissions we are flooding our atmosphere with will just lead to more trees and bushes.
Featured photo courtesy of Pixabay/Pexels (CC0)
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