Daily on Energy: Finding — For a $1 rise in Bitcoin, a miner deals $3 to $6 of carbon emissions damages
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DATAPOINT IN THE BITCOIN ENERGY DEBATE: Here’s a finding set to feature in debates about the effects of cryptocurrency on the climate.
A new paper circulated yesterday by the National Bureau of Economic Research concludes that a $1 increase in Bitcoin price contributes to approximately $3.11-$6.79 in external damages from carbon emissions alone (and not including things like local air pollution and other factors), as miners ramp up to gain the greater rewards. And as Bitcoin mining network difficulty continues to increase, the energy required to mine it also increases.
The research “is sort of getting at this idea that the external damages from crypto mining, in this case, exceed the sort of value added [that] the firm is getting from from that additional dollar,” Anna Papp, a PhD student at Columbia University’s School of International and Public Affairs and co-author of the working paper, told Breanne.
Another question is whether Bitcoin’s rise is expanding the life of other fossil fuel plants that had been previously heading towards retirement— since, as the study notes, fossil fuel-generated electricity is believed to power the majority of cryptomining efforts.
Why it matters: The U.S. has now overtaken China as the world’s leading cryptocurrency miner, and certain states have sought to attract new investment from the industry. (Texas, for example, offers miners a 10-year tax abatement and sales credits, as the research notes.)
As crypto has grown, critics have suggested that the massive amounts of energy involved in mining could amount to an environmental disaster. Sen. Elizabeth Warren, among others, has called on regulators to scrutinize miners’ energy use as part of a push to crack down on the industry.
How the study worked: Researchers studied the Scrubgrass power plant, a coal-fired plant in Pennsylvania that had been slated for retirement before it began mining. It offers an interesting case study, in which Bitcoin directly extended the life of a dirty fossil fueled plant—and also prompted researchers to wonder if (and to what extent) this is happening on a larger scale.
“I think more data is important to fully understand the extent of the external costs related to Bitcoin mining,” said Papp, including more disclosure on where the mining is happening, and what kind of energy it’s using.
Limitations: The authors were limited in the scope of their research, due primarily to the lack of available data on bitcoin miners operating in the U.S. Instead, the group compared the efficacy and carbon emissions of Scrubgrass to the efficiency and carbon intensity of other U.S. power plants.
Scrubgrass is a less-efficient plant with an especially high carbon intensity, the study notes–a characteristic the researchers speculated may be true of other Bitcoin mining facilities (such as Panther Creek, another Pennsylvania Bitcoin mining facility owned by Stronghold), as well.
The industry view: Bitcoin defenders have often claimed that many miners use renewable energy. And Sen. Ted Cruz, for one, has praised miners for helping to balance demand on the Texas grid – ramping up mining during slow times and halting operations at peak demand.
Stronghold Digital Mining, the company that now owns Scrubgrass, did not respond to our request for comment.
… Nic Carter, a general partner at Castle Island Ventures, a public blockchain-focused venture capital firm, noted that the Scrubgrass facility cited in the working paper is in fact a coal refuse mitigation site, aimed at finding a better use for waste coal, which will oxidize over time if left alone —releasing carbon and polluting the groundwater.
“The Stronghold plant they are using as an example is a rare, unique case,” he told the Examiner. “Stronghold is participating in an EPA program to mitigate coal refuse left over from over 100 years of coal mining. The refuse coal is going to oxidize anyway in its natural state, so mining the bitcoin with the waste coal represents no net increase in emissions.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
ENERGY COSTS AT CENTER OF NEW BIDEN CAMPAIGN AD: President Joe Biden launched a new campaign ad, “Never Left,” playing up his efforts to lower consumer energy costs as he seeks reelection in 2024.
The one-minute spot makes the case that Biden’s policies, including passage of the Inflation Reduction Act, will help lower power bills for American families.
The new television spot is part of a 16-week, $25 million ad blitz his campaign launched in September.
Biden is vulnerable on the issue of costs and particularly on energy costs, including gas prices, which have been closely tied to his approval rating as president. Overall energy costs are up 37% since Biden took office, according to the consumer price index. Read more from Breanne here.
MONTANA TO APPEAL YOUTH CLIMATE CHANGE RULING: The state of Montana is set to appeal a landmark state court ruling that sided with young climate activists, who argued that the state was responsible for contributing to climate change, The Hill reports.
Montana Attorney General Austin Knudsen’s office filed a notice of appeal on Friday in the case of Held v. Montana. A coalition of youth climate activists had sued the state over a 2023 statute that excluded fossil fuel permitting from consideration of greenhouse gas output. The plaintiffs argued that this provision violated their right under the Montana constitution to a “clean and healthful environment.”
District Court Judge Kathy Seeley sided with the plaintiffs in August. Following the ruling, Knudsen’s office signaled that it would appeal the decision, calling it “absurd” and arguing that the plaintiffs “found an ideological judge who bent over backwards to allow the case to move forward.”
The state court ruling did not establish a federal precedent, but experts have said it’s likely to ignite movement in similar efforts in other states with some form of constitutional environmental protection, such as New York, Hawaii, Illinois, Massachusetts, Pennsylvania and Rhode Island. Read more about that here.
UAW STRIKE TO COST NEARLY $4B: The United Auto Workers strike against the Big Three automakers has resulted in nearly $4 billion in economic losses in the first two weeks of the strike, according to a new analysis from the Anderson Economic Group.
According to the report, manufacturer losses exceeded $1.1 billion, while supplier losses amounted to $1.29 billion, and dealer and customer losses came to $1.2 billion. These figures don’t include plant closures, additional strikes, or layoffs taking effect on or after Sept. 29.
The analysis also shows that the second week of the strike was more costly than the first.
“Suppliers were particularly hard-hit by the UAW’s strategy of announcing specific plants to be struck just hours before they were shut down,” said Patrick Anderson, AEG’s principal and CEO. “The shutdown of 38 parts distributions centers also crimped dealership service operations and, of course, caused more UAW workers to lose wages.”
What to expect in the coming weeks: AEG analysts predict that week three of the strike will be significantly more costly for Ford after the company was largely spared in second week targets. The new targets will result in Ford dealers and customers losing one of their most popular and profitable models: the Ford Explorer and Lincoln Aviator in the mid-size SUV category. Read the report here.
A NUCLEAR DEADLOCK IN THE EU: France and eight other European nations dependent on nuclear energy are redoubling efforts to prolong existing nuclear facilities – but are facing issues with getting Germany on board with their plan, which has raised the fear that its own energy producers could be undercut.
As Bloomberg lays out, France – along with Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania, Slovakia and Slovenia – have put forward a plan to break a deadlock over state support to extend the lives of aging reactors. Berlin has also floated its own plan in hopes of a breakthrough, but the two sides remain far apart ahead of a meeting of energy ministers on Oct. 17.
Why it matters: The dispute is pivotal to redesign of the EU’s electricity market as the bloc aims to wean itself of Russian energy while also moving away from fossil fuels. The goal of the power market reform was to weaken the role of natural gas in establishing prices, while also increasing the take-up of renewables.
However, if energy ministers fail to reach a deal during their meeting later this month, leaders from the bloc’s 27 member states may take up the issue at a summit later this month to provide political impetus, Bloomberg reports. Once a deal is reached, talks can begin with parliament over the final shape of the reform. Read more on that here.
RADIATION EXPOSURE COMPENSATION ACT AMENDMENT IN PLAY IN SENATE NDAA: A coalition of activists is working with senators on a proposed amendment to a Senate defense funding bill that would expand the pool of Americans who are eligible for federal compensation after being exposed to radiation by nuclear testing, The Hill reports.
The amendment, which was passed by the upper chamber earlier this year by 61 votes, would expand that pool to include residents that were exposed as a result of nuclear testing in Idaho, Colorado, Montana, New Mexico, Guam and the St. Louis area.
The Radiation Exposure Compensation Act (RECA), passed in 1990, only covered then-residents of Utah, Nevada, and Arizona, and excluded a number of Americans who had been exposed to radiation. This included Americans that suffered exposure from the first-ever detonation of an atomic bomb conducted as part of the Manhattan project in New Mexico in 1945 – otherwise known as the Trinity test.
Efforts to expand eligibility – and even maintain those already in place – face a ticking clock: The original RECA sunsets in 2024. The Senate amendment would extend the law for another 19 years. But the upper chamber’s approval of the NDAA amendment marks the 13th attempt at expanding RECA.
The House approved its own version of the NDAA before the Senate. The chambers are set to conference and craft a single, final bill, likely toward the end of 2023. More on that here.
ERCOT REQUESTS FOR MORE POWER AHEAD OF WINTER: The Electric Reliability Council of Texas sought out proposals from power producers on Monday to beef up its operating reserves by around 3,000 megawatts in case of any unpredicted spikes in demand during the upcoming winter, Reuters reports.
The request for proposals seeks capacity from both dispatchable generation and demand response solutions to help cover the period between December 2023 and February 2024, according to the Texas power grid operator, citing the significant peak load growth since last winter and retirements of dispatchable resources.
“Dispatchable resources comprise nuclear, coal, gas, biomass and energy storage,” but not wind and solar, which cannot manage output based on ERCOT instructions, the grid operator said in an emailed statement to Reuters.
The Texas grid has been concerned about extreme weather since a deadly storm in February 2021 left millions without power for days as ERCOT struggled to prevent a grid collapse after the closure of an unusually large amount of generation. Read about it here.
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