Fact-Checking 8 Claims About Crypto’s Climate Impact

Cryptocurrencies are bad for the environment—at least, that’s what most people online seem to believe. Pro-crypto posts on social media are often flooded with angry comments about the industry’s outsized contribution to greenhouse gas emissions. Studies estimate that Bitcoin mining, the process that safeguards the Bitcoin network, uses more power globally per year than most countries, including the Philippines and Venezuela.

On the other side, members of the crypto community argue that crypto mining is actually good for the environment in several crucial ways. They say that it offers a new, energy-hungry market that will encourage renewable projects. In the long run, they say, crypto will revolutionize the energy grid, and soak up excess energy that would have been otherwise wasted.

As lobbyists have volleyed arguments on both sides, a blow was dealt to crypto mining’s hopes for rapid expansion in the U.S. on June 30 when New York officials denied the air permits of Greenidge Generation, a Bitcoin mining operation, citing “substantial greenhouse gas (GHG) emissions associated with the project.” The decision could set a precedent for how local jurisdictions across the country approach a hotly contested topic.

So which side is correct?

To investigate, TIME spoke with several energy and environmental experts to break down some of the crypto community’s main arguments. While some experts say that there’s potential for positive impact from crypto mining, most agree there are few indications that the industry is going in the right direction.

“There is a narrow path upon which they could be useful to the energy system—but I don’t see that happening,” says Joshua Rhodes, an energy research associate at the University of Texas at Austin. And right now, he says, damage is already being done. “Writ large, they’re probably adding to carbon emissions currently.”

Claim: Crypto mining relies on renewable energy.

Bitcoin’s network relies on groups of computers, all around the world, to run complex math equations. These computing centers act less like “miners” in the literal sense and more like network watchdogs, used for security and stability. The process, known as proof of work, is energy-intensive by design, in order to prevent hacks and attacks.

Crypto advocates argue that the proof-of-work process is becoming more energy efficient: that more and more miners are turning to renewable energy sources like wind, solar, or hydropower, as opposed to coal or natural gas. However, one peer-reviewed study from earlier this year shows the opposite: that the Bitcoin network’s use of renewable energy dropped from an average of 42% in 2020 to 25% in August 2021. Researchers believe that China’s crackdown on crypto, where hydropower-driven mining operations used to be plentiful, was the primary catalyst of this decrease.

At the moment, the rate at which crypto miners use renewable energy sources is heavily disputed. The Bitcoin Mining Council, an industry group, argues that 60% of mining comes from renewable sources, which is 20 percentage points higher than the number listed by the Cambridge Center for Alternative Finance. George Kamiya, an energy analyst at the International Energy Agency, says that while the Bitcoin Mining Council likely has access to more data, its numbers come from a self-reported survey that lacks methodological details, and encouraged them to share the underlying data and methodology with outside researchers like Cambridge to increase their credibility.

Regardless of which statistic is closer to the truth, there are still many mining operations using non-green energy sources. In New York, Greenidge repurposed a coal power plant that was previously shuttered. It’s now powered by natural gas, which is also fossil-fuel-based. Yvonne Taylor, vice-president of Seneca Lake Guardian, an environmental non-profit, told TIME in April that Greenidge would emit “over a million tons of CO2 equivalents into the atmosphere every year, in addition to harmful particulate matter.”

A representative for Greenidge wrote in an email to TIME that the company has offered to reduce its greenhouse gas emissions by 40% from its currently permitted levels by 2025, and that it plans to be a “zero-carbon emitting power generation facility” by 2035. The company also plans to appeal the denial of its air permits and remain operational.

Claim: Crypto mining will lead to a renewable energy boom.

If crypto mining isn’t sustaining itself on renewables right now, might it in the future? Fred Thiel, the CEO of the crypto mining company Marathon Digital Holdings, has announced his intention to make the company fully carbon-neutral by the end of this year, and says that companies like his could have a huge impact on the future of the renewable energy industry.

It’s worth noting that many cryptocurrencies already use much less energy-intensive processes than Bitcoin’s proof of work. Smaller blockchains like Solana and Avalanche use a security mechanism called proof of stake, which Ethereum Foundation researchers claim reduces energy usage by more than 99% compared to Bitcoin’s system. Ethereum, the second largest blockchain behind Bitcoin, is in the process of switching from proof of work to proof of stake this year.

It doesn’t seem like Bitcoin will transition away from proof of work any time soon. But renewable energy developers need customers in order to grow, and proof-of-work miners provide exactly that, Thiel argues. As an example, Thiel suggested that there are wind farms in Vermont that have no ability to sell their energy because of their remote locations and the lack of transmission lines. Putting a crypto mining plant on top of the farms would theoretically give them immediate revenue. “If the goal of this country is to convert to green or sustainable energy forms for the majority of our energy use by 2050, the only way it’s going to happen is if the power generators have an incentive to build the power plants,” Thiel says.

But Thiel declined to give the name of the Vermont wind farms, and a follow-up email to a Marathon representative asking for the name of that operation or any similar ones received no response. Most experts TIME spoke with dispute the idea that there has been any sort of boom in renewables due to crypto. “I am not aware of any specific examples where a major crypto mining project directly—and additionally—boosted renewable energy production,” Kamiya wrote.

“The proof is in the pudding–and I have not seen that play out in the state of Montana,” says Missoula County Commissioner Dave Strohmaier, whose county hosted energy-intensive mining operations that rankled local communities, leading the local government to restrict miners’ ability to set up new operations.

Joshua Rhodes says that counties in Texas were ”chock-full of renewable projects getting built and turning on” even before the Bitcoin mining rush. He also argues that even if crypto did spur a renewables boom, it might not even help the right places. While wind and solar energy is plentiful in West Texas, for example, it requires extensive infrastructure and transmission lines to run that power back east to the cities that desperately need it, like Houston and Dallas. “All of the cheap electricity can’t get out,” he says.

And even if it were true that crypto mining is creating rapidly accelerating demand for solar and wind farms—which, again, doesn’t seem to yet be the case—there’s the problem of where to put them. Many communities or organizations have opposed them on various grounds ranging from aesthetic to conservational. In New York, Assemblymember Anna Kelles—who spearheaded a bill to impose a moratorium on crypto mining in the state—says that a crypto-driven influx of solar and wind operations would be “directly competing with farmland in New York State at a time when it’s becoming more and more the breadbasket of the country because of climate change.”

With major resistance and long timetables to erect wind and solar projects, impatient crypto miners are more likely to set up shop using other, less clean forms of energy. In Kentucky, abandoned coal mines are being repurposed into crypto mining centers.

Claim: Crypto miners improve electricity grids

If crypto companies aren’t yet supercharging a renewables boom, then maybe they’re helping other ways, like making our electricity grids more resilient. Thiel argues that crypto miners are uniquely suited to help grids for several reasons: that they can be turned off quickly during peak hours of energy usage in a way that, say, pasteurization machines can’t; that they can soak up energy from the grid that would be otherwise wasted; that they can be located very close to sources of energy.

“We voluntarily curtail whenever the grid needs the energy,” Thiel says. “It acts as this ideal buffer for the grid.” During peak stretches of Texas’s energy usage, Thiel says, Marathon has lowered or completely shut off their usage of the grid for two to three hours a day.

Flexible energy loads are, in fact, good for the grid, Rhodes wrote in a study last year.

He found that if crypto miners were willing to curtail their energy usage during peak times so that their annual load is slashed by 13-15%, then their enterprises would help reduce carbon emissions, improve grid resiliency under high-stress periods, and also help foster the shift to renewables.

But Rhodes and others are skeptical that most miners will be willing to operate on someone else’s schedule. Crypto miners have shown that in order to maximize their profits, they would much rather operate 24/7. Strohmaier, in Montana, says that when he met with crypto miners operating in his county about their activity, the topics of grid resilience or curtailment “never came up once. We never got the sense there was any willingness to scale back even for a nanosecond of what they were doing. It was all, ‘We have to keep every one of these machines running—and add more if we are able to remain viable,’” he says.

Thiel says that when there isn’t enough energy from the wind farms to power Marathon’s plants—as wind doesn’t blow all the time—the company then supplements it partially with natural gas from the grid. When asked for a breakdown of Marathon’s energy usage, a representative wrote in an email, “We’re still in the process of installing miners in Texas. It’s hard to estimate what the ultimate mix will be.”

Claim: Crypto miners are simply using energy that would have gone to waste.

Plenty of electricity gets wasted in the U.S., and crypto miners are hoping to take advantage of it. The process of oil extraction, for example, produces a natural gas byproduct that many companies simply choose to flare (burn off and waste) rather than building the infrastructure to capture it. But in North Dakota, crypto miners signed a deal with Exxon to set up shop directly on site and use gas that would have been flared for new mining operations instead.

Some experts say this process could still be severely damaging. “I don’t see that as a benefit: They’re still burning the gas,” says Anthony Ingraffea, a civil and environmental engineering professor at Cornell University, who co-wrote a paper in 2011 on the environmental hazards of extracting natural gas.

Further, Ingraffea argues, by giving Exxon extra business at their oil drilling sites, crypto mining theoretically incentivizes the fossil fuel industry to keep investing in oil extraction. Kamiya contends that there are other productive uses for flared gas, including producing electricity to be sold back to the grid, but that crypto mining “could disincentivize the operator from finding other uses and markets for its gas that can drive higher emission reductions.”

And crypto miners are running into problems even in ideal energy circumstances. A paper released this month from the Coinbase Institute contends that in Iceland, a “new gold rush” of mining activity has led to minimal environmental impacts due to the country’s “abundant geothermal energy.” But in December, the country experienced a severe electricity shortage, causing its main utility provider to announce they would reject all future crypto mining power requests.

Claim: Some crypto mining operations are already carbon neutral.

Last year, Greenidge Generation, the crypto mining facility in New York, tried to quell criticisms about its environmental impact by announcing its intention to become carbon neutral. In a press release, the company said it would purchase carbon offsets and invest in renewable energy projects to account for its gas-based emissions.

Replacing fossil-fuel-based energy with renewable energy is certain to be an environmental good. But carbon offsets are not as clear-cut. The offset industry has come under fire from many scientists who say that many such projects are poorly defined and not as helpful as they seem—that it’s common for projects that have no positive environmental impact to be rewarded on technicalities. Offsets essentially allow companies to pay to continue polluting. Greenpeace even called the entire system “​​a distraction from the real solutions to climate change.”

Carbon offsets “do not reduce global emissions, they just move them around the globe,” Ingraffea says. He argues that they should only be used in the case of emissions that are impossible to reduce.

Read more: The Crypto Industry Was On Its Way to Changing the Carbon-Credit Market, Until It Hit a Major Roadblock

Claim: Data centers are just as bad for pollution as crypto mining operations.

Many crypto miners feel unfairly targeted about their environmental impact, believing that data centers, which receive far less scrutiny, are just as responsible for increasing carbon emissions.

Multiple experts disagree. “Crypto mining consumes about twice as much electricity as Amazon, Google, Microsoft, Facebook, and Apple combined,” says Kamiya.

Jonathan Koomey, a researcher who has been studying information technology and energy use for more than 30 years, says that the two categories of machines are moving in opposite directions in terms of efficiency. A 2020 study he co-wrote found that while the computing abilities and output of regular data centers had grown vastly between 2010 and 2018, its electricity use barely increased at all. Meanwhile, in Bitcoin mining, “there’s a structural incentive for the entire system to get less efficient over time,” he says. He’s referring to the fact that, generally, Bitcoin miners are forced to solve harder and harder puzzles over time to keep the blockchain functioning—and the computing power to work through those tasks requires increasing amounts of energy.

Claim: Christmas lights use more electricity than Bitcoin.

This claim has been repeated over and over by Bitcoin mining defenders, including Thiel in our interview, in order to deflect attention from Bitcoin mining and onto other large uses of electricity. It’s also completely unsubstantiated. The latest major study on holiday lights came from a paper written in 2008, which put their electricity consumption in the U.S. at 6.63 terawatt hours of electricity per year. (The paper noted that figure would only decrease as LED bulbs became more common). The Bitcoin network, by comparison, consumes an estimated 91 terawatt hours yearly.

Popular online posts on this topic that defend Bitcoin, including from the digital mining operator Mawson, either do not cite any sources for their data or mangle the findings of trusted institutions.

Claim: Bitcoin’s value added to society will make it all worth it.

Koomey and other experts say that over the last decade there’s only been one surefire reason crypto mining’s environmental impact can sometimes fall: when cryptocurrency prices go down. During these drops, miners are disincentivized to stay in the market or buy new equipment, and some close up shop, leading to fewer greenhouse-gas emissions. Indeed, as Bitcoin’s value fell from $40,000 to $20,000 from late April to June, industry power usage also dropped by a third according to the Cambridge Bitcoin Electricity Consumption Index.

So why should the U.S. allow crypto miners to go on, if they’re harming the environment? Crypto enthusiasts argue that the long-term societal and economic benefits of their industry will offset its electricity usage, just as the computer revolution did before it.

Koomey says that when weighing the possible environmental impacts of crypto, it’s important to take a wide-lens approach: to think about what crypto might add to society overall compared to other energy guzzlers.

“Sure, Google uses a measurable amount of electricity—but I would argue that’s a pretty good use of that electricity,” he says. “So you have to come back to this question for the crypto people, aside from just how much electricity they use: What business value are you delivering? How does this technology perform a function better than the technology that it replaces? Is it worth it?”