How Bitcoin mining destroyed this New York city

How Bitcoin mining destroyed this New York city

Economist Matteo Benetton, co-author and professor at the Hass School of Business at the University of California, Berkeley, says cryptocurrency mining could shrink the local economy. In places with fixed electricity supplies, operations absorb network capacity, potentially leading to supply shortages, rationalization and eclipses. Even in places with sufficient access to electricity, such as northern New York State, mining can displace other potential industries that may have employed more people. “While there are private benefits, through the electricity market, there are social costs,” says Benetton.

These influences are now being felt across the country. Benetton says there are strong profit incentives to keep as many servers up and running, and he now calls for greater transparency in the energy use of these companies. This is not a popular opinion in the industry. But, says Benetton, “if you’re doing really well, you shouldn’t be afraid to reveal the data.”

The federal government is not currently monitoring the energy consumption of cryptocurrencies, but Gary Gensler, chairman of the Securities and Exchange Commission, realizes that there are gaps in regulation. In a speech in 2021 at the Aspen Security Forum, he called the industry the “Wild West”.

As long as mining is so profitable, Read warns, crypto bans only transfer damage to new locations. When China cryptocurrency mining 2021 banned to achieve its carbon reduction targets, operations have risen in places like Kazakhstan, where electricity comes primarily from coal. As a result, recently study it was found that the use of renewable energy in Bitcoin fell by about half between 2020 and 2021, to 25%.

Even when the industry invests in renewable energy sources, consumption itself makes it a significant contributor to carbon emissions.

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Read rejects promises that green investment or greater efficiency can solve this problem. In a recent working document, he revealed that cryptocurrency energy consumption will increase by another 30% by the end of the decade – producing an additional 32.5 million metric tons of carbon dioxide per year. As long as the price of bitcoin rises, the rewards of mining are increasing, which encourages the use of energy, he says. He calls this situation a “bitcoin dilemma”.

Those 32 million metric tons of carbon dioxide will further exacerbate the climate crisis, whether the emissions come from the northern state of New York or Kazakhstan. “We all suffer because of it,” says Read.

Lois Parshley is an investigative science journalist.

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