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Bitcoin Mining, at What Cost?


A few years ago, I gave a tour of the Art Basel Miami Beach exhibition for a group of MIT alumni. I had been working on an exhibit about how the internet functions, so I showed my tour group an innocuous-seeming photo in an exhibitor’s booth: an undersea fiber optic cable, shot by the artist Trevor Paglen. I wanted to remind the tour group (and myself) that, notwithstanding the metaphors of cloud computing, digital communication travels on physical infrastructure. Atoms move bits. In the globalized digital space of Bitcoin mining, many of the atoms that have been moving many of the bits are the atoms that make CO2.

On June 8, 2022, the Mothers Out Front Corporate Responsibility Action Group hosted Mothers Out Front member Erin White and guest Charlie Schumacher, VP of Corporate Communications for the Bitcoin mining corporation Marathon Digital Holdings. Mothers Out Front’s presentation focused on  the energy consumed in Bitcoin mining.[1]

“Proof of work,” the protocol that Bitcoin uses to verify and validate transactions on the blockchain, makes Bitcoin miners the heaviest consumers of electricity in the industry. Recently, especially in the United States, Bitcoin miners have highlighted their interest in turning toward sources of renewable energy to provide the electricity that they use. At the Mothers Out Front meeting, Charlie Schumacher outlined Marathon Digital Holdings’ plan to move their mining operations to west Texas, where wind energy is abundant.

In 2020 (which was tied with 2016 as the hottest year ever recorded), Marathon Digital Holdings began powering most of its Bitcoin mining by using electricity from a coal-fired generating plant in Hardin, Montana. The mining company plans to become “100% carbon neutral”[2] by the end of 2022 and to shutter its Montana operation then. Its move toward using west Texas wind energy will contribute to that goal. In an email, Schumacher explains: “To offset any electricity that is not pulled directly from renewable sources (e.g., power from the Texas grid), we will be leveraging renewable energy credits (RECs), which we have already procured from our hosting provider, who in turn procured them directly from one of our renewable energy providers.” That is, Marathon will purchase RECs to cover its energy use that is not generated by renewable sources.

In an interview focused on the company’s impending exit from the Hardin, Montana coal-fired plant, Marathon CEO Fred Thiel tells Yellowstone Public Radio, “We’re leaving all the infrastructure there intact specifically so another miner can come in right behind us with a minimal delay and then coming up to speed.” Anne Hedges, Director of Policy and Legislative Affairs and Co-Director of the Montana Environmental Information Center, explained to the Center for Investigative Reporting that the privately-held coal plant’s operation had been declining when Marathon Digital Holdings entered into an agreement to purchase its output. Hedges had expected the plant to close. Instead, she says, “They’re pumping CO2 into the atmosphere that wasn’t going into the atmosphere two years ago.”[3] In the second quarter of 2021, Marathon’s CO2 emissions from the Hardin plant totaled 187,000 tons. It would take over 220,000 acres of forest a full year to sequester the emissions from those three months.

Bitcoin mining is a global industry, and it’s agile. Miners can, and do, move to sites that provide cheap sources of electrical power and friendly regulatory schemes. In 2021, for example, when China banned crypto mining, miners moved to coal-powered Kazakhstan and to the United States, where only about twelve percent of electrical output is powered by renewable sources. 

In the US, the cryptocurrency industry as a whole, and Bitcoin mining in particular, are drawing attention from federal and state governments. In March, 2022, President Biden issued an Executive Order directing the Office of Science and Technology Policy to report on  cryptocurrency’s effects on “efforts to tackle climate change at home and abroad.” Massachusetts Senators Elizabeth Warren and Ed Markey have joined other Congresspersons to investigate the climate impacts of Bitcoin mining. In May 2022, the New York state legislature passed a bill requiring a two-year moratorium on new crypto mining operations in the state. The bill is under review by Governor Hochul, who is urged by crypto mining supporters to veto it.

As they attempt to move away from fossil fuels, Bitcoin miners contend that their industry is in a position to lead the buildout of renewable energy facilities. By placing mining facilities adjacent to renewable energy production sites (that is, “behind the meter,” before the electricity generated at those sites reaches the electrical grid), they say, mining will capture “wasted energy.” In west Texas, “wasted energy” consists primarily of electricity produced by wind and not transmitted to other customers due to grid congestion, transmission inefficiencies, and the lack of large-scale battery storage. Therefore, the argument goes, the Bitcoin miners in west Texas will use energy that has already been generated and would otherwise not be used. In the Texas case, industry representatives also point toward their ability to assist in balancing that state’s notoriously unstable and isolated electrical grid.

Regulatory- and tax-friendly Texas is an eager participant in what Anne Hedges of the Montana Environmental Information Center calls, “a national competition for mines,”[4] The buildout of west Texas wind power is proceeding rapidly, raising questions from environmental and consumer groups about whether Bitcoin miners will actually add to the load on the state’s already stressed electrical grid, and whether the state should invest in upgrading and stabilizing its grid, rather than building more capacity that can only be used by “behind the meter” consumers.

Controversies over quantifying and predicting the climate impacts of Bitcoin mining abound. A 2018 report in Nature Climate Change raised the possibility that Bitcoin mining alone could increase global temperature past a two degree target. Industry supporters argue that evolving efficiencies in computing power will offset the increasing scale of their mining operations. Bitcoin enthusiasts, in particular, believe that Bitcoin mining’s energy use is “a feature, not a bug,” that “proof-of-work,” the electricity-heavy protocol used by Bitcoin, provides the only immutable, and the most powerfully anonymous, record of transactions. The argument in favor of energy-for-the-sake-of-anonymity was reinforced by anonymous recent donations of Bitcoin to Ukraine, totaling 100 million dollars. But in a recent article in Technology Review, Cornell professor Eswar Prasad writes, “it turns out that the cryptocurrency [he’s referring specifically to Bitcoin] does not guarantee anonymity – users’ digital identities can, with some effort, be connected to their real identities.”[5]

Finally, comparative statistics that put Bitcoin mining’s energy usage into perspective are wildly divergent. Researchers at the University of Cambridge explain that, while Bitcoin’s electricity consumption (approximately 125 terrawatt-hours per year) is both greater than Norway’s (about 124 terrawatt-hours per year), and less than the electricity used in lighting residences in the United States (60 terrawatt-hours per year), all such comparisons require careful examination. The Cambridge researchers note that comparative statements regarding Bitcoin’s energy use suffer from presenter bias on both sides of the controversy; from limited availability of data on which to base the comparisons; and from the “apples and oranges” problem that arises when comparing the social value of Bitcoin mining to an entity (for example, a nation) or an activity (such as residential lighting) to which it is compared. 

Nevertheless, if, as its backers argue, Bitcoin mining is a relatively small energy consumer at present, it’s not from lack of ambition. Growth strategies are rampant in the Bitcoin industry. Two nations, El Salvador and the Central African Republic, have denoted Bitcoin as a national currency. And privatized, self-governing “Bitcoin cities” are attracting venture capital, in an effort to “create an entirely new kind of industry…the industry of building [Bitcoin] cities.”

When I was in Miami, talking to the MIT tour group about photos of undersea internet cables, I told the group that I had challenged a student to calculate the combined weight of all the servers and cables and routers that make up the internet. I wanted to know how much the internet weighs. A bystander scoffed, telling me, “it’s all in the cloud.” But, really, there is no cloud. And industrial growth is never impact-free.

Addressing the Mothers Out Front group, Charlie Schumacher remarked that, “Everything of value uses energy.” For Bitcoin supporters, its social value is obvious: providing anonymous and protected financial services to users worldwide. Yet, the claim that Bitcoin will democratize access to currency flows is unverifiable. We do know, though, that as of December 2021, .01% of the currency’s holders controlled 27% of Bitcoin;[6] and globally, nineteen people on Forbes’ 2022 list of billionaires gained their fortunes from cryptocurrencies and the blockchain.

Mothers Out Front member and co-presenter Erin White, responding to Schumacher’s statement, says, “Energy is valuable, especially in today’s world because we rely on it so heavily for everything we do. So, if that’s true, then maybe we need to reevaluate and start thinking of not using energy as having value.”[7]


[1] Bitcoin is one of thousands of cryptocurrencies. Transactions in Bitcoin are recorded in a digital ledger called a blockchain. To enter a transaction on the blockchain, Bitcoin miners solve complex mathematical puzzles that require intense computation. The owner of the computer that first solves a puzzle is rewarded in Bitcoin, currently at the rate of 6.25 Bitcoins for each solution. For more on the basics on cryptocurrency, see the explainer at Investopedia; for more on Bitcoin’s energy use, including usage by Marathon Digital Holdings, listen to reporter Elizabeth Shogren’s work in a recent podcast, presented by the Center for Investigative Reporting.
[2] email to the author, June 12, 2022.
[3] phone conversation with the author, June 13, 2022.
[4] phone conversation with the author, June 13, 2022.
[5] “The Transformation of Money,” MIT Technology Review,125:3, May/June 2022.
[6] Rebecca Ackerman, “Crypto’s confusing consumer promises,” MIT Technology Review,125:3, May/June 2022. Ackerman goes on to describe this ratio as “far more skewed than for dollar ownership in the US, which is not a flattering statistic to begin with.”
[7] email to the author, June 15, 2022.