Bitcoin mines cash in on electricity — by devouring it, selling it, even turning it off — and they cause immense pollution. In many cases, the public pays a price.
Texas was gasping for electricity. Winter Storm Uri had knocked out power plants across the state, leaving tens of thousands of homes in icy darkness. By the end of Feb. 14, 2021, nearly 40 people had died, some from the freezing cold.
Meanwhile, in the husk of a onetime aluminum smelting plant an hour outside of Austin, row upon row of computers were using enough electricity to power about 6,500 homes as they raced to earn Bitcoin, the world’s largest cryptocurrency.
The computers were performing trillions of calculations per second, hunting for an elusive combination of numbers that Bitcoin’s algorithm would accept. About every 10 minutes, a computer somewhere guesses correctly and wins a small number of Bitcoins worth, in recent weeks, about $170,000. Anyone can try, but to make a business of it can require as much electricity as a small city.
In Texas, the computers kept running until just after midnight. Then the state’s power grid operator ordered them shut off, under an agreement that allowed it to do so if the system was about to fail. In return, it began paying the Bitcoin company, Bitdeer, an average of $175,000 an hour to keep the computers offline. Over the next four days, Bitdeer would make more than $18 million for not operating, from fees ultimately paid by Texans who had endured the storm.
The New York Times has identified 34 such large-scale operations, known as Bitcoin mines, in the United States, all putting immense pressure on the power grid and most finding novel ways to profit from doing so. Their operations can create costs — including higher electricity bills and enormous carbon pollution — for everyone around them, most of whom have nothing to do with Bitcoin.
Until June 2021, most Bitcoin mining was in China. Then it drove out Bitcoin operations, at least for a time, citing their power use among other reasons. The United States quickly became the industry’s global leader.
Since then, precisely how much electricity Bitcoin mines are using in America and their effect on energy markets and the environment have been unclear. The Times, using both public and confidential records as well as the results of studies it commissioned, put the most comprehensive estimates to date on the largest operations’ power use and the ripple effects of their voracious demand.
It is as if another New York City’s worth of residences were now drawing on the nation’s power supply, The Times found.
In some areas, this has led prices to surge. In Texas, where 10 of the 34 mines are connected to the state’s grid, the increased demand has caused electric bills for power customers to rise nearly 5 percent, or $1.8 billion per year, according to a simulation performed for The Times by the energy research and consulting firm Wood Mackenzie.
The additional power use across the country also causes as much carbon pollution as adding 3.5 million gas-powered cars to America’s roads, according to an analysis by WattTime, a nonprofit tech company. Many of the Bitcoin operations promote themselves as environmentally friendly and set up in areas rich with renewable energy, but their power needs are far too great to be satisfied by those sources alone. As a result, they have become a boon for the fossil fuel industry: WattTime found that coal and natural gas plants kick in to meet 85 percent of the demand these Bitcoin operations add to their grids.
Their massive energy consumption combined with their ability to shut off almost instantly allows some companies to save money and make money by deftly pulling the levers of U.S. power markets. They can avoid fees charged during peak demand, resell their electricity at a premium when prices spike and even be paid for offering to turn off. Other major energy users, like factories and hospitals, cannot reduce their power use as routinely or dramatically without severe consequences.
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In some states, notably New York, Pennsylvania and Texas, Bitcoin operators’ revenue can ultimately come from other power customers. The clearest example is Texas, where Bitcoin companies are paid by the grid operator for promising to quickly power down if necessary to prevent blackouts. In practice, they rarely are asked to shut down and instead earn additional money while doing exactly what they would have been doing anyway: seeking Bitcoin. Five operations have collectively made at least $60 million from that program since 2020, records show.
Several of the companies are being paid through these agreements a majority of the time they operate. Most years, they are asked to turn off for only a few hours, at which point they are paid even more.
The windfall for Bitdeer during Winter Storm Uri came through this program, in exchange for a fraction of the power it typically used. The company did not respond to requests for comment. Another Bitcoin company made tens of millions of dollars reselling electricity during the storm — and ultimately stands to earn as much as $125 million — according to its financial filings, which were previously reported by the Tech Transparency Project. A third company told investors that another natural disaster like Uri could be a significant business opportunity.
“Ironically, when people are paying the most for their power, or losing it altogether, the miners are making money selling energy back to Texans at rates 100 times what they paid,” said Ed Hirs, who teaches energy economics at the University of Houston and has been critical of the industry.
In interviews and statements, many of the companies said they were no different from other large power users except for their willingness to shut off quickly to benefit the grid. Several objected to the method The Times and WattTime used to estimate their emissions, which calculated the pollution caused by the additional power generated to satisfy the mines’ demand, showing it to overwhelmingly come from fossil fuels.
The companies said this method held them to an unfair standard.
“The analysis cited could be used to attack any industry that consumes power,” said David Fogel, the chief executive of Coinmint, which operates in upstate New York. “I think the entire notion of singling out specific industries like this is unfair.”
But WattTime’s method is the one many energy and climate experts recommend for measuring the environmental effects of increased power use by any industry, particularly one that grows so large so suddenly.
www.nytimes.com
Texas was gasping for electricity. Winter Storm Uri had knocked out power plants across the state, leaving tens of thousands of homes in icy darkness. By the end of Feb. 14, 2021, nearly 40 people had died, some from the freezing cold.
Meanwhile, in the husk of a onetime aluminum smelting plant an hour outside of Austin, row upon row of computers were using enough electricity to power about 6,500 homes as they raced to earn Bitcoin, the world’s largest cryptocurrency.
The computers were performing trillions of calculations per second, hunting for an elusive combination of numbers that Bitcoin’s algorithm would accept. About every 10 minutes, a computer somewhere guesses correctly and wins a small number of Bitcoins worth, in recent weeks, about $170,000. Anyone can try, but to make a business of it can require as much electricity as a small city.
In Texas, the computers kept running until just after midnight. Then the state’s power grid operator ordered them shut off, under an agreement that allowed it to do so if the system was about to fail. In return, it began paying the Bitcoin company, Bitdeer, an average of $175,000 an hour to keep the computers offline. Over the next four days, Bitdeer would make more than $18 million for not operating, from fees ultimately paid by Texans who had endured the storm.
The New York Times has identified 34 such large-scale operations, known as Bitcoin mines, in the United States, all putting immense pressure on the power grid and most finding novel ways to profit from doing so. Their operations can create costs — including higher electricity bills and enormous carbon pollution — for everyone around them, most of whom have nothing to do with Bitcoin.
Until June 2021, most Bitcoin mining was in China. Then it drove out Bitcoin operations, at least for a time, citing their power use among other reasons. The United States quickly became the industry’s global leader.
Since then, precisely how much electricity Bitcoin mines are using in America and their effect on energy markets and the environment have been unclear. The Times, using both public and confidential records as well as the results of studies it commissioned, put the most comprehensive estimates to date on the largest operations’ power use and the ripple effects of their voracious demand.
It is as if another New York City’s worth of residences were now drawing on the nation’s power supply, The Times found.
In some areas, this has led prices to surge. In Texas, where 10 of the 34 mines are connected to the state’s grid, the increased demand has caused electric bills for power customers to rise nearly 5 percent, or $1.8 billion per year, according to a simulation performed for The Times by the energy research and consulting firm Wood Mackenzie.
The additional power use across the country also causes as much carbon pollution as adding 3.5 million gas-powered cars to America’s roads, according to an analysis by WattTime, a nonprofit tech company. Many of the Bitcoin operations promote themselves as environmentally friendly and set up in areas rich with renewable energy, but their power needs are far too great to be satisfied by those sources alone. As a result, they have become a boon for the fossil fuel industry: WattTime found that coal and natural gas plants kick in to meet 85 percent of the demand these Bitcoin operations add to their grids.
Their massive energy consumption combined with their ability to shut off almost instantly allows some companies to save money and make money by deftly pulling the levers of U.S. power markets. They can avoid fees charged during peak demand, resell their electricity at a premium when prices spike and even be paid for offering to turn off. Other major energy users, like factories and hospitals, cannot reduce their power use as routinely or dramatically without severe consequences.
Story continues below advertisement
Continue reading the main story
In some states, notably New York, Pennsylvania and Texas, Bitcoin operators’ revenue can ultimately come from other power customers. The clearest example is Texas, where Bitcoin companies are paid by the grid operator for promising to quickly power down if necessary to prevent blackouts. In practice, they rarely are asked to shut down and instead earn additional money while doing exactly what they would have been doing anyway: seeking Bitcoin. Five operations have collectively made at least $60 million from that program since 2020, records show.
Several of the companies are being paid through these agreements a majority of the time they operate. Most years, they are asked to turn off for only a few hours, at which point they are paid even more.
The windfall for Bitdeer during Winter Storm Uri came through this program, in exchange for a fraction of the power it typically used. The company did not respond to requests for comment. Another Bitcoin company made tens of millions of dollars reselling electricity during the storm — and ultimately stands to earn as much as $125 million — according to its financial filings, which were previously reported by the Tech Transparency Project. A third company told investors that another natural disaster like Uri could be a significant business opportunity.
“Ironically, when people are paying the most for their power, or losing it altogether, the miners are making money selling energy back to Texans at rates 100 times what they paid,” said Ed Hirs, who teaches energy economics at the University of Houston and has been critical of the industry.
In interviews and statements, many of the companies said they were no different from other large power users except for their willingness to shut off quickly to benefit the grid. Several objected to the method The Times and WattTime used to estimate their emissions, which calculated the pollution caused by the additional power generated to satisfy the mines’ demand, showing it to overwhelmingly come from fossil fuels.
The companies said this method held them to an unfair standard.
“The analysis cited could be used to attack any industry that consumes power,” said David Fogel, the chief executive of Coinmint, which operates in upstate New York. “I think the entire notion of singling out specific industries like this is unfair.”
But WattTime’s method is the one many energy and climate experts recommend for measuring the environmental effects of increased power use by any industry, particularly one that grows so large so suddenly.
The Real-World Costs of the Digital Race for Bitcoin
Bitcoin mines cash in on electricity — by devouring it, selling it, even turning it off — and they cause immense pollution. In many cases, the public pays a price.
