Environmental campaign targets Bitcoin miners in an effort to curb greenhouse gases
Energize Weekly, April 6, 2022
Environmental groups are taking aim at the power-hungry Bitcoin cryptocurrency seeking to get it to change the way it operates and thereby cut its greenhouse gas emissions.
The “Change the Code, Not the Climate Campaign” is being spearheaded by Greenpeace and the Environmental Working Group. It contends that by changing Bitcoin’s internal coding mechanisms its energy use and emissions can be cut.
At its current pace, Bitcoin, which accounts for more than half the world’s cryptocurrency, could raise global temperatures 2 degrees Celsius by 2033, according to researchers at the University of Hawaii.
“Digital assets may present a key environmental challenge at a time when we need to shift to carbon-free sources in order to combat climate change,” according to the White House Office of Science and Technology.
The reason for Bitcoin’s huge energy demands is two-fold. First, it is a virtual currency that exists only electronically in specialized computers – Application-Specific Integrated Circuit (ASCI) Miners.
While ASCI miners are more efficient and have greater computing capacity than the central processing units in a laptop or desktop computer, a crypto currency mine needs hundreds or even thousands of ACIS Miners.
There are an estimated one million crypto miners operating in the world, according to the Columbia University Climate School.
The biggest energy demand, however, is from keeping track of the creation and trading in cryptocurrencies.
A single Bitcoin transaction uses an estimated 2,272 kilowatt-hours of electricity, about the amount of power the average U.S. household consumes in 78 days, according to the analytic web site Digiconomist.
Bitcoin is using more electricity than Sweden, according to the Cambridge University Bitcoin Energy Consumption Index.
This demand for electricity has sent Bitcoin miners scrambling to find inexpensive power. The lure of cheap hydropower set off crypto mining fever in the towns around the Coulee Dam, 80 miles west of Spokane, Washington.
It is, however, crypto mines taking over old natural gas-fired and coal-fired plants, such as the Scrubgass Power Plant in rural Kennerdell, Pa., that concern environmentalists.
Several start-up companies are also offering services to channel natural gas from oil wells, which is often just flared as waste, into turbines to power crypto mines.
Denver-based Crusoe Energy already operates at least 44 data centers in Montana, North Dakota, Wyoming and Colorado using oil well gas as a fuel and, according to Bloomberg News, is expanding a Bitcoin mine pilot project it has with Exxon in North Dakota.
“Bitcoin is resurrecting the fossil fuel industry,” the environmental groups’ campaign said.
In the face of these trends, the environmental groups are advocating a change in the software code to a “low-energy protocol” that they claim will reduce energy demand 99.9 percent.
Since there is no central bank involved in Bitcoin mining, transactions need to be transparent and widely accessible. A recording mechanism had to be created to do this – Blockchain. Nodes – powerful computers connected to the other computers in the network – run the key Bitcoin software and validate transactions. Each node has a record of every transaction it has executed.
Miners verify their transactions through dozens of variables and then compete to have their validations accepted through a second verification process. When that is done, the transaction is added to the blockchain. This validation process is known as “proof of work.”
“Bitcoin uses an outdated technology called proof-of-work to validate transactions,” according to the campaign. “This proof-of-work method, at least as it currently operates, uses massive amounts of energy and thus is a huge source of climate pollution. As Bitcoin’s prices surges, so too does it energy use.”
Newer cryptocurrencies are becoming lower consumers of energy through the use of a more efficient software called “proof-of-stake,” which relies on pledges and consensus, instead of competition, and has more security.
Ethereum, the second largest cryptocurrency, shifted to proof-of-stake last year. Carl Beekhuizen, a researcher at the Ethereum Foundation, estimated that proof-of-stake is about 2,000 times more energy efficient than proof-of-work.”
Despite its attractions, the Bitcoin campaign concedes the switch wouldn’t be that easy.
“Changing Bitcoin would render a whole lot of expensive infrastructure worthless, meaning Bitcoin stakeholders will need to walk away from sun costs – or find other creative solution,” the campaign said.
The campaign started with a launch of digital ads in the Wall Street Journal, New York Times, Facebook last week.
Another target will be convincing investors to apply pressure, Michael Brune, a campaign advisor and former executive director of the Sierra Club, told Bloomberg News. “Goldman Sachs, BlackRock, PayPal, Venmo, Fidelity — there are lots of companies we anticipate will be helpful to this effort,” Brune said.