Along a dirt road in the depths of a Texas farm, cryptocurrency firm Argo Blockchain is building a power plant for the internet age: a crypto “mining” site with computers that produce new bitcoins.
But unlike other bitcoin mining operations, which consume large amounts of fossil fuels and generate carbon emissions, Argo claims to be trying to do something environmentally responsible. When Argo CEO Peter Wall led a tour of the 126,000-square-foot construction site one morning this month, he pointed to a row of wind turbines a few miles down the road, white speakers gleaming in the sunlight.
He announced that the new facility, located an hour outside of Lubbock, would be fueled mostly by wind and solar energy. “This is Nirvana Bitcoin mining,” Wall said. “Look away and you will have your renewed strength.”
Wind turbines near a new Argo Blockchain power plant that will be fueled mostly by wind and solar power, in Dickens County, Texas, March 15, 2022. (Carter Johnston/The New York Times)
In the face of criticism from politicians and environmentalists, the crypto-mining industry has embarked on a rebranding to challenge the prevailing view that computers that consume a lot of electricity are harmful to the climate. All five of the major publicly traded crypto miners say they are building or already operating factories powered by renewable energy, and industry executives have begun arguing that the demand from crypto miners will create opportunities for wind and solar energy companies to open their own facilities.
Efforts – partly a PR exercise, partly a genuine attempt to make the industry more sustainable – have intensified since last spring, when China launched a crackdown on cryptocurrency mining, forcing some mining operations to move to the United States. A trade group called the Bitcoin Mining Council also formed last year, in part to address climate issues, after Elon Musk criticized the industry for its use of fossil fuels.
Hoses that will be used to power the dialectical coolant of crypto-mining computers at the new Argo Blockchain power plant in Dickens County, Texas, March 15, 2022. (Carter Johnston/The New York Times)
Cryptocurrency mining does not involve any picks or shovels. Instead, the term refers to the process of verifying and creating the currency necessary for the Bitcoin ecosystem. Powerful computers race with each other to process transactions and solve complex mathematical problems that require several numerical guesses per second. As a reward for this authentication service, miners receive new coins, providing a financial incentive to keep computers running.
In the early years of bitcoin, crypto enthusiasts could mine coins by running a program on a laptop. But as digital assets become more popular, the amount of energy needed to generate bitcoin has gone up. A single bitcoin transaction now requires more than 2,000 kilowatt-hours of electricity, or enough energy to power the average American home for 73 days, researchers estimate.
Electrical distribution panels at the Argo Blockchain power plant under construction in Dickens County, Texas, March 15, 2022. (Carter Johnston/The New York Times)
To achieve this, some miners are reviving broken 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 may be responsible for about 65 megatons of carbon dioxide per year, compared to Greece’s emissions.
According to the study, the Bitcoin network’s use of green energy sources has also fallen to an average of 25% in August 2021 from 42% in 2020. (The industry has argued that its average renewable use is close to 60%). As a result of Chinese repression, which cut off a cheap source of hydropower. It also reflects underlying economic incentives, Alex de Vries, one of the authors of Juul’s study said. Renewable energy is an intermittent energy source – the sun shines only part of the day, and wind speed fluctuates greatly.
“What a miner would do if he wanted to maximize profits was to put his machines anywhere they could work all day,” de Vries said.
Containers full of dialectical cooler for Argo Blockchain crypto mining computers, in Dickens County, Texas, March 15, 2022. (Carter Johnston/New York Times)
Bitcoin’s ballooning energy use has long angered environmentalists. But criticism that made a strong impression came from longtime Bitcoin supporter Musk, who said on Twitter in May that Tesla, his electric car company, would no longer accept crypto payments due to “the increasing use of fossil fuels for Bitcoin mining and transactions.”
His tweet sent the mining industry into crisis mode. Michael Saylor, CEO of software company MicroStrategy, which invests heavily in bitcoin, reached out to Musk to discuss the climate issue. A group of mining executives, including Saylor and Wall, later met up with Musk Over Zoom.
“He wanted to make sure the industry was on the sustainability side, and he gave us some training,” Saylor recalls. His encouragement was: ‘Find out how clean the energy is, and how sustainable the energy is. Find out how much you use.” (Musque did not respond to a request for comment.)
Peter Wall, CEO of Argo Blockchain, at the company’s 126,000-square-foot power plant under construction in Dickens County, Texas, March 15, 2022. (Carter Johnston/The New York Times)
After the call, Saylor established the Bitcoin Mining Council, a forum for the industry to exchange ideas and coordinate environmental strategy. One of the members, TeraWulf, has pledged to operate crypto-mining using more than 90% carbon-free energy. It has two projects in the works – a retired coal plant in upstate New York fueled by hydroelectric power, and a nuclear-powered facility in Pennsylvania.
“Everyone I talk to now is talking about carbon neutrality,” said Paul Prager, CEO of TeraWulf. “The language has definitely changed.”
But financial priorities and technological barriers in the crypto-mining industry, which includes more than a dozen publicly listed companies such as Argo, prevent a full transition to renewable energy. In late 2020, Marathon Corporation, one of the largest publicly traded mining companies, began mining bitcoin at a coal-fired plant in Montana, citing easy access to cheap energy.
In recent months, Texas has become a hot spot for cryptocurrency mining, attracting more than two dozen companies. The state has an unusual incentive structure well suited to a nascent industry: When electricity demand rises statewide, the Texas grid operator offers discounts to companies that can unplug quickly, allowing power to flow to ordinary homeowners. Many crypto miners can be turned on or off in seconds, allowing them to take advantage of the stimulus with minimal disturbance.
That deal was part of the allure of Argo, a London-based company founded in 2017 that operates two other mines in Quebec, using mostly hydroelectric power. Wall said Argo was also drawn to West Texas’ abundant green energy. The facility outside Lubbock will be connected to the western sector of the Texas power grid, where 85% of the electricity comes from solar and wind infrastructure, including an array of turbines located virtually adjacent to the Argo construction site.
But Wall does not guarantee that the new Argo Center will not have a carbon footprint. This would require bypassing the grid and purchasing power directly from a renewable energy company.
“A lot of these renewable energy producers are still a bit skeptical about crypto,” he said. “Crypto miners do not have credit profiles to sign deals for 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 power directly.
The broader crypto community is divided over whether cleaning up the mining sector is the best path to achieving environmental sustainability. The power-intensive authentication system that underpins Bitcoin is known as “Proof of Work”; Some in the industry are pushing to build new cryptocurrencies on a different system called “Proof of Stake,” which uses less than 0.01% of the energy expended in the mining process.
Wall said he had no objection to trying an alternative system. However, he said he believes in bitcoin’s long-term potential to transform finance, although he wishes miners could be called something that looks less extractive, like “verifiers.”
This is a fight he is unlikely to win. But he said that even in the face of a backlash, companies will continue to mine bitcoin.
“This is just going to happen,” he said. “We need to do it in an environmentally friendly way.”
This article originally appeared in the New York Times.
.
[ad_2]
