The U.S. coal industry has been on the decline for the past decades, but it has seen a resurgence with cryptocurrency miners restarting coal plants in states like Kentucky, Pennsylvania and Montana. For the largest cryptocurrency, Bitcoin, fossil fuels make the vast majority of its energy mix, with coal the top source of electricity for Bitcoin globally. Annually, Bitcoin has used as much electricity as entire countries, and is providing a lifeline to the fossil fuel industry. The scary thing is that the problem is likely to get much worse unless something is done.
That is because, unlike other digital technologies, Bitcoin’s current code requires it to use lots of electricity. It uses a “Proof of Work” (PoW) system to secure its record of transactions. The “work” — done by specialized, electricity-hungry mining machines — is essentially a massive competitive guessing game. As mining machines get faster and more guesses are generated, the system adjusts to require more digital “work” leading to more and more electricity use. Meanwhile, the costs to communities and our climate is mounting.
The good news is that Bitcoin does not need to suck up massive amounts of energy. The second largest cryptocurrency, Ethereum, recently changed the way it maintains security and now uses less than 99 percent of the electricity it did previously. With a change to its open-source code, Bitcoin can make a similar move. Its code has been changed before, as recently as last year. But Bitcoin is not a company with a CEO to issue directives. Regulation alone cannot shift a decentralized global technology. It will take people and institutions invested in Bitcoin to build the support needed to make a switch happen.
In a climate crisis, everyone has a role to play, from everyday Bitcoin enthusiasts to celebrity spokespersons for crypto trading platforms. But there is a special responsibility for big companies that are ramping up their Bitcoin business, especially those that claim to care about our climate.
Recent news about crypto has been dominated by the spectacular collapse of crypto-trading firm FTX. But amid the headlines have also been new announcements by Mastercard and Fidelity Investments to dramatically increase their role in crypto/Bitcoin trading and investing. Their marketing included no mention of Bitcoin’s climate pollution, or what, if anything, they plan to do about it.
We know that companies know there is a problem. In 2017, Mastercard stated in its Corporate Sustainability Report that “new research shows that cryptocurrencies like Bitcoin are inherently more energy-intensive than Mastercard’s payment network.” They go on to call out how Bitcoin’s electricity consumption per transaction ranges from 300 kilowatt-hours to up to 1,000 kilowatt-hours — more than the average U.S. household uses in a month.” Now, Mastercard is rushing to increase its Bitcoin business despite its 2040 “net zero” climate pledge.
Fidelity states on its website that “robust sustainability practices can be critical to an investment’s long-term success.” But they are rolling out Bitcoin investment offerings to millions of their 401(k) customers and will soon debut a retail crypto trading platform to many more.
These companies, and many more including BlackRock and Goldman Sachs, are firing up their Bitcoin business, will have to deal with the growing climate risk on their balance sheets. With increased scrutiny from regulators and customers, the head-in-the-sand approach will not work for long.
People should not have to choose between cryptocurrency and a livable climate. Big businesses that want to profit from Bitcoin have a responsibility to step up and champion a shift to a new, secure and efficient code. They should bring their clout and resources to the growing movement to change the Bitcoin code to make an investment in what matters most: a livable planet.
Annie Leonard is co-executive director of Greenpeace USA.
This piece has been updated.