Crypto and fossil fuels

Some have argued that cryptocurrency has the potential to pave the way for more renewable energy developments, spurring on growth. This has been met with skepticism from critics, who have said that while it might be a renewable energy catalyst, considering the huge amount of energy sucked up by cryptocurrency mining operations, this energy could be better utilized elsewhere. Moreover, increasingly, cryptocurrency companies are, in fact, turning to fossil fuels to power their operations in an alarming trend. While there was a dip in production recently, as Bitcoin and other cryptocurrencies plummeted in value, over the last decade, Bitcoin's electricity consumption has skyrocketed, and between 2017-2021, it doubled to between 78 terawatt hours and 101 terawatt hours.

In recent months there has been a spate of crypto mining firms cozying up with oil and gas drilling sites, with the Greenidge Generation plant being brought back to life, specifically raising concerns. It appears that cryptocurrency, with all its recent green promises, is actually breathing new life into fossil fuels, and in order to bypass fluctuations in energy markets, bitcoin miners are now, as Jessica McKenzie, writing in The Bulletin says, "[seizing] the means of electricity production."

Following Greenidge, Digithost, in 2021, announced a deal to buy a 60-megawatt gas-fired power plant in North Tonawanda, New York, near Buffalo, while Stronghold Digital Mining acquired two power plants in Pennsylvania.

McKenzie, also highlights the insidious claims made by these companies that they are environmentally friendly and committed to a green vision. Greenidge, for example, has spoken of its intention to become carbon neutral through the purchasing of carbon offsets, a well-known greenwashing strategy, while Stronghold Digital Mining has made similar green claims, through its use of "waste coal." Despite being known as an environmental danger, burning waste coal (energy derived from waste coal) in Pennsylvania is classified as a Tier II alternative energy resource, meaning that Stronghold receives both Coal Refuse Energy and Reclamation Tax Credits and Pennsylvania Tier II Alternative Credits. McKenzie notes: "As long as mining bitcoin remains profitable, fossil fuel companies will increasingly try to use it to prop up their dying industry."

For those companies that are fueling their operations with fossil fuel flares, Paasha Mahdavi, an assistant professor of political science at the University of California, Santa Barbara, says that while it's claimed this is an environmental win, it's "basically a way to monetize flaring," and not "a way to stop flaring." Mahdavi went on to point out that this kind of operation enables fossil fuel companies to profit off their waste gas, and as a result, incentives that they keep on drilling. Likewise, although Jon Goldstein, a senior director at the Environmental Defense Fund, reflected that it's better to be "doing something of use with [the gas]," cryptomining is "not really a use that's going to do much good for society at large. It's going to benefit investors in cryptocurrency."