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⚡ "How Bitcoin Is Keeping Zombie Power Plants Alive"

The Carbon Copy

Photo by Michael Förtsch / Unsplash

Host: Stephen Lacey
Guest: Brian Kahn | Climate Editor | Protocol
Category: ⚡ Energy | Bitcoin & Energy

Podcast’s Essential Bites:

[1:18] SL: “Bitcoin mining today uses a half percent of the world's electricity. And every year as more shipping containers and warehouses full of high powered computers are deployed to unlock more Bitcoin, energy use grows by double digits. […] By 2017, Bitcoin was using as much energy as Denmark or Ireland. And some groups picked us up and extrapolated wild scenarios. The World Economic Forum wrote a story in 2017 with the panicked headline “In 2020, Bitcoin will consume more power than the world does today”. And when I saw that it brought me back to the early days of the Internet, when some experts thought that data centers were going to suck up all our electricity supply. There were claims in the 90s that the Internet would use half of America's electricity in the 2010s. […] So why would we get so panicked about Bitcoin?”

[3:11] SL: “Energy use of Bitcoin mining has increased tenfold in the last five years. One mined Bitcoin could use anywhere from 8 to 13 years worth of household electricity. And if you want to trade that Bitcoin, or use it to buy something, no matter how small, that single transaction could use enough energy to power an American home for six weeks. So data centers, these supercomputers that literally make everything online possible, are using only a percent of global electricity. And Bitcoin, this hyper specific network is already at half of that. And there's a constant frenzy to find new power plants to feed new mining operations.”

[5:10] BK: “The Greenidge power plant [in Upstate New York was revived to mine Bitcoin]. This is a power plant that was a coal plant that was built in the 1960s on the Finger Lakes. It shut down in the 2010s because it wasn't economical to burn coal anymore. And then it got bought up by this private equity firm. And they said, we're going to turn it into a peeker gas plant, we're going to put power on the grid when we need extra power. They quickly found out that was also not a really economically feasible business model. And that's when the crypto mining came in.”

[6:08] SL: “This is not a one off story. What Brian saw on Lake Seneca is unfolding across the US. Coal and gas power plants that are under pressure in Ohio, Montana, Pennsylvania, and even elsewhere in New York, are now getting an economic lifeline thanks to partnerships with Bitcoin miners.”

[10:53] BK: “Big tech companies, like Google for example, they want to get to net zero. They want to get to 100% renewables. That is a centralized decision that Google is making. For crypto and for cryptocurrency mining in particular, no one's making centralized decisions, necessarily. Instead, it’s this decentralized decision making process where everyone is actually like, what's the cheapest way to get the most cash out of this to generate the most bitcoins possible? And to do that it requires, in a lot of cases, fossil fuel energy.”

[18:03] SL: “Here's the thing about mining Bitcoin: It doesn't have to use so much electricity and mining operations don't have to be connected to old coal or gas plants. That's just the consequence of this mad scramble to get power as quickly as possible. There are lots of other cryptocurrencies that use a fraction of the electricity that Bitcoin does. It's all about the mining method.

[19:01] BK: “Proof of work is essentially a race for everyone's running to try to capture the flag. […] It uses a ton of energy. […] And only one person ends up capturing the flag. Proof of stake is a lot different. Everyone lines up at the starting line to go capture the flag. But instead of everyone making it run, a random person at the end sort of spins around three times and then points at someone and says, you go do it, and only one person goes to get the flag. So we've just saved a ton of energy. […] It's like all these computers stand there and they're ready to go help mint that block on the blockchain. But instead of all of them trying to do it at once, […] the person that actually does is randomly chosen and so that cuts down the waste of energy. […] It's literally a 98% reduction.

[22:03] BK: “One of the fundamental issues is that these power plants that are being turned to Bitcoin mines, they're making money, and they're providing some revenues to these towns, but a lot of it's just getting shipped off to investors and other states and what have you. At the same time, they're making it harder for people living in New York to meet their climate goals. So that is the tension that essentially exists here. And that is, I think, what this fight at the end of the day is really all about.”

Rating: ⚡⚡⚡⚡

🎙️ Full Episode: Apple | Spotify | Google
🕰️ 25 min | 🗓️ 04/20/2022
✅ Time saved: 23 min

Additional Links:
Article: “The crypto reckoning in the Finger Lakes” (Brian Kahn, 2022)