Bitcoin mines in the US have had a tremendous impact on power grids, a New York Times investigation reveals. The mines — which are giant data farms — use vastly more electricity than the communities surrounding them, driving up pollution from coal and gas power plants. The crypto mines also make electricity bills more expensive for their neighbors, even as the companies profit off incentives that grid operators offer to prevent blackouts during an energy crunch.
This is the most comprehensive analysis yet of Bitcoin’s impact on the environment and energy system in the US. And it comes as Democratic lawmakers press federal agencies to require crypto companies to divulge information about their operations. The Times has startling numbers for individual crypto mines and the industry as a whole, which it got by pouring over financial records, satellite imagery, and studies it commissioned from outside research groups.
The newspaper identified 34 of the biggest crypto mines in the US, each operating at 40 megawatts or higher. Every single one of them, on its own, uses at least 30,000 times as much electricity as the average home in America. In Rockdale, Texas, the largest and most energy-hungry Bitcoin mining facility in the country burns through as much electricity as the closest 300,000 homes combined.
The industry’s expansion in the US has been swift, another stressor for US power grids. The US only became the world’s biggest hub for Bitcoin miners after China kicked them out in 2021. The Times compares the new power demand coming from American crypto mines to suddenly adding another “New York City’s worth of residences.”
Bitcoin is a purposely energy-demanding blockchain. To validate transactions and generate new tokens, Bitcoin “miners” use specialized hardware to solve mathematical puzzles. The amount of energy needed to solve those puzzles is supposed to dissuade bad actors from messing with the ledger. The puzzles get increasingly complex with time as more people try to solve them, requiring more sophisticated software that eats up more electricity in the process.
To meet that rising demand, power grids might have to turn on backup generators, which typically run on gas or coal. A couple of crypto mining companies have even revived shuttered fossil fuel power plants to mine Bitcoin. That’s made Bitcoin mining attractive to states like Texas and North Dakota that produce a lot of fossil fuels, while triggering outrage from environmental advocates and Democratic lawmakers trying to meet the Biden administration’s climate goals.
Pollution stemming from the added energy demand of Bitcoin mines is about as much as the annual emissions from 3.5 million new gas-guzzling cars, the Times reports. Promises from the industry that Bitcoin mines would spur renewable energy growth haven’t panned out. Coal and gas plants meet about 85 percent of the demand Bitcoin mining adds to power grids, according to an analysis the Times commissioned from the nonprofit Watttime.
On top of making pollution worse, crypto mines also affect Americans’ energy bills. Skyrocketing demand raises electricity prices and forces nearby households to compete for limited supply. The energy consumption has raised other customers’ electricity bills by almost 5 percent in Texas, according to a Wood Mackenzie analysis commissioned by the Times. That amounts to $1.8 billion per year in higher electricity costs for consumers across Texas, which is home to about a third of the crypto mines scrutinized.
While they drive other people’s bills up, crypto companies have managed to game energy systems in their favor. The company operating the Bitcoin mine in Rockdale, Texas, paid just 2.96 cents per kilowatt-hour last year, it reported to investors. That’s compared to 13.5 cents residential customers typically paid that year.
How does a crypto mine get electricity for so cheap? In Texas, it can benefit from a program that pays industrial businesses to power down when the grid is under too much pressure. This happened in February 2021 when a severe cold snap disrupted energy supply — leaving millions of residents without power and ultimately killing hundreds of people. During the disaster, the state power grid operator paid one crypto mining company an average of $175,000 an hour to power down its computers. In 2020, five mines made at least $60 million from that energy-saving program, the Times reports.
It’s worth checking out the entire story from the Times, which includes helpful maps and data on each of the 34 crypto mines it investigated.