Original Report by Earthjustice
Acknowledgements
First, the positives. Earthjustice have done a generally good job of avoiding the sensationalism of GreenpeaceUSA. This is a more thoroughly researched report. It is even occasionally backed up by evidence and citation. It looks as though the writer of the report has highlighted issues with Bitcoin mining that they have legitimate grievances against, and has also avoided drawing the unsupported conclusions of GreenpeaceUSA such as “climate disaster”.
Also noteworthy is that this is a softer critique than previous critiques of Bitcoin mining conducted by EarthJustice. They have avoided using disputed studies (such as CCAF’s emissions reporting) and conflicted, some would say discredited, sources such as central-bank employee Alex de Vries.
This allows me to give the intellectual attention that reasonably well thought-through document deserves, and address specific claims point-by-point.
Criticisms
The overall criticism I have of the report is the consistent lack of context it gives to claims (see below), which result in misleading the reader, together with recycling unsupported or widely debunked claims. The report reads like a throwback, which seems to lack awareness that it comes after the positive ESG benefits Bitcoin has through its flexibility as a form of “Demand Response” have recently been endorsed both by a Bitcoin ESG study by KPMG, and in a peer-reviewed academic paper. There is no attempt to engage with either of these more recent studies, nor an attempt by Earthjustice to refute why either of their findings are incorrect. Instead, many of Earthjustice’s citation refers back to their own prior 2022 study. Earthjustice also appears unaware that Cambridge University has recently revised down its Bitcoin energy estimates, and acknowledged that its methodology likely overestimates fossil fuel use in a recent model revision, preferring instead to again back-reference their own prior work.
Executive Summary
The overall problem Earthjustice have with Bitcoin mining in Texas is that they claim Mining is conveniently summarized at the top of their study
Similarly, here is my high-level summary, point-by-point
Further CONTEXT
Claim: Cryptomining will drive up electricity prices for everyone
There is no evidence for this, and in fact an overwhelming weight of evidence to the contrary.
“Demand management, where customers get discounts for decreasing energy use when prices spike, is the single best method to lower power costs, improve reliability & reduce emissions. But because they reduce profitability of energy industry, they’re woefully under-utilized in US.” John Arnold, Arnold Ventures – an evidenced-based philanthropic Venture Fund
Energy Markets expert, and Shaun Connell explained in a recent podcast that Bitcoin mining is “the rolls royce of demand response” and that how energy markets work is that if you have more people offering a demand response service, that makes the service a more competitive marketplace, and that drives down the cost of demand response programs which in turn helps lower the cost of energy all users of the grid”
As a side-note, Shaun Connell has 15+ Years of Energy Trading & Optimization, and Decarbonizing of the Grid using Highly Flexible Controllable Loads.
Critically, the person most qualified to offer an informed viewpoint on the matter having run the grid of Texas for two years, Brad Jones, had this to say about the impact of Bitcoin in driving prices down.
“The real value of Bitcoin is its flexibility. The capability for us to use it in our ancillary services at the lowest possible cost means cost for all consumers in the state of Texas.” Brad Jones, Former Interim CEO, ERCOT. Texas.
Claim: “Record windfalls selling electricity back to the grid” & “ERCOT Demand Response Programs give away millions to Bitcoin miners”
While presented as two separate points, this is in fact one point. The point is: “Bitcoin mining companies, along with other industries, are paid by ERCOT to provide grid-stabilization services.”
EarthJustice have left out some important context here: As the level of intermittent variable renewable energy increases on the grid, it is critical that grid operators have ways and means to dial up and down electricity consumption. Without this flexibility, they rely on fossil-fuel burning gas peaker plants to increase electricity supply at times of peak demand.
Demand response (DR) has been around for years. To grid operators, Bitcoin mining is simply a superior form of demand response that offers them much more control in stabilizing grids than traditional methods. DR is recognized by the International Energy Agency and the US Department of Energy (see source below) as critical to meeting our Zero Emission Targets.
It has also previously been positively endorsed by mainstream media, including NY Times. The moral outrage that it appears EarthJustice want to level at Bitcoin mining, can be falsely levelled at any form of Demand Response, and would appear to be made in ignorance of how demand response works, and why it is critical to meeting our zero-emission targets. I would urge Earthjustice to research DR more deeply in future; for I would contend that not only are they falsely vilifying an industry based on lack of understanding of demand response, but they are in fact attacking an industry who is providing a service that is synergistic to the zero-emission goals EarthJustice want to see realized.
Communities foot the bill when crypto mines relocate
The only evidence cited to back up Earthjustice’s claim is a reference to their own earlier study which claims that in 2018 the following occurred
Apart from a single instance which occurred five years ago, there is no citation given.
Nor does Earthjustice provide evidence that this bill was picked up by ratepayers as opposed to being resolved by any number of remedies that a liquidator has at their disposal during Chapter-11 bankruptcy proceedings.
Nor is there any comparative analysis reported by Earthjustice about community impact of any business being declared redundant so the reader can assess objectively how Bitcoin mining companies rate relative to the norm.
Other inaccuracies or distortions in the report
This is not an exhaustive list of inaccuracies (that rebuttal would be too time-consuming). So I’ll keep my focus on the main ones.
The evidence used for “drive increased emissions from gas and coal plants” but give no evidence for this assertion. It’s an oft-repeated claim, which quickly breaks down on first examination. The evidence here seems to be the the Greenidge Power Plant, which they previously claimed had opened up a previous gas power plant for the purpose of cryptomining. This claim is often circulated by Bitcoin antagonists but has in fact been publicly contradicted by public records filings which show the plant was not re-opened for crypto-mining.
We can see this evolution in the S-1 form with the SEC, here, which provides a detailed look on when and how the operation grew. Additionally, you can see Greenidge’s initial press release announcing its exploration into bitcoin mining dated March 5, 2020 here. I have also covered how opponents of Bitcoin use Greenidge incorrectly to support the narrative “Bitcoin increases offgrid fossil fuel use” here.
Use of emotive images of Texan citizens during winter storm
The “moral outrage” tactic doesn’t rely on any logic, just neuro-association with emotive images of human suffering. But it’s perhaps a more effective tool of influence. It is however a tool of propaganda, not of objective reporting, so it deserved no place in a report which claims to be based on objective analysis. Earthjustice were generally successful in avoiding this sort of persuasion technique; this was their one transgression.
Robbing the reader of important context is often used by Bitcoin opponents. The reality is that every industrial user pays a fraction of what residences pay for electricity. Is it fair? Maybe. Maybe not. But this is an argument against capitalism, not an argument against Bitcoin. But by removing important context, the author misrepresents the point as a specific objection to Bitcoin.
Notably, no mention of what Bitcoin mining is, of how it benefits society is included either in this report, or in prior reports by Earthjustice. This omission is important because it is easy to label a technology “wasteful” if you do not understand its utility or value to society. Bitcoin it turns out has significant value to society, and I’ve previously documented that here.
Is Bitcoin mining perfect? No. Are there more than one Bitcoin mining companies who have been bad actors who made lives horrible for neighbors by being inconsiderate about the unquestionable high decibel noise levels. Yes. I would happily work shoulder to shoulder with Earthjustice to encourage the remaining outliers to solve this problem using the steps that most of the industry is already taking. However, every industry has outliers, and we should avoid maligning an entire industry based on its worst performing examples.
And as a voice for the Environment, Earthjustice can do a much better job giving people context so they do not mislead reader opinion, and conducting research which extends to talking to those who understands the domains they are writing about, noteably: demand response, grids, and energy markets. You may just find when you do so, that we are on the same team, working together for the good of the environment and a zero-emission future.