Economist Matteo Benetton, a co-author of the paper and a professor at the Hass School of Business at the University of California, Berkeley, says that cryptocurrency mining can deplete local economies. Where there is a fixed power supply, grid power-hungry activities can potentially lead to supply shortages, allocations and power-off. Even in places with a lot of access, like upstate New York, mining can crowd out other potential industries that could employ more people. “While there are individual benefits, through the electricity market, there are social costs,” says Benetton.
These effects are now being felt across the country. Benetton said there are strong profit incentives to keep as many servers running as possible, and he is now calling for more transparency in these companies’ energy use. That is not a popular opinion in the industry. However, Benetton said, “if you’re doing really well, you shouldn’t be afraid to disclose data.”
The federal government does not currently monitor the energy consumption of cryptocurrencies, but Securities and Exchange Commission Chairman Gary Gensler recognizes that there are gaps in regulation. In a 2021 speech at the Aspen Security Forum, he called the industry the “Wild West.”
Read warns, as long as mining is profitable, cryptocurrency bans only move harm to new locations. When China Cryptocurrency mining banned in 2021 To meet the carbon reduction goal, activities have surged in places like Kazakhstan, where electricity comes primarily from coal. As a result, a recent learn shows that Bitcoin’s renewable energy use has roughly halved between 2020 and 2021, to 25%.
Even as the industry invests in renewable energy, its sheer consumption makes it a significant contributor to carbon emissions.
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Read refutes promises that green or more efficient investing can solve this problem. In a recent working paper, he found that the energy use of cryptocurrencies will increase by 30% by the end of the decade – generating an additional 32.5 million tons of carbon dioxide per year. As long as the Bitcoin price goes up, the reward of mining will increase, which drives energy usage, he said. He calls this situation the “Bitcoin Dilemma.”
That 32 million tons of carbon dioxide will make the climate crisis even worse, whether the emissions come from upstate New York or Kazakhstan. “We all have to suffer the consequences,” says Read.
Lois Parshley is an investigative science journalist.