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The Real-World Costs of the Digital Race for Bitcoin

60 points by karaokeyoga 4y ago

karaokeyoga 4y ago
https://archive.md/g6cia https://archive.md/g6cia
crazygringo 4y ago
Key quotes (italics mine): "In some areas, this has led prices to surge. In Texas, where 10 of the 34 mines are connected to the state’s grid, the increased demand has caused electric bills for power customers to rise nearly 5 percent, or $1.8 billion per year, according to a simulation performed for The Times by the energy research and consulting firm Wood Mackenzie." "The additional power use across the country also causes as much carbon pollution as adding 3.5 million gas-powered cars to America’s roads, according to an analysis by WattTime, a nonprofit tech company. Many of the Bitcoin operations promote themselves as environmentally friendly and set up in areas rich with renewable energy, but their power needs are far too great to be satisfied by those sources alone. As a result, they have become a boon for the fossil fuel industry: WattTime found that coal and natural gas plants kick in to meet 85 percent of the demand these Bitcoin operations add to their grids."
PretzelPirate 4y ago
I may have missed it, but did the author try to interview whoever in Texas made the deal with the Miners? It seems that their input would be important to help us understand why they'd make such a bad deal. Maybe it all comes down to paying off the right people, but I can't assume that until a journalist digs deep enough.
havnagiggle 4y ago
One thing from the article I don't really understand: why are power companies signing these shutdown deals? Are they not allowed to set quotas or cost tiers that make sense for the limited capacity they have? Why can't we have reasonable prices for residential amounts of electricity, and progressively more expensive bands that control for the actual value of that electricity based on the supply? Why cant they put an energy quota/cap for their customers? Clearly miners are valuing the electricity more than for what it could be sold at because they keep buying more of it. It sounds like we need a smart grid just to get energy economics back to something reasonable. Although the fact they can call up their client and tell them to shut it down seems like they already have something in place, but that it just needs to be automated as quota enforcement. And I didn't see any mention of policies that could make coal-sourced electricity more costly. It seems like again, obvious economic policy would improve this situation. But it's just written as BTC = bad.
- treerunner 4y ago
  Unfortunately, politicians are too busy playing culture war to dig deep on policy for just about anything. They choose inaction, they choose ignorance. Carbon aside, it will be interesting to see how this plays out in Texas, where the electrical grid is tenuous. But to your point, looking at things from sustainability minded perspective (and even opting to ignore value of product as it stands right now), why yes, BTC is bad.
- NickM 4y ago
  I don't think it's as simple as "just tweak the economics"; in places like upstate NY, there are very cheap electricity prices due to abundant hydro resources, so there are some big crypto mining operations that have set up shop to exploit that. But, of course, when demand goes up, prices go up for everyone; more demand isn't going to lead to the creation of more natural resources, so the benefits of cheap hydro are limited, and usage of them is a zero-sum game. Power companies have no incentives to discourage crypto miners, because obviously increased demand leads to more profits for them, while meanwhile the externalized costs are being paid largely by households and small local businesses. You could make miners pay more for electricity, but unless you charge them so much that it's no longer profitable and they go away, they're still going to be using that electricity, to the detriment of everyone else in the area. Better to just ban them entirely, IMO, but it's pretty hard for politicians to just unilaterally kill off entire businesses, even bad ones like these.
  - latchkey 4y ago
    Upstate NY has hydro because it was developed to power the aluminum smelters that no longer exist after having shut down (thanks China!) and left multiple superfund sites. https://en.wikipedia.org/wiki/Moses-Saunders_Power_Dam https://en.wikipedia.org/wiki/Moses-Saunders_Power_Dam In this specific case, the power can't just easily be routed somewhere else because all the lines were routed directly to the plants. You can literally look on Google Maps and see the lines. Building new lines could be done but it is super expensive to do that. Up until the bitcoin miners came in and took over the plant, the power was just going unused.
x-complexity 4y ago
This is another a hit piece on Bitcoin, AND an attempt to force in ESG mandates based on concerns for the environment. The most jarring part of the article is the table that attributes 70-90+% of the met energy requirements towards fossil fuels, whilst not providing ANY explanation as to how such conclusions were made other than "We pulled it from WattData's analysis for energy usage from March 9", and are provided NO links or references towards the WattData data used. The percentages themselves aren't backed up with references towards WattData. Nothing concrete from NYT themselves that can be used to say "Here's the exact calculations & sources that we used for this data". Keep in mind that this is the lynchpin for the entire article. If no references are provided for such a a critical part of the article, then such data cannot be used and the random average case must be used instead: ((Daily energy usage of facility, MWh) / (Average Daily Total Power generated by the state, MWh)) * (Generated from fossil fuels, %) * (Total emissions from fossil fuels for the state, MT of CO^2)
- darkmighty 4y ago
  The article cites how they've struck deals with the grid operators. So therefore they're just using grid energy and hence using the carbon intensity of the local grid is very reasonable.
- tphyahoo 4y ago
  [dead]
- tphyahoo 4y ago
  [dead]
progrus 4y ago
Every time I see the lizards write another article whining about bitcoin or NFTs, my heart glows a little.
- giraffe_lady 4y ago
  the lizards?
  - progrus 4y ago
    IYKYK…
    - Incipient 4y ago
      If you're so far in internet suburbia to actually get that lizard reference, chances are you took a wrong turn, or 50.
  - TAKEMYMONEY 4y ago
    popular with conspiracy theorists https://en.wikipedia.org/wiki/Reptilian_conspiracy_theory https://en.wikipedia.org/wiki/Reptilian_conspiracy_theory
    - progrus 4y ago
      Lol, yep that’s the etymology. But pretty sure y’all really don’t get it: https://youtu.be/DnHOxZgvdWM https://youtu.be/DnHOxZgvdWM
      - TAKEMYMONEY 4y ago
        People get that a podcaster who's partial twitter bio is "#Bitcoin + Football" (and linked to this article) say it too it's just that you made a comment so generic as to be confusing
        progrus 4y ago
NickM 4y ago
The article talks about how the increased demand for electricity raises prices, and the costs are then passed on to consumers. For anyone looking for more data on this, this UC Berkeley study from a couple of years ago analyzed the situation in upstate NY: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720 tl;dr: they found that the increased electricity rates costs households and small businesses in the area hundreds of millions of dollars per year.
walkhour 4y ago
Simply a cold blooded, profoundly biased, partisan piece of the most outrageous propaganda on Bitcoin. > By the end of Feb. 14, 2021, nearly 40 people had died, some from the freezing cold. And you know what? These deaths may not have happened if it wasn't because of Bitcoin. I look forward to the NYTimes' take on the Christmas lights. Maybe they can somehow let the reader infer someone has died because they made electricity more expensive.
- survirtual 4y ago
  Don’t you know? It is Bitcoin’s fault Texas has a neglected power grid and a wildly corrupt power industry that does not use profit to update and maintain their grid. It is Bitcoin’s fault that when their grid failed, their prices skyrocketed further exploiting Texans, while people died from the cold. It is Bitcoin’s fault that Texans have made no real change since this event has happened, neither politically nor with infrastructure, and held none of the leaders in industry nor politicians accountable. It is Bitcoin’s fault that the power industry has an outrageous lobby funneling money from their customers right into the pockets of politicians, to avoid wasting profits on doing their job. It is Bitcoin’s fault that everyone up and down the chain of supply excessively squeezes every ounce of profit from the public without any shame, guilt, or consequence and without contributing an iota of the value they claim to be offering. It is Bitcoin’s fault that the countless billions in the US that go into the power industry are squandered in fraud, waste, and abuse instead of modernization and clean energy. It is all Bitcoin’s fault. Ban Bitcoin before people paid outrageous sums of money might be forced to actually do their jobs.
  - 99throw99 4y ago
    [flagged]
- lisasays 4y ago
  You can say the piece was biased if you want. But to apply the description "cold-blooded" seems, well, quite weird.
- crazygringo 4y ago
karmakaze 4y ago
> Until June 2021, most Bitcoin mining was in China. Then it drove out Bitcoin operations, at least for a time, citing their power use among other reasons. The United States quickly became the industry’s global leader. I wonder if these differences such as policy on the allocation of resources and (not) raising the young on social media will have a significant impact on the economic futures of nations.
globalreset 4y ago
NYT is not a source worth trusting to form an informed opinion.
- 99throw99 4y ago
  [flagged]
deleted 4y ago
[deleted]

60 points by karaokeyoga 4y ago

https://archive.md/g6cia https://archive.md/g6cia

Key quotes (italics mine): "In some areas, this has led prices to surge. In Texas, where 10 of the 34 mines are connected to the state’s grid, the increased demand has caused electric bills for power customers to rise nearly 5 percent, or $1.8 billion per year, according to a simulation performed for The Times by the energy research and consulting firm Wood Mackenzie." "The additional power use across the country also causes as much carbon pollution as adding 3.5 million gas-powered cars to America’s roads, according to an analysis by WattTime, a nonprofit tech company. Many of the Bitcoin operations promote themselves as environmentally friendly and set up in areas rich with renewable energy, but their power needs are far too great to be satisfied by those sources alone. As a result, they have become a boon for the fossil fuel industry: WattTime found that coal and natural gas plants kick in to meet 85 percent of the demand these Bitcoin operations add to their grids."

PretzelPirate 4y ago

I may have missed it, but did the author try to interview whoever in Texas made the deal with the Miners? It seems that their input would be important to help us understand why they'd make such a bad deal. Maybe it all comes down to paying off the right people, but I can't assume that until a journalist digs deep enough.

havnagiggle 4y ago

One thing from the article I don't really understand: why are power companies signing these shutdown deals? Are they not allowed to set quotas or cost tiers that make sense for the limited capacity they have? Why can't we have reasonable prices for residential amounts of electricity, and progressively more expensive bands that control for the actual value of that electricity based on the supply? Why cant they put an energy quota/cap for their customers? Clearly miners are valuing the electricity more than for what it could be sold at because they keep buying more of it. It sounds like we need a smart grid just to get energy economics back to something reasonable. Although the fact they can call up their client and tell them to shut it down seems like they already have something in place, but that it just needs to be automated as quota enforcement. And I didn't see any mention of policies that could make coal-sourced electricity more costly. It seems like again, obvious economic policy would improve this situation. But it's just written as BTC = bad.

treerunner 4y ago
Unfortunately, politicians are too busy playing culture war to dig deep on policy for just about anything. They choose inaction, they choose ignorance. Carbon aside, it will be interesting to see how this plays out in Texas, where the electrical grid is tenuous. But to your point, looking at things from sustainability minded perspective (and even opting to ignore value of product as it stands right now), why yes, BTC is bad.
NickM 4y ago
I don't think it's as simple as "just tweak the economics"; in places like upstate NY, there are very cheap electricity prices due to abundant hydro resources, so there are some big crypto mining operations that have set up shop to exploit that. But, of course, when demand goes up, prices go up for everyone; more demand isn't going to lead to the creation of more natural resources, so the benefits of cheap hydro are limited, and usage of them is a zero-sum game. Power companies have no incentives to discourage crypto miners, because obviously increased demand leads to more profits for them, while meanwhile the externalized costs are being paid largely by households and small local businesses. You could make miners pay more for electricity, but unless you charge them so much that it's no longer profitable and they go away, they're still going to be using that electricity, to the detriment of everyone else in the area. Better to just ban them entirely, IMO, but it's pretty hard for politicians to just unilaterally kill off entire businesses, even bad ones like these.
- latchkey 4y ago
  Upstate NY has hydro because it was developed to power the aluminum smelters that no longer exist after having shut down (thanks China!) and left multiple superfund sites. https://en.wikipedia.org/wiki/Moses-Saunders_Power_Dam https://en.wikipedia.org/wiki/Moses-Saunders_Power_Dam In this specific case, the power can't just easily be routed somewhere else because all the lines were routed directly to the plants. You can literally look on Google Maps and see the lines. Building new lines could be done but it is super expensive to do that. Up until the bitcoin miners came in and took over the plant, the power was just going unused.

x-complexity 4y ago

This is another a hit piece on Bitcoin, AND an attempt to force in ESG mandates based on concerns for the environment. The most jarring part of the article is the table that attributes 70-90+% of the met energy requirements towards fossil fuels, whilst not providing ANY explanation as to how such conclusions were made other than "We pulled it from WattData's analysis for energy usage from March 9", and are provided NO links or references towards the WattData data used. The percentages themselves aren't backed up with references towards WattData. Nothing concrete from NYT themselves that can be used to say "Here's the exact calculations & sources that we used for this data". Keep in mind that this is the lynchpin for the entire article. If no references are provided for such a a critical part of the article, then such data cannot be used and the random average case must be used instead: ((Daily energy usage of facility, MWh) / (Average Daily Total Power generated by the state, MWh)) * (Generated from fossil fuels, %) * (Total emissions from fossil fuels for the state, MT of CO^2)

darkmighty 4y ago
The article cites how they've struck deals with the grid operators. So therefore they're just using grid energy and hence using the carbon intensity of the local grid is very reasonable.
tphyahoo 4y ago
[dead]
tphyahoo 4y ago
[dead]

progrus 4y ago

Every time I see the lizards write another article whining about bitcoin or NFTs, my heart glows a little.

giraffe_lady 4y ago
the lizards?
- progrus 4y ago
  IYKYK…
  - Incipient 4y ago
    If you're so far in internet suburbia to actually get that lizard reference, chances are you took a wrong turn, or 50.
- TAKEMYMONEY 4y ago
  popular with conspiracy theorists https://en.wikipedia.org/wiki/Reptilian_conspiracy_theory https://en.wikipedia.org/wiki/Reptilian_conspiracy_theory
  - progrus 4y ago
    Lol, yep that’s the etymology. But pretty sure y’all really don’t get it: https://youtu.be/DnHOxZgvdWM https://youtu.be/DnHOxZgvdWM
    - TAKEMYMONEY 4y ago
      People get that a podcaster who's partial twitter bio is "#Bitcoin + Football" (and linked to this article) say it too it's just that you made a comment so generic as to be confusing
      - progrus 4y ago

NickM 4y ago

The article talks about how the increased demand for electricity raises prices, and the costs are then passed on to consumers. For anyone looking for more data on this, this UC Berkeley study from a couple of years ago analyzed the situation in upstate NY: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720 tl;dr: they found that the increased electricity rates costs households and small businesses in the area hundreds of millions of dollars per year.

walkhour 4y ago

Simply a cold blooded, profoundly biased, partisan piece of the most outrageous propaganda on Bitcoin. > By the end of Feb. 14, 2021, nearly 40 people had died, some from the freezing cold. And you know what? These deaths may not have happened if it wasn't because of Bitcoin. I look forward to the NYTimes' take on the Christmas lights. Maybe they can somehow let the reader infer someone has died because they made electricity more expensive.

survirtual 4y ago
Don’t you know? It is Bitcoin’s fault Texas has a neglected power grid and a wildly corrupt power industry that does not use profit to update and maintain their grid. It is Bitcoin’s fault that when their grid failed, their prices skyrocketed further exploiting Texans, while people died from the cold. It is Bitcoin’s fault that Texans have made no real change since this event has happened, neither politically nor with infrastructure, and held none of the leaders in industry nor politicians accountable. It is Bitcoin’s fault that the power industry has an outrageous lobby funneling money from their customers right into the pockets of politicians, to avoid wasting profits on doing their job. It is Bitcoin’s fault that everyone up and down the chain of supply excessively squeezes every ounce of profit from the public without any shame, guilt, or consequence and without contributing an iota of the value they claim to be offering. It is Bitcoin’s fault that the countless billions in the US that go into the power industry are squandered in fraud, waste, and abuse instead of modernization and clean energy. It is all Bitcoin’s fault. Ban Bitcoin before people paid outrageous sums of money might be forced to actually do their jobs.
- 99throw99 4y ago
  [flagged]
lisasays 4y ago
You can say the piece was biased if you want. But to apply the description "cold-blooded" seems, well, quite weird.
crazygringo 4y ago

karmakaze 4y ago

> Until June 2021, most Bitcoin mining was in China. Then it drove out Bitcoin operations, at least for a time, citing their power use among other reasons. The United States quickly became the industry’s global leader. I wonder if these differences such as policy on the allocation of resources and (not) raising the young on social media will have a significant impact on the economic futures of nations.

globalreset 4y ago

NYT is not a source worth trusting to form an informed opinion.

99throw99 4y ago
[flagged]

deleted 4y ago

[deleted]