Happy Nice Mall

Along a dirt-covered road deep in Texas farm country, cryptocurrency company Argo Blockchain is building a powerhouse for the internet age: a crypto “mining” site filled with new Bitcoin generating computers.

But unlike other Bitcoin mining operations that consume large amounts of fossil fuels and generate carbon emissions, Argo claims to be trying to do something environmentally responsible. Argo’s CEO, Peter Wall, led a tour of the 126,000-square-foot construction site one morning this month, pointing to a row of wind turbines a few miles down the road, their white railings shining in the sunlight.

He explained that the new facility, one hour outside of Lubbock, will be fueled mostly by wind and solar power. “This is Bitcoin mining nirvana,” Mr. Wall said. “You look far and you have renewable power.”

Faced with criticism from politicians and environmentalists, the cryptocurrency mining industry has embarked on a rebranding effort to challenge the prevailing view that its electricity-hungry computers are harmful to the climate. All five of the largest publicly traded crypto mining companies say they are building or already operating facilities powered by renewable energy, and industry executives have begun arguing that demand from crypto miners will create opportunities for wind and solar companies to open their own facilities.

Partly a public relations effort, partly a genuine attempt to make the industry more sustainable, the effort has intensified since China began last spring. A crackdown on crypto miningforced some mining operations to relocate to the United States. After Elon Musk, a trade group called the Bitcoin Mining Council was also formed last year, in part to combat climate issues. criticized industry using fossil fuels.

Crypto mining does not involve any pickaxes or shovels. Instead, the term refers to a verification and currency creation process essential to the Bitcoin ecosystem. Powerful computers compete with each other to process operations, solving complex mathematical problems that require quintillions of numerical predictions per second. As a reward for this authentication service, miners receive new coins that provide a financial incentive to keep computers running.

In Bitcoin’s early years, a crypto enthusiast could mine coins by running software on a laptop. But as digital assets become more popular, The amount of power required to produce bitcoin has increased. A single Bitcoin transaction now requires more than 2,000 kilowatt-hours of electricity, or enough energy to power the average American home for 73 days, the researchers said. guess.

To achieve this, some miners reviving deteriorated coal power plantsor using low-cost natural gas to power their computers. A study done last month in the journal joules He found that worldwide Bitcoin mining could be responsible for about 65 megatons of carbon dioxide per year, compared to Greece’s emissions.

According to the study, the Bitcoin network’s use of green energy sources also fell from 42 percent in 2020 to an average of 25 percent in August 2021. (The industry has argued that its average use of renewables is close to 60 percent.) This is partly the result of pressure from China to cut off a cheap hydroelectric source. But Alex de Vries, one of the authors of the Joule study, said it also reflects key economic incentives. Renewable energy is an intermittent power source – the sun shines only part of the day and wind speeds fluctuate significantly.

“What a miner would do if he wanted to maximize profits is to put his machines where they can work all day,” said Mr de Vries.

Bitcoin’s use of bubble energy has long enraged environmentalists. But the criticism that made the strongest impression came from Mr. Musk, a longtime Bitcoin supporter. said In May, the electric car company announced on Twitter that Tesla would no longer accept crypto payments due to “increasing fossil fuel use for Bitcoin mining and transactions.”

His tweet put the mining industry in crisis mode. Michael Saylor, CEO of MicroStrategy, a software company that has invested heavily in Bitcoin, contacted Mr. Musk to discuss the climate issue. A group of mining executives, including Mr Saylor and Mr Wall, later met with Mr Musk via Zoom.

“He wanted to make sure the industry was on the side of sustainability and gave us some coaching,” said Mr Saylor. “His incentive was: ‘Find out how clean the energy is, how sustainable the energy is. Understand how much you use.’” (Mr. Musk did not respond to a request for comment.)

Following the call, Saylor established the Bitcoin Mining Council, a forum where the industry will share ideas and coordinate environmental strategy. One member, TeraWulf, has pledged to run cryptocurrency mines using more than 90 percent zero carbon energy. He has two projects in the works – a retired hydroelectric coal plant in New York and a nuclear-powered plant in Pennsylvania.

“Everybody I talk to right now is talking about carbon neutrality,” said TeraWulf CEO Paul Prager. “Language has definitely changed.”

But financial priorities and technological barriers in the crypto mining industry, which includes more than a dozen publicly traded companies like Argo, are preventing a full transition to renewable power. Marathon, one of the largest publicly traded mining companies in late 2020, began citing easy access to Bitcoin mining at a coal-fired facility in Montana. cheap energy.

In Illinois, cryptocurrency mining company Sangha Systems has repurposed an old steel mill in the town of Hennepin. The Sangha is run by Spencer Marr, a former lawyer. says He founded the company to promote clean energy. But about half of the Hennepin operation’s power comes from fossil fuels.

“It was a compromise we had to make,” said Mr. Marr. “It was a purpose that allowed us to establish ourselves as a company.”

In recent months, Texas has become a hotspot for crypto mining. more than two dozen companies. The state has an unusual incentive structure that is well suited to the emerging industry: the Texas grid operator offers a discount of what amount to companies that can pull the plug quickly, allowing energy to flow to ordinary homeowners when electricity demand rises statewide. Many crypto mines can be opened and closed in seconds, allowing them to take advantage of the incentive with minimal inconvenience.

The deal was part of the appeal of Argo, a London-based company founded in 2017 that operates two mines in Quebec that use mostly hydropower. Mr. Wall said Argo is also drawn to the abundant green energy in West Texas. The facility, outside of Lubbock, will connect to the western sector of the Texas power grid, where about 85 percent of the electricity comes from wind and solar infrastructure, including a set of turbines located right next to the Argo construction site.

However, Mr. Wall cannot guarantee that Argo’s new headquarters will not have a carbon footprint. This requires bypassing the grid and purchasing energy directly from a renewable energy company.

“Many of these renewable energy producers are still somewhat skeptical of cryptocurrency,” he said. “Crypto miners do not have the credit profiles to sign 10 or 15-year deals.”

In the future, Argo said, it plans to build its own solar panels on-site in Texas and brokerage deals with local renewable energy companies to buy energy directly.

The broader cryptocurrency community is divided over whether cleaning up the mining industry is the best route to environmental sustainability. The energy-intensive authentication system underlying Bitcoin is known as “proof of work”; some in the industry are trying to create new cryptocurrencies in a different system called “proof of stake”. as little as 0.01 percent energy consumed in the mining process.

Mr. Wall said he had no objection to experimenting with an alternative system. Still, he said he believes in Bitcoin’s long-term potential to transform finance, even though he wishes miners could be called something less exploitative like “validators”.

This is a war that is unlikely to win. But he said that even in the face of the backlash, companies will continue to mine Bitcoin.

He said, “It’s just going to happen. It’s a fact. We need to do it in an environmentally friendly way,” he said.