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Bitcoin is a novel form of currency that bypasses banks, credit card companies and governments. But as Reveal’s Elizabeth Shogren reports, the process of creating bitcoin is extremely energy intensive, and it’s setting back efforts to address climate change. Already, bitcoin has used enough power to erase all the energy savings from electric cars, according to one study. Still, towns across the United States are scrambling to attract bitcoin-mining operations by selling them power at a deep discount.
Bitcoin’s demand for electricity is so great that it’s giving new life to the dirtiest type of power plants: ones that burn coal. In Hardin, Montana, the coal-fired power plant was on the verge of shutting down until bitcoin came to town. The coal that fuels the bitcoin operation is owned by the Crow Nation, so some of the tribe’s leaders support it. But in just one year, the amount of carbon dioxide the plant puts into the air jumped nearly tenfold.
Bitcoin’s huge carbon footprint has people asking whether cryptocurrency can go green. Bitcoin advocates say it can switch to renewable energy. Others are instead developing entirely new types of cryptocurrency that are less energy hungry. Guest host Shereen Marisol Meraji talks with Ludwig Siegele, technology editor at The Economist, who gives his assessment of the challenges of making cryptocurrency environmentally friendly.
Dig Deeper
Watch: How cryptocurrency works [New York Times]
Read: Bitcoin now negating a decade of progress in deploying electric vehicles [Digiconomist]
Read: President Biden’s Executive Order calling on federal agencies to study cryptocurrency. [White House]
Credits
Reporting and lead producer: Elizabeth Shogren | Editor: Taki Telonidis | Production manager: Amy Mostafa | Production help: Michael Montgomery and Amy Mostafa | Fact-checker: Nikki Frick | Digital producer: Sarah Mirk | Episode illustration: Jess Suttner | Score and sound design: Jim Briggs and Fernando Arruda, with help from Jess Alvarenga, Steven Rascón, and Kathryn Styer Martínez | Executive producer: Kevin Sullivan | Host: Shereen Marisol Meraji
Transcript
Speaker 1:Hi, I’m Aura Bogado, a senior reporter at Reveal. My work focuses on migrant children confined in federal custody. I’ve investigated abuse, forced drugging, even tasing in government sponsored shelters. The stories I work on are told from the perspective of the people experiencing the policies and practices I’m investigating, in this case, migrant children. Support rigorous, ethical investigative reporting. Donate today at revealnews.org/donate.
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Shereen Marisol…:From the Center for Investigative Reporting and PRX, this is Reveal. I’m Shereen Marisol Meraji in for Al Letson, and if my voice or names sound familiar, you may have heard me on the show I helped create and co-hosted called Code Switch, which is all about race and identity. But today on Reveal, we’re talking cryptocurrency and the climate.
Shereen Marisol…:Cryptocurrency has been in the news a lot lately, most recently because of the war in Ukraine. Ukraine has used it to raise funds to fight Russia’s invasion, and Russians are using crypto to try and minimize the sting of sanctions. But nearly 8000 miles away, and a few years ago, a bunch of grad students at the University of Hawaii, fascinated by crypto’s growing global influence, asked their professor Camilo Mora, if they could do a research project about Bitcoin.
Camilo Mora:I thought that was a video game or maybe one of those Pokemon things.
Shereen Marisol…:Camilo is a professor of environment and his grad students talked him into studying Bitcoin’s carbon footprint.
Camilo Mora:We started to investigate, and then we get some calculations on the carbon footprint of it, and I just couldn’t believe it. I just think this is crazy.
Shereen Marisol…:By now, nearly everybody’s heard of Bitcoin and probably knows somebody trying to get rich off it. Here’s a simple breakdown. Bitcoin, and other cryptocurrency, is basically digital money. It allows people around the globe to buy and sell things without a bank, a credit card company or government in the middle. What many people don’t know is that Bitcoin requires enormous amounts of electricity.
Camilo Mora:Imagine this thing that is completely useless, in my view, having the same electricity demand than entire countries. Entire economies. Then, that got my attention. And at that moment, we figured, “Okay, we are going to put two hardcore numbers to show how bad this is.”
Shereen Marisol…:Camilo’s team found that, if Bitcoin took off, it would use so much energy that it would push us into the danger zone for catastrophic climate change in about 10 to 20 years. That’s decades faster than scientists are currently projecting. He wrote an article about it for the scientific journal Nature in 2018, and it grabbed headlines.
Camilo Mora:And I’m telling you, even to this day, it blows my mind away to know how bad that is, how stupid we are as an species, investing energy on that kind of stuff.
Shereen Marisol…:And investing money, too. More than 10% of Americans recently invested in Bitcoin. Famous people are talking it up, like director Spike Lee.
Spike Lee:The digital rebellion is here. Old money is out. New money.
Shereen Marisol…:Cryptocurrency.
Spike Lee:Is in.
Shereen Marisol…:Why does it gobble up so much power, and what does that mean for the rest of us? Reveal’s Elizabeth Shogren has been reporting on climate change for 20 years. Last year, some environmental experts started telling her that cryptocurrency was becoming their top concern. So, she started digging and learned that, while the US is trying to prioritize fighting climate change, states and cities across the country are competing with each other to provide power for Bitcoin.
Elizabeth Shogr…:My first stop is Kearney, Nebraska, a town that’s rolling out the electrons for a big new Bitcoin operation. I drive out to the tech park on the edge of town. There are corn and alfalfa fields all around.
Elizabeth Shogr…:I’m driving through the gates. Looks like just a bunch of trailers lined up, spaced out in a big area.
Elizabeth Shogr…:I walk towards the back of the site where I see a bunch of activity, and I meet Preston Scalca, who’s busy hooking up cables. They’re red, blue, white, and black, and about as thick as a broom handle.
Elizabeth Shogr…:So, that’s basically connecting the electricity, right?
Preston Scalca:Yep. So, you got 34,500 volts coming in on this side, runs through the transformer and knocks it down to 416 volts. So, from here, it goes to the switch gear, which powers the container itself.
Elizabeth Shogr…:The container Preston’s describing is one of those big metal trailers you see on the back of an 18 wheeler or cargo ship. There are more than 50 of them here, lined up in several neat rows. Preston wears a baseball cap. He’s got a goatee and an easy smile. And he’s been running power to the containers over and over again, for more than a year.
Preston Scalca:I’ve probably hooked up 30 of them, 35 of them.
Elizabeth Shogr…:These containers are full of something called miners, not guys with pickaxes over their shoulders, but specialized computers used for what’s called Bitcoin mining. These machines are what is slurping up the enormous amounts of power that made Camilo Mora’s jaw drop.
Preston Scalca:This out here is pulling more electricity than the whole city of Kearney is. It’s insane.
Elizabeth Shogr…:I just toured Kearney. It’s a thriving little city with a university, two hospitals, lots of other businesses, and about 34,000 residents. This whole operation covers about the same amount of ground as a single Walmart supercenter. It amazes me to think it uses more power than that whole city. It’s this kind of power consumption that has people really worried. Worldwide, bitcoin mining uses more electricity annually than entire countries, like Argentina or Sweden.
Elizabeth Shogr…:China was home to most cryptocurrency mining until this summer when they banned it. Other countries, like Iran and Kazakhstan, have cracked down, too. The mining was destabilizing power grids and sending too much carbon dioxide into the atmosphere. Now, the US is by far the world leader, thanks to companies like Compute North and its CEO, and co-founder, who just pulled up, and jumps out of an SUV.
Elizabeth Shogr…:So nice to meet you.
Dave Perrill:Pleasure to meet you as well. How you doing?
Elizabeth Shogr…:Wearing a nice wool coat and shiny leather shoes, Dave Perrill looks like the boss. Everyone else here is in sweatshirts and work boots. Dave flew in to help me understand why the Bitcoin industry is booming in the United States.
Dave Perrill:Yeah, Minneapolis is home.
Elizabeth Shogr…:Compute north makes money by providing Bitcoin miners everything they need to set up shop: electricity, internet and maintenance. Think of it as a hotel for Bitcoin computers. We walked past a medium sized shipping box. Inside is the latest delivery of specialized computers sent by one of Compute North’s customers.
Dave Perrill:Did you want to do a tour outside?
Elizabeth Shogr…:The city of Kearney wooed Dave here with low cost electricity and lots of it.
Dave Perrill:So when we first moved here, there’s a 30 megawatt substation. That wasn’t being used by anybody. It was built here and it was simply just wasting away.
Elizabeth Shogr…:30 megawatts, or 30 million Watts, is enough power to run thousands of homes and businesses.
Dave Perrill:That allowed us to get to market very quickly.
Elizabeth Shogr…:By get to market, Dave means hooking up more than 11,000 computers, but his customers wanted to send him a lot more. About a year ago, the Nebraska Power Company came through in a big way.
Dave Perrill:Part of our partnership with Nebraska Public Power is they’ve helped us bring in more energy to our site here. They’ve placed two temporary transformers that are mobile.
Elizabeth Shogr…:Power companies use portable transformers like these when big storms knock out electricity for small cities. Compute North got two of them.
Dave Perrill:So, this is about 70 megawatts.
Elizabeth Shogr…:But the power company needs these for emergencies around the state, so it’s building something permanent that’s way bigger.
Dave Perrill:A brand new 100 megawatt, more efficient substation for the entire site.
Elizabeth Shogr…:Wow. A 100 megawatt substation. That’s an enormous electric facility that’s being built just for you?
Dave Perrill:This one is. This one will serve 100% of our facility.
Elizabeth Shogr…:I want to see the Bitcoin miners that are gobbling up all this power. Dave asks his colleague, Dustin [Macatee] to get the keys for one of the containers. Dustin runs this place for Dave.
Dustin Macatee:I’ll show you what a miner is.
Elizabeth Shogr…:And this is what a cryptocurrency mine sounds like? What makes all the noise?
Dustin Macatee:The fans on the miners. There’s two fans on each miner. Some have four fans on each miner.
Elizabeth Shogr…:Inside the storage container, we’re looking at floor to ceiling metal shelves, crammed with computers the size of toaster ovens, hundreds of them.
Dustin Macatee:They only do Bitcoin mining. That’s what they specialize in. They’re not used for anything other than Bitcoin.
Elizabeth Shogr…:I ask Dustin and Dave what all those mins are doing, and they say that’s their customer’s expertise. So, I reach out to their biggest customer. Fred Teal is CEO and Chairman of Marathon Digital Holdings. He says to understand miners, you have to first understand why Bitcoin was created.
Fred Teal:And so the whole concept of Bitcoin came up because people had lost faith in the banking system. They had lost faith in government, as a way to manage the value of their money.
Elizabeth Shogr…:Bitcoin was designed to bypass government, banks and credit card companies, but still allows secure online purchases. The Bitcoin system needed a way to keep track of transactions. That’s where something called the blockchain comes in.
Fred Teal:Think about your bank statement as a listing of transactions. You got your paycheck deposited. You’ve paid for Netflix, whatever. Those are transactions in your ledger. The Bitcoin blockchain is literally just a list of transactions between parties.
Elizabeth Shogr…:Now, we get to those specialized computers, or miners. Before a new group or block of transactions is added to Bitcoin’s blockchain, those specialized computers around the globe compete to solve a complex math problem.
Fred Teal:Every 10 minutes, there is a race amongst Bitcoin miners to solve a mathematical proof.
Elizabeth Shogr…:The computers that solve the problem first get to add the latest transaction to the blockchain, and they get a reward.
Fred Teal:And if we do it before anybody else does it, we are paid in Bitcoin for processing that transaction. If we lose that race, we’re not paid.
Elizabeth Shogr…:But even those losers use up a lot of power and critics say that’s incredibly wasteful. Fred disagrees.
Fred Teal:It’s the expenditure of energy and effort that causes this to be such a secure network.
Elizabeth Shogr…:The more successful Bitcoin becomes, the more energy it will use. Even early pioneers of Bitcoin realized this could eventually become a climate change problem. Back in January, 2009, Hal Finney received the first ever Bitcoin transaction, and briefly ran the cryptocurrency. Days after its launch, he tweeted, “Thinking about how to reduce CO2 emissions from a widespread Bitcoin implementation.”
Elizabeth Shogr…:Back at the Kearney mining operation, both the computers and the fans that cool them use a lot of electricity. Compute North’s Dave Perrill says other mining facilities use air conditioning to keep the machines from overheating.
Dave Perrill:If we did use air conditioning, we would use up twice as much power or have half as much computing power going on here as we’d you today.
Elizabeth Shogr…:We duck into a trailer to continue our interview in a quieter spot. Being an IT entrepreneur runs in Dave’s blood. More than 35 years ago, his dad started an IT company for restaurants. Then Dave launched his first tech company. When he was in middle school, his customers were fellow geeks and they dialed in to share geeky information.
Dave Perrill:You can hear that crazy screeching modem noise going dee dee dee. That’s what we did.
Elizabeth Shogr…:Later, it became an internet provider.
Dave Perrill:So, by the time I was a senior in high school, I think I had 300 phone lines, 17 computers. It was quite the bedroom. I couldn’t sleep in there anymore, because there was too much heat from the computers and all the things that were going on. But it was a lot of fun.
Elizabeth Shogr…:A lot of early Bitcoin mining took place in bedrooms, too. But the high tech computers are too hot and noisy to be good roommates. So, businesses like Dave’s started to crop up. The scale of these Bitcoin hotels is getting bigger as the industry booms. Dave said the secret sauce is tracking down lots of cheap power.
Dave Perrill:We’re always trying to match what is probably one of the fastest moving sectors in the world, which is cryptocurrencies, blockchain, digital assets, with one of the most conservative, slowest moving, which is the energy construct. And we play in the middle of that
Elizabeth Shogr…:In Kearney, Dave found eager partners. Stan Klaus is the mayor. He’s also the local representative of the electric company, Nebraska Public Power District. He jumped at the chance to bring Compute North to Carney.
Elizabeth Shogr…:Did you know what cryptocurrency was at the time?
Stan Klaus:I didn’t. I’m still not all that overly familiar with it.
Elizabeth Shogr…:Why did you think cryptocurrency might be good for Nebraska?
Stan Klaus:Because I looking at it from the power perspective and the revenue that could be generated off the power, and what you could do with that revenue. That’s where my focus was. Because I knew it wasn’t going to be a lot of jobs.
Elizabeth Shogr…:I ask him how many jobs, and he says just 10. But the city expected to get money another way. Kearney gets a share of all electric bills, and Stan knew Compute North would be a whopper of a bill. Besides, Kearney had lost out on a bid to host a Facebook data center, and was looking to bring businesses to its tech park. Stan takes me to the new substation his power company is building for Compute North.
Elizabeth Shogr…:So, we’re walking on a gravel road. There’s a lot of big, tall metal towers that look like, imagine, the trunks of big mature trees that will be holding the equipment for the substation and it’s muddy.
Elizabeth Shogr…:We watch workers in a cherry picker four stories above us.
Stan Klaus:They’re just putting up steel and electrical components for the substation.
Elizabeth Shogr…:This substation cost Nebraska Public Power District, $23 million, a quarter of its annual budget for capital expenses.
Stan Klaus:This is a huge project.
Elizabeth Shogr…:So, if it weren’t for Compute North, is there any chance your company would be building this huge new substation here?
Stan Klaus:No chance.
Elizabeth Shogr…:They left nothing to chance. Here’s how it worked. The power company, city and local economic development council all pitched to sweeten the deal and get Compute North to come to Kearney. The council paid for the land and gifted it to Compute North. The power company not only brought in temporary substations while building this new one…
Stan Klaus:We also have given Compute North a discounted rate.
Elizabeth Shogr…:So, you’re giving them a discount because they use a lot of power. Do you know what it would be without the discount?
Stan Klaus:Oh, it would probably double. But the reality is, they may not be here if that drove their cost structure up too high. If we got greedy, none of this would be here.
Elizabeth Shogr…:The city makes Compute North’s deal even sweeter. Normally, Kearney gets 12% of everyone’s electric bill. But the city offered Compute North a deal. It would keep only 6%. That meant, in 2021, for example, the city kept $1 million from Compute North instead of more than $2 million.
Elizabeth Shogr…:So, they’re getting discounts all around.
Stan Klaus:They are, and it’s not a permanent situation.
Elizabeth Shogr…:That low electricity rate lasts for five years. By then, Compute North would’ve gotten tens of millions of dollars, as an incentive to use enormous amounts of power.
Elizabeth Shogr…:Now, we’re struggling with climate change. Are you at all worried that you’ve basically just doubled the amount of electricity you use and that could have an impact on climate change?
Stan Klaus:Yeah. I believe that we were looking more at what our capacity was, our unused capacity. We are generating revenue for our city that wouldn’t be here, but for this project, and that revenue helps our community to grow and keep our property taxes down and allows us to do the things in our community that’s a benefit to all.
Elizabeth Shogr…:But experts I talked to said encouraging companies to gobble up lots more power is not a benefit to all. One of them published a study that shows Bitcoin already has used enough power to erase all the energy savings from electric cars.
Elizabeth Shogr…:I got in touch with a bunch of economists scientists and environmentalists, and they all agreed with professor Camilo Mora from the University of Hawaii. Using scads of power for cryptocurrency could sabotage our fight against climate change.
Elizabeth Shogr…:I asked Compute North’s CEO Dave Perrill about what they said. So, you don’t think it’s immoral to use energy the way you are right out there. What do you think about that?
Dave Perrill:I think most folks that make that argument don’t fully understand one of two things. It’s either the value that Bitcoin and blockchain and crypto bring or the way that power networks, distribution networks and the grids work.
Elizabeth Shogr…:How big a concern is climate change for you personally?
Dave Perrill:I mean, I think it’s front and center. I got three little kids. They’re six, three and nine months, and if I felt that I was sitting here just burning up the environment and being a bad citizen and leaving my kids to a worse world, I wouldn’t do it. But I fundamentally believe computing can be done much more cost effectively and much more environmentally friendly.
Elizabeth Shogr…:I was talking to your electric company and they said that you asked them a lot for the lowest rate possible, but that you didn’t ask them for renewables.
Dave Perrill:Well, we’re on grid here. So, we don’t necessarily have an option of what’s getting put onto the generation side. We looked at their grid, we looked at their mix and we love carbon free element of 65%.
Elizabeth Shogr…:Most of that 65% is from nuclear power, which has a different pollution problem: nuclear waste. Other big industrial plants are demanding renewable power. And the Nebraska Power Company is trying to get them what they want. In Kearney, there’s a solar farm right next door to Compute North. That power was used by the city, but now those clean electrons flow to Dave’s operation.
Elizabeth Shogr…:About 12% of the electricity in the US comes from solar and wind. So, scientists and environmentalists warn, if cryptocurrency miners siphon off what little clean energy we have, the rest of us will end up using dirtier sources of energy. And as Bitcoin gets more popular, its energy use will surge. Dave tells me his company needs more electricity, fast. Compute North just got $385 million from its backers, and expects to expand a lot this year.
Dave Perrill:Well, 15 to 20 X in our company. Once again, it’s significant, significant growth.
Elizabeth Shogr…:So, you’re saying you’ll be 15-20 times larger than you are now.
Dave Perrill:That’s accurate. The pace is part of the fun.
Elizabeth Shogr…:And that pace is picking up. Dave can’t wait for new wind farms or solar arrays to be built. So, he is taking advantage of existing plants, including one that runs on natural gas. Natural gas emits a lot of carbon dioxide and also methane, a much more potent greenhouse gas.
Elizabeth Shogr…:All across the country, Bitcoin miners are plugging in. No place more than Texas. A Bitcoin mine there will use about as much power as 150,000 Texas homes. In Pennsylvania, a company called Talon Energy is building a cryptocurrency mine at a nuclear plant. An electric utility in Missouri started mining its own Bitcoin last year.
Elizabeth Shogr…:And here’s the really terrifying part in terms of climate change. Fossil fuel plants that had either closed down or were about to are firing up to power new Bitcoin operations.
Shereen Marisol…:So, not only is Bitcoin using massive amounts of energy, including precious green energy. It’s also dusting off old, dirty power plants.
George Real Bir…:Before the Bitcoin mine, you could probably count on your hands the number of days it ran in a year, and now it’s running every day I come into town.
Shereen Marisol…:Elizabeth is back with that part of the story in a minute. You’re listening to Reveal.
Speaker 1:Latino USA’s award-winning series, The Moving Border, returns with a new episode. Part three explores how things have, or haven’t changed for asylum seekers, hoping to reach the US one year into the Biden presidency. In this episode, we explore the changing demographics of asylum seekers stuck in Mexico, including the particular challenges for Haitian migrants arriving from South America. Listen to Latino USA wherever you get your podcasts.
Shereen Marisol…:From the Center for Investigative Reporting and PRX, this is Reveal. I’m Shereen Marisol Meraji. A couple of years ago, before Compute North’s Nebraska facility was up and running, the Bitcoin mining company Marathon was looking for cheap electricity to power its specialized computers. It found some in Hardin. It’s a small town in Southeastern Montana, next to the Crow reservation. Shawn Walks Over Ice is a member of the tribe, and he had experience with computers. So, he applied for a job at the new facility in Hardin. He got it, but Shawn had no idea that this new position would be operating a cryptocurrency mine.
Shawn Walks Ove…:When I came to work here, I wasn’t expecting Bitcoin. They didn’t say nothing at all about Bitcoin on that job advertisement.
Shereen Marisol…:He did know his new job was located at the Hardin generating station, a coal fired power plant. Reveal’s Elizabeth Shogren reports on what bringing Bitcoin to this remote place has meant for the town of Hardin and the nearby reservation.
Elizabeth Shogr…:I’m headed east on I-90, past Hardin, on a crisp winter day. Off to my left, behind the Love’s Truck Stop, I see a power plant and clouds of exhaust billowing from it. Before I know it, Hardin is behind me, and a sign welcomes me to Crow Country. Shawn Walks Over Ice grew up here. He tells me his tribe calls itself
Shawn Walks Ove…:Apsáalooke. It means the Children of the Long Beaked Bird, which is the Raven. But they just call us Crow. The crows are different from Ravens. Ravens are smart birds. They’re cunning and they remember stuff.
Elizabeth Shogr…:Apsáalooke is also the name of a coal mine that fuels the Hardin generating station. The coal is owned by the Crow people, but a non-Crow company, West Morlin, owns and runs the mine. Shawn’s dad worked there for decades. Shawn worked there, too, as a drafting technician for several years after college.
Shawn Walks Ove…:I really liked it. I made good money.
Elizabeth Shogr…:Dozens of other Crow men make good money there too, but it always troubled Sean that West Morlin got most of the profit. About a third of the families with children on the reservation lived below the poverty line.
Shawn Walks Ove…:All we were capable of was royalties, and royalties meaning that you get a fraction of millions of dollars being made with our coal. We are always considered a third world country within a rich country.
Elizabeth Shogr…:The Crow people get a royalty from the coal that feeds the power plant, but the United States has been turning away from coal. We use less than half as much as we did 15 years ago. That’s been hard on the tribe and the Apsáalooke mine.
Shawn Walks Ove…:That mine almost went down.
Elizabeth Shogr…:So did the Hardin generating station. It went through bankruptcy in 2012.
Shawn Walks Ove…:And from what I knew before, the power plant was going out of business. Nobody was buying up power.
Elizabeth Shogr…:In fact, after filing public records requests, I found out that the power station sat idle many months over the last several years. Then came Bitcoin, and the power station started steadily churning out electricity and carbon dioxide. Anne Hedges is the policy director of the Montana Environmental Information Center. She’s been working for decades to shut down coal plants. I showed her the documents I got from the state about the plants’ spiking greenhouse gas emissions.
Elizabeth Shogr…:What do you see in those documents?
Anne Hedges:I see a future that is unsustainable and terrifying. I see a plant that was about to go by the wayside because it couldn’t compete economically in the marketplace. And now, they are making Bitcoins like mad, and they are pumping CO2 into the atmosphere, that wasn’t going into the atmosphere just a couple years ago.
Elizabeth Shogr…:She says it’s especially important to shut down coal plants because they pump out twice as much carbon dioxide as plants that burn natural gas. Wind and solar power don’t emit greenhouse gases. Anne says restarting a coal plant flies in the face of what scientists say we need to do to curb climate change.
Anne Hedges:They said that, by mid-century, we have to decrease our reliance on coal by 89%. And I was looking at that as, “Okay. That’s doable.” And decrease our reliance on gas. And I thought, “That’s a challenge.” But now, with cryptocurrency, I am right back to being really nervous about coal, and it terrifies me. It really does. I am really distressed.
Elizabeth Shogr…:For months, I tried setting up a visit to this Bitcoin mine that had revived a coal fired power plant, but the mining company, Marathon, kept delaying. So, I just drive up to the gate and push the intercom button.
Speaker 16:Hello?
Elizabeth Shogr…:Yes. My name is Elizabeth Shogren. I called yesterday.
Elizabeth Shogr…:A man in a hard hat comes out.
Robert Grant:Currently, due to the new Omicron stuff, our company has shut down all visit, from especially off state. So, you need corporate approval to come on site.
Elizabeth Shogr…:What’s your name?
Robert Grant:My name’s Robert Grant. I’m the operations manager of the power plant.
Elizabeth Shogr…:Could you talk to me just outside the plant?
Robert Grant:Nope. Everything through our data center goes through corporate office.
Elizabeth Shogr…:He tells me the power plant’s been here since 2006, and the Bitcoin operation about a year. As we talk, a big coal truck wants to pass, and we have to get out of the way. Robert tells me it’s from the Apsáalooke mine.
Elizabeth Shogr…:What brought Marathon here was the same thing that brought Compute North to Kearney, Nebraska: cheap power. Montana has among the lowest electricity prices in the country, yet Marathon pays only about a quarter of what most businesses and residents pay. It didn’t take any digging to find that out. Marathon brags about it on its website. What did take some digging was figuring out how the power plant could offer such a low rate. Since the plant’s owner wouldn’t talk, I walk into the Big Horn county courthouse, up the stairway and past two elk heads with enormous antlers. I have a meeting with Mike Opie, the county’s accountant.
Elizabeth Shogr…:Are you Mike?
Mike Opie:Yes. You’re Melissa, right?
Elizabeth Shogr…:Elizabeth.
Mike Opie:Elizabeth, right? I’m sorry.
Elizabeth Shogr…:That’s okay.
Elizabeth Shogr…:Mike tells me how Hardin attracted the power plant nearly 20 years ago. The town issued a bond to pay for roads, sewers and other infrastructure.
Mike Opie:And that sweetens the deal for the people coming in and putting their businesses in there.
Elizabeth Shogr…:The plant got to skip paying taxes for about 10 years and was supposed to start paying or that, but it didn’t because it declared bankruptcy first. The plant now owes $4.5 million dollars in back taxes to the city and county, and the city’s on the hook for about $21 million for that bond.
Mike Opie:This sheet here will show you how much is unpaid. So, one year it was 700 and some thousand dollars. The schools get, actually, the bulk of most of the taxes around here. If the school got 60% of that 700, you can imagine what they could do with it.
Elizabeth Shogr…:The plant’s recently started paying its current taxes, but they’re much lower than they used to be. That’s because the state reassessed the plant. Originally, it was valued at $250 million. Now, it’s just $2 million, so their current tax bill is much lower. There’s another reason the Bitcoin mine’s electricity is so cheap. The Apsáalooke coal mine got a big federal tax break because the coal belongs to the tribe.
Mike Opie:Here comes George.
Elizabeth Shogr…:George Real Bird, III is a county commissioner, and he just walked into the office.
George Real Bir…:Before the Bitcoin mine, you could probably count on your hands the number of days it ran in the year, and now it’s running every day I come into town.
Elizabeth Shogr…:So, in your mind, that’s a good thing.
George Real Bir…:Yes. We have a power plant that needed a customer, and now it has one. They built the Bitcoin mine next door and just ran a giant electrical cord over to it.
Elizabeth Shogr…:Who owns the coal that is burned in that plant?
George Real Bir…:The minerals are owned by 14,000 Crows, Crow tribal members.
Elizabeth Shogr…:The tribe divides up the money it gets from coal and other jointly owned property and passes out checks three times a year to all its members. George starts scrolling through his smartphone and pulls up the receipt he got from the last payment.
George Real Bir…:This last one was 235. In some families, that’s money they use to live. Household that might have 10, 15 people in it, that’s a big infusion of cash into that home that they probably wouldn’t have otherwise. I’d say people use it for staples. They use it for food, for shelter, pay bills.
Elizabeth Shogr…:George remembers when he was growing up, he bought shoes with his checks.
George Real Bir…:In April, I bought summer shoes. I bought school shoes in August, and I bought basketball shoes or winter shoes in December.
Elizabeth Shogr…:His nephews and nieces do that now. I asked George if he’s concerned about the greenhouse gas emissions that come from that plant burning a lot more coal to make Bitcoin.
Elizabeth Shogr…:The climate change aspect of that coal fire power plant now working, instead of being defunct, like it kind of was a few years ago. Do you have worries about that?
George Real Bir…:I think the coal technology’s we’ve got improved and utilized in this country. I think there’s a future for coal.
Elizabeth Shogr…:Coal communities have been saying this for decades, but technology to strip carbon dioxide out of coal exhausts is very expensive. It’s not being used in any power plants in the US. I never get to go into the Bitcoin mine, but Shawn Walks Over Ice, who once worked there, agrees to meet me on a dirt road on the backside of the power station. Hi, Shawn.
Shawn Walks Ove…:Good morning.
Elizabeth Shogr…:How are you?
Shawn Walks Ove…:Yeah, the roads were a little slick.
Elizabeth Shogr…:From here, we can see the containers that hold Bitcoin miners, lined up like a train. There’re hooked directly to the power stations. There’s also an enormous building with a big door on one end.
Shawn Walks Ove…:If you open that garage door right there and walk in, it’s going to be hot. You can faint in there. So, they always say, “Don’t go in there by yourself.” So, if you pass out, they can drag you out.
Elizabeth Shogr…:From Shawn’s perspective, the work was risky.
Shawn Walks Ove…:So nobody really knows what to really do, how to run those miners, how to cool them off. There’s transformers behind there that have potential of blowing up. That’s raw power that can kill you. One jolt of that will stop your heart.
Elizabeth Shogr…:He didn’t like working so close to a coal fired power plant either.
Shawn Walks Ove…:That stack right there is pushing out ash. Ash is bad for your lungs, and it always looks like it’s kind of raining when you’re inside there.
Elizabeth Shogr…:Do you think that this Bitcoin mine is benefiting the Crow people, whose coal is used to create the Bitcoin?
Shawn Walks Ove…:There’s no benefit at all, to be honest. Yeah, they’ve hired a couple Crows, but I can count them with my fingers.
Elizabeth Shogr…:Shawn was juggling this job with working on a master’s degree online. He imagined the owners of the Bitcoin computers getting rich while they paid him 20 bucks an hour.
Shawn Walks Ove…:Who wouldn’t be pissed? It was discouraging. It was like, how come we can’t get a bigger pay? It’s hard work.
Elizabeth Shogr…:After working here for several months, Sean quit. Since then, the Bitcoin mine has grown, and so has the plant’s greenhouse gas footprint. I got the state to release the power plant’s reports to me. They show the plant’s annual carbon dioxide emissions ballooned from 80,000 tons in 2020, to more than 750,000 tons in 2021. That’s as much carbon dioxide as about 150,000 cars. Anne Hedges, the Montana environmental leader, is furious.
Anne Hedges:It’s just a few rich people who are going to get rich at the expense of everybody else. I feel like it’s people saying, “Well, a few can have champagne while the rest of you go hungry.” We’re not in a place where we have that kind of excess power available for something that is just a get rich quick scheme. Sorry. I really hate it. I hate cryptocurrency. I hate it.
Elizabeth Shogr…:Anne worries that other coal plants headed for retirement will be resurrected to mint Bitcoin. And it’s already happening in Pennsylvania.
Speaker 18:One company is using the waste from decades of coal mining to power thousands of super computers, running nonstop, to create Bitcoin.
Elizabeth Shogr…:Burning waste coal is even dirtier than burning regular coal and Pennsylvania subsidizes it. That plant and the Hardin operation in Montana are some of the most glaring examples of old, dirty fuel being used to make what supporters hope will become the currency of the future.
Sharon Stewart …:Okay. So, I see that you’ve got the classes that we talked about.
Elizabeth Shogr…:Sharon Stewart Paragoy is sitting across the desk from a student, advising her on getting into classes. Sharon’s a professor at Little Bighorn College on the reservation, and a Montana legislator.
Sharon Stewart …:Oh, I have to sign that as well. Okay. And there’s no return on that.
Elizabeth Shogr…:Sharon thinks her tribe’s leaders rely too much on coal. She’s been trying for decades to get them to invest in clean energy.
Sharon Stewart …:We’ve tried to bring wind farms to the Crow reservation without any luck from the different chair people.
Elizabeth Shogr…:She says one Crow leader after another ignored her advice.
Sharon Stewart …:Because they believe that coal was not going to go away.
Elizabeth Shogr…:But many customers are going away. By far, the biggest buyer of the tribe’s coal is a power plant in Minnesota. It used to burn 4 to 5 million tons per year. Now it burns half that much, and it plans to shut down its remaining coal units in 2026. Selling less coal means less money for the members of the tribe, and the local government gets less tax money.
Sharon Stewart …:We are in an economic crisis here.
Elizabeth Shogr…:Sharon says that makes it hard for people to worry about climate change.
Sharon Stewart …:People are aware of it. It’s a problem. But then when you have an economically disadvantaged community struggling to survive, then climate change is not going to be on the table.
Elizabeth Shogr…:Just outside Sharon’s office, I meet Shawn Walks Over Ice again. We walk across the snow towards Cottonwood trees and a stunning circular Arbor with benches underneath.
Shawn Walks Ove…:There’s some dry spots right here, if you want to.
Elizabeth Shogr…:Great.
Shawn Walks Ove…:Have a seat right there.
Elizabeth Shogr…:As we’re talking, a man approaches us and Shawn starts speak in Crow.
Shawn Walks Ove…:[foreign language] Radio. Radio review.
Elizabeth Shogr…:Shawn introduces me to David Yarlott.
David Yarlott:I’m president of the college here.
Elizabeth Shogr…:David says he’s worried that poverty will get worse as coal declines. I ask if he worries about climate change, too.
David Yarlott:Personally, yes. For many people here on campus, yes.
Elizabeth Shogr…:He’s a rancher, and he’s seen the effects of climate change on his family’s business.
David Yarlott:The reservoirs ran up, creeks ran up. We’re just seeing that in the hotter temperatures last summer. Our wells almost went dry.
Elizabeth Shogr…:We say goodbye to David, and Shawn tells me his plans, now that he’s left the Bitcoin mine.
Shawn Walks Ove…:I’m getting my master’s degree in legal studies, majoring in oil, gas, and energy.
Elizabeth Shogr…:And why are you doing that?
Shawn Walks Ove…:Because a lot of the reservations throughout the United States, they are neglected in a way. They’re always pushed off to the side.
Elizabeth Shogr…:Sean wants to use this degree to help his people negotiate better leases and prosper from the fossil fuels under their land.
Shawn Walks Ove…:On the reservation, there’s oil here and coal and natural gas.
Elizabeth Shogr…:All these riches that you’re talking about, the coal and the natural gas and the oil, these are all fossil fuels and they’re contributing to climate change. Are you worried about that?
Shawn Walks Ove…:Oh, not at all. We are so small here. We’re a needle in the haystack compared to, if you go to Los Angeles, the big cities, big power plants. Yeah, there’s an issue. We’re so isolated here, spread out, fossil fuel is needed.
Elizabeth Shogr…:And he’s not against Bitcoin, either, as long as it’s his tribe that benefits. He dreams of his people using their own energy to fuel their own Bitcoin operation. I can see in Shawn the entrepreneurial spark that cryptocurrency has lit in many people across the country. But given how much energy it uses, many experts can’t see a way for both Bitcoin and our planet to thrive.
Shereen Marisol…:That’s Reveal’s Elizabeth Shogren.
Shereen Marisol…:All over the country, Bitcoin is firing up gas, nuclear and coal plants, and sucking in enormous amounts of electricity from the grid, all contributing to climate change. Which makes you wonder, can there be such a thing as clean cryptocurrency?
Emin Gün Sirer:The power consumption of Bitcoin is on the order of Las Vegas. We end up consuming on the order of 12 US households.
Shereen Marisol…:That’s next on Reveal.
Speaker 23:I may sound biased here, but I think our stories are pretty great. And if you’re listening to this, I have a feeling that, well, you might agree. But have you ever been left wanting even more? Reveal’s newsletter goes behind the scenes. Reporters describe how they first found out about these stories, and the challenges they face reporting them. Plus, recommended reads and more. Subscribe now at revealnews.org/newsletter.
Shereen Marisol…:From the Center for Investigative Reporting and PRX, this is Reveal. I’m Shereen Marisol Meraji, and today we’re talking about cryptocurrency and how Bitcoin’s hunger for energy could threaten US plans to slow climate change. President Biden has pledged to cut greenhouse gas emissions in half by 2030. The Bitcoin computers we visited in Hardin, Montana, and Kearney, Nebraska, are owned by a company called Marathon Digital Holdings. And earlier in the show, we heard from its CEO and chairman, Fred Teal. He says people don’t need to panic about how much electricity Bitcoin uses. They should put things into perspective. For example, a Bitcoin industry group says that during the holidays…
Fred Teal:We use more electricity to turn on Christmas tree lights in this country than all the Bitcoin miners in this country. Why? Why do we need Christmas tree lights?
Shereen Marisol…:Besides, he argues, Bitcoin is going green because cryptocurrency miners are feeling pressure from Wall Street investors. With so many people investing in Bitcoin, the price for a single coin has swelled into the tens of thousands of dollars. And that means there’s more money to pay for green power.
Fred Teal:Our goal, as well as the goal of most people in our industry, is to get to a net zero, effectively, energy footprint, where the only energy we’re using is energy we’re producing, and trying to do that through fully renewable energy sources.
Shereen Marisol…:Fred says they’ll get there by connecting directly to wind farms and solar arrays. And also by buying energy credits. Those are sold by renewable energy producers, and companies can buy them to offset dirty energy that they get from the grid. And Fred says Bitcoin’s need for electricity is sparking construction of new green power sources.
Fred Teal:So, what the energy companies are doing today is they view Bitcoin mining as the perfect incentive for them to deploy renewable energy.
Shereen Marisol…:So, can Bitcoin be as green as Fred Teal says? We decided to ask Ludwig Siegele, who’s written a lot about Bitcoin. He’s US technology editor at The Economist.
Ludwig Siegele:I think he’s wrong. And for the simple reason, so in a day and age where we all scramble to slow down climate change, we can’t ignore a system that uses as much energy, let’s say, as the Netherlands. So saying, “Oh, this doesn’t matter. It uses less energy than the banking system.” It doesn’t cut it. That system, the banking system, underpins the entire economy. So, I think the comparison just doesn’t hold.
Shereen Marisol…:But what he’s saying is that it’s plugging into clean power, wind and solar energy. Isn’t that a good thing?
Ludwig Siegele:I mean, theoretically, that sound one’s good. But the idea that people are building fields of solar collectors or other renewable energy sources just to power Bitcoin mines, I haven’t seen any evidence for that.
Shereen Marisol…:And also, what would that do for the rest of us, as far as if this clean energy is being used to mine Bitcoin, versus what we need it for in our everyday lives?
Ludwig Siegele:Exactly. You can, of course, use renewable energy for Bitcoin, but if you use it for Bitcoin mining, it can’t be used for other purposes. Let’s say, economically, more valuable activities. Because what you have to see is you have a very energy hungry system that basically powers a currency that is used mostly for speculation, at this point. And so, you have to ask yourself the question. Is this the right use of renewable energy? Or should we do other stuff with it? So, I think, in the end, what Bitcoin and cryptocurrencies have to do is move to a different system that is less energy hungry.
Shereen Marisol…:And there’s a race going on right now to do just that. The people who run the cryptocurrency called Ethereum have been struggling to switch over from a system like Bitcoin’s to one that uses less energy. Others are starting from scratch, and inventing entirely new cryptocurrencies, like this man.
Emin Gün Sirer:I’m Emin Gün Sirer, and I’m the CEO of Ava Labs. I used to be a professor at Cornell University. I used to be the director of initiative for cryptocurrencies and smart contracts.
Shereen Marisol…:A few months ago, Emin left Cornell to run his company, Ava Labs. He was in Istanbul, Turkey, when we caught up with him.
Emin Gün Sirer:We had a hackathon here and came to my ancestral roaming grounds, and it’s been great.
Shereen Marisol…:Emin, along with some of his former students at Cornell, are the inventors of a new cryptocurrency system called Avalanche. He says the Avalanche system is faster and more flexible than Bitcoin. And most importantly, he says, it’s incredibly energy efficient.
Emin Gün Sirer:The power consumption of Bitcoin is on the order of Las Vegas. And the power consumption of the Avalanche system is 12 American households. So, it’s night and day.
Shereen Marisol…:He says what makes it so energy efficient is that it runs on an entirely different system for processing transactions and adding to the digital ledger, or blockchain, something called proof of stake. Instead of using specialized computers and all that electricity to solve complicated math problems, in proof of stake, there’s a different kind of competition. Participants put up cryptocurrency that they already own.
Emin Gün Sirer:Kind of like a bond, that says that they have some skin in the game.
Shereen Marisol…:And a winner is selected based on a bunch of factors, including how many coins were staked. The winner gets to add the latest transactions to the blockchain and is rewarded in new coins. If these proof of state currencies overtake Bitcoin, they’d be an answer to the power consumption problem. But Ludwig Siegele says it won’t be easy. They’re just not as battle tested as Bitcoin’s proof of work system.
Ludwig Siegele:Proof of work is pretty straightforward. It’s hard to hack. Proof of stake is more easy to attack. And that, of course, is really important in these systems. I mean, if they’re vulnerable to attack, then people won’t use them, and that’s a problem that these systems have yet to solve.
Shereen Marisol…:And in the meantime, Bitcoin is just going to keep sucking up energy.
Ludwig Siegele:In the meantime, it’s going to suck up a lot of energy and not just electric energy, but lots of intellectual energy and attention, and so on and so forth. Yep.
Shereen Marisol…:A few years back, in my orbit, there was a lot of excitement and energy around the blockchain, around crypto and the possibilities to make change, big change, and help solve some big, real world problem. Is that energy and excitement over? Is that a thing in the past?
Ludwig Siegele:I mean, there’s still lots of people who think blockchain is a very important in technology and will solve lots of problems, or cryptocurrencies, for that matter, because it always goes together. But I’ve come to realize that actually implementing it, making it really work, is difficult. Lots of problems, problems of governance, problems of how people can use it. It’s a very complex technology to use. And at the same time, you have this crypto craze, which is a financial phenomenon, which is why I say the crypto craze has to go away, or at least it has to be some contraction, and then we can see or move forward with, perhaps, improving blockchains and see what alternatives to proof of work actually work.
Shereen Marisol…:Is there a way that the federal government can step in now and start regulating the power consumption issue?
Ludwig Siegele:I think that, for one country, will be very difficult. Because, as you see, China has outlawed mining. What happened? These miners, they took their mining rigs, they put them on planes, they flew them to Kazakhstan or Texas or wherever energy is cheap. And so, if the US were to say, “Okay, no more Bitcoin mining. This is not good for the environment.” These people would just move on.
Ludwig Siegele:So, I don’t see that’s problem you can solve by regulation, except if you get international coordination. The EU, the US, Russia, getting together and deciding to outlaw Bitcoin mining. But I don’t see that happening.
Shereen Marisol…:Ludwig Siegele is the US technology editor at The Economist.
Shereen Marisol…:There are signs we could see some regulation of cryptocurrency. The European Union is working on rules, and so is President Biden. Earlier this month, he signed an executive order about cryptocurrency. It directs the government to study crypto’s pros and cons, and recommend ways to protect investors and the financial system. But it doesn’t call for any regulations that would restrict energy use by cryptocurrencies.
Shereen Marisol…:Our lead producer for this week’s show is Elizabeth Shogren. [inaudible] edited the show, and thanks to Reveal’s Michael Montgomery and Amy Mustafa for help with the episode. Nikki Frick is our fact checker. Victoria Baranetski is our general counsel. Our production manager is Amy Mustafa. Score sound design by Jim Briggs and Fernando Arruda. Our postproduction team this week also includes Jess Alvarenga, Steven Rascon and Catherine Styer Martinez.
Shereen Marisol…:Our digital producer is Sarah Merck. Our CEO is Kazar Campwalla. Sumi [inaudible] is our editor in chief. Our executive producer is Kevin Sullivan. Our theme music is by Camarato Lightning.
Shereen Marisol…:Support for Reveal is provided by the Reva and David Logan Foundation, the John D and Catherine T MacArthur Foundation, the Jonathan Logan Family Foundation, the Ford Foundation, the Heising Simon’s Foundation, the Hellman Foundation, the Democracy Fund and the In As Much Foundation. Reveal is a co-production of the Center for Investigative Reporting and PRX. I’m Shereen Marisol Meraji. And remember, there’s always more to the story.
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