Crypto Mining in Washington and Oregon Could Rule the Wild West

Environmental policies affect bitcoin activity in the Northwest Territories, where interest rates have risen due to cheap hydroelectricity.

More than a dozen cryptocurrency miners have set up shop in Grant County, Washington.

Just below the Grand Coulee Dam, in a county with a population of just over 100,000, you’d think there are 13 cryptocurrency mining operations — vaults filled with networked computers that continuously churn out complex mathematical equations. to find bitcoins. But those miners are using a total of 27 megawatts of electricity today, a fraction of what the Grant County Utility District has been asking for since the bitcoin price skyrocketed to nearly $20,000 in 2017.

Christine Pratt, the utility’s public information officer, said in 2018: “We received a request to triple our load in the county. The actions taken have helped us prepare. to treat customers fairly.” Treat it like this. ”

InvestigateWest ( ) is a nonprofit news organization specializing in investigative journalism in the Pacific Northwest. This event is made possible with the support of the Sustainable Paths Foundation.

Some of the cheapest hydroelectricity in the United States is produced by Grand Coulee and other dams, fueling interest in cryptocurrency mining in the region. As a result, utilities in downtown Washington, DC, often take advantage of sharp increases in electricity prices to keep up with high industrial demand.

The fee schedule is also one of many ways Washington agencies are trying to regulate the cryptocurrency mining industry.

After years of bitcoin’s boom cycle, environmental regulation around crypto mining remains relatively sparse in Washington and the Pacific Northwest.

Even among government agencies tasked with environmental protection beyond emissions, such as water quality or e-waste treatment, the speakers shared a general consensus that they have no specific understanding of the impact of bitcoin mining.

This situation will gradually change.

Ambitious clean air laws in Oregon and Washington aim to ban non-renewable energy from the state’s grid over the next several decades, a goal that can be achieved quickly. In response, lobbyists and politicians drew attention to the fact that cryptocurrency mining does not lead to the release of fossil fuels after a period of high energy consumption.

Oregon is looking to extend emissions controls to high-rise customers of consumer-owned utilities that power crypto mining operations and data centers, to cover cover what climate activists see as a major flaw. The law currently applies only to investor-owned electricity and utility providers, such as PacifiCorp and Portland General Electric.

“The next step in the journey towards 100% clean energy, and getting there is really meaningful,” said Pam Marsh, co-sponsor of HB 2816, Representative D-Southern Jackson County, Oregon.

In Washington, the Clean Energy Standard applies to customers of similar municipal and municipal utilities that are not subject to applicable law. They serve most of the crypto mining operations in central and eastern Washington.

Glenn Blackmon, director of energy policy at the Washington Office of Energy, described the measure as part of a broader discussion the state needs to have about prioritizing resources to meet energy goals. climate.

“We are also trying to move the rest of the economy from fossil fuels to clean electricity,” Blackmon said. “[Cryptocurrency mining] certainly adds to the growing demand for electricity supply to meet energy targets.”

a push, not a hammer

It’s no surprise that Bitcoin mining consumes a lot of electricity. is the purpose.

Because Bitcoin operates through a so-called “proof of work” system, the scarcity comes from the time and energy each computer expends to solve precise mathematical equations to obtain large amounts of money. Bitcoin. This system supports the value and security of the currency.

Other environmental impacts in the industry include computers that fail, are thrown away, and need to be replaced, and servers run for long periods of time with coolant (usually water).

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This aspect of crypto mining has made headlines, with hot water pouring back into lakes and closed coal plants reopening to run crypto servers.

Concerns about the latter practice prompted New York lawmakers in November to target cryptocurrency miners operating on fossil fuel-powered power plants.

This angered the representative of Washington. When Tana Senn first learned about the industry a few years ago.

“[It] opened my eyes,” said Senn, D-Mercer Island, who sits on the newly formed House Committee on Innovation, Community Development, and the Economy and Veterans Affairs . They try to learn by experience and technology.

By that time, he said, his views had changed. He learned how utilities are increasing costs to meet demand, and how the Washington Department of Ecology’s water quality department oversees companies’ drainage operations such as crypto mining operations. This allayed his initial fear.

“I realized that as a country, we cannot enact laws against cryptocurrencies,” he said. If crypto is imminent, “Washington is a better place to have these than going to China or Texas or some place where there’s no regulation and it’s going to do more damage.”

During the 2022 legislative session, he and colleagues in the Washington Senate successfully pushed for a blockchain task force in May. The working group will explore the application of blockchain technology in several areas, including its impact on the environment.

This is not the first time: about a dozen countries have established such working groups. California and Wyoming have their own laws.

Washington’s blockchain team is scheduled to meet in December 2022, and the first report to Governor Jay Inslee is due in December 2023. But in an interview in early January, Senn said the group is still the first meeting has not been held.

“It’s kind of frustrating,” he said.

Jim Kopriva, a spokesman for Inslee, was less optimistic about the contribution of cryptocurrency mining to the country, but was quick to point out that a legislative solution is currently being sought.

Kopriva said the governor is “generally satisfied” with the Biden administration’s approach to the impact of cryptocurrencies on energy consumption.

“Exploitation uses energy and creates some jobs, and our energy infrastructure must prioritize the energy needs of Washingtonians,” he said. “Future legislation will close loopholes and ensure energy-intensive industries receive clean, renewable energy under our state’s laws.”

Strengthen regulations

National efforts to reduce the environmental impact of cryptocurrency mining include industry innovation and government regulation.

For example, the Bitcoin Mining Council, founded in 2021, is perhaps the industry’s biggest attempt to start the conversation about energy consumption during Bitcoin mining. It tries to control the mix of electricity used to mine Bitcoin. The latest quarterly report estimates that 58.9% of the energy used by the global mining industry comes from sustainable sources such as hydroelectricity.

Individual farms also show consistent performance. Merkle Standard, a cryptocurrency mining company based in Pend Oreille County in the northeast corner of Washington, is an example. The website says it will be carbon negative by the end of the year. It is currently purchasing renewable energy credits to cover potential fossil fuel sources in the energy mix. The company did not respond to questions about the rate of energy use supplemented by renewable energy credits.

Not long after, InvestigateWest launched in October.

Currently, the company is licensed to use up to 100 megawatts of energy per year, but has signed agreements with business partners to allow up to 500 megawatts. Achieving these goals will require significant infrastructure investment and will take years. management said.

So far, federal efforts on encryption have been largely confined to research.

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The White House released a series of key reports in September that sought to outline the national impact on the industry. It includes several key statistics, including that cryptocurrency mining currently accounts for about 1% of the nation’s electricity consumption and generates between 250 and 50 million tons of carbon dioxide per year – similar to emissions. diesel fuel from domestic cryptocurrency mining. .

Reports also indicate that the industry produces more than 30,000 tons of e-waste a year, which is equivalent to all e-waste generated in the Netherlands.

Crypto industry advocates such as the Blockchain Association have criticized the Biden administration’s report, calling it a “missed opportunity” for ignoring network-related risks without recommending solutions. methods to improve accessibility and security.

In response to the White House report, US Senators Edward Markety (D-Massachusetts) and Jared Hoffman (D-California) introduced the Crypto Asset Environment Transparency Act in December. Funded by Oregon Democratic Senator Jeff Merkley.

The bill would require the Environmental Protection Agency to conduct a comprehensive impact study on U.S. cryptocurrency mining operations and require crypto mining operations that use more than 5 megawatts of electricity to report on greenhouse gas emissions.

Meanwhile, the states of Oregon and Washington are working to ensure that cryptocurrency mining operations cannot ultimately buy electricity from non-renewable sources to meet their energy needs.

Oregon’s clean energy goals require the state’s investor-owned utilities to reduce greenhouse gas emissions by 80% from baseline by 2030; 90% by 2035; and 100% by 2040.

Washington’s Clean Energy Transition Act requires utilities to phase out coal-fired power plants from state portfolios by 2025. The portfolio must be greenhouse gas neutral by 2030, for allowing them to use limited amounts of natural gas that is offset by something else, such as B. Credits for renewable energy. Utilities must provide 100 percent renewable electricity by 2045 and cannot use offsets.

Joshua Basofin, clean energy policy manager at environmental nonprofit Oregon Climate Solutions, said advocates of Oregon’s climate law over the past few years have touted the potential of Oregon’s climate change. data centers and crypto mining operations to help curb emissions as part of the 2021 House bill. say they have admitted. CO2. It wants to flow.

“Oregon is very attractive to data centers and crypto,” Bastoffin said. “We think it would be nice if this other large payload is similar to HB 2021. Cryptocurrencies are not being developed here, but I think there is a lot of room for growth.”

“Climate change is real, it’s going to affect our communities, and we need to become big consumers of energy for our standards to remain a major utility,” Marsh said.

According to two states Oregon and Washington still use more than twice as much energy as non-renewable sources.

The latest data on national power generation resources shows that by 2020, 26% of the national electricity grid will be coal, 21% natural gas, 40% hydro and 7% wind.

According to 2020 data, Washington’s hydropower share is about 55%, but the overall mix of utilities still consists of about 10% coal. About 13% comes from natural gas and 9% comes from wind and nuclear power.

The severity and scale of the task ahead is why domestic politicians are trying to strike a balance between cracking down on the crypto mining industry and opening the door to alternative energy. for bitcoins.

“Even as they build their own new clean resources, they can still compete for scarce resources, new clean energy,” said Blackmon of the Washington Office of Energy.

“At the same time, there are other novel uses that we really like and that we think are more valuable than crypto.”