Bitcoin miners build renewable energy-powered factories to solve environmental problems

Down a dirt road deep in rural Texas, the cryptocurrency company Argo Blockchain is building a power plant for the internet age: a cryptocurrency “mining” outpost housing the computers that generate new bitcoins.

But unlike other bitcoin mining operations, which consume vast quantities of fossil fuels and produce carbon emissions, Argo claims it is trying to do something environmentally responsible. One morning this month, Argo CEO Peter Wall gave a tour of the 126,000-square-foot construction site, pointing to a row of wind turbines a few miles away, their white spokes gleaming in the sun.

He announced that the new facility, an hour’s drive from Lubbock, would be powered primarily by wind and solar power. “This is Bitcoin mining heaven,” Wall said. “You look far out and you’ve got renewable energy.”

Facing criticism from politicians and environmentalists, the cryptocurrency mining industry has begun rebranding to challenge the mainstream view that its power-hungry computers are harmful to the climate. The five largest publicly traded cryptocurrency mining companies all say they are building or already operating plants powered by renewable energy, and industry executives have begun arguing that demand from cryptocurrency mining companies will create opportunities for wind and solar companies.

The effort — part PR campaign, part genuine attempt to make the industry more sustainable — has intensified since China began cracking down on cryptocurrency mining last spring, forcing some operations to relocate to the U.S. An industry group called the Bitcoin Mining Council was also formed last year, in part to address climate concerns, after Elon Musk criticized the industry’s use of fossil fuels.

Argo CEO Peter Wall tours the new 126,000-square-foot facility in West Texas. Photo: Carter Johnston for The New York Times

Cryptocurrency mining does not involve any pickaxes or shovels. Instead, the term refers to the verification and currency creation process that is crucial to the Bitcoin ecosystem. Powerful computers compete with each other to process transactions, solving complex mathematical problems that require countless number guesses per second. As a reward for this authentication service, miners are awarded new Bitcoins, which provides a financial incentive to keep the computers running.

In the early days of Bitcoin, cryptocurrency enthusiasts could mine coins by running software on their laptops. But as digital assets have become more popular, the amount of electricity required to generate Bitcoin has soared. Researchers estimate that a single Bitcoin transaction now requires more than 2,000 kilowatt-hours of electricity, enough to power an average American home for 73 days.

To achieve this goal, some miners are reviving failed coal-fired power plants or using low-cost natural gas to power their computers. Last month, a study in the journal Joule found that bitcoin mining worldwide could produce about 6,500 megatons of carbon dioxide per year, equivalent to the emissions of Greece.

The Bitcoin network’s use of green energy has also fallen, from 42% in 2020 to an average of 25% in August 2021, according to the study. (The industry argues that its average renewable energy use is closer to 60%.) That’s partly because of a crackdown in China, which has cut off sources of cheap hydroelectricity. But it also reflects basic economic incentives, said Alex de Vries, one of the authors of the Joule study. Renewable energy is an intermittent source — the sun is visible only part of the day, and wind speeds fluctuate wildly.

“If miners want to maximize their profits, all they have to do is put their machines anywhere they can run them 24/7,” said Alex de Vries.

Bitcoin's ballooning energy usage has long angered environmentalists. But the most impressive criticism has come from Musk, a longtime bitcoin supporter who said on Twitter in May that his electric car company Tesla would no longer accept cryptocurrency payments because "Bitcoin mining and trading increasingly use fossil fuels."

His tweet sent the mining industry into crisis mode. Michael Saylor, CEO of MicroStrategy, a software company that has invested heavily in Bitcoin, reached out to Musk to discuss climate issues. A group of mining executives, including Saylor and Wall, later met with Musk on Zoom.

“He wanted to make sure the industry was on the sustainable side, so he gave us some guidance,” Saylor recalled. “His encouragement was: ‘Find out how clean this energy is, how sustainable it is. Figure out how much you’re using.’ ” (Musk did not respond to a request for comment.)

After that call, Saylor founded the Bitcoin Mining Council, a forum for the industry to share ideas and coordinate environmental strategies. One of the members, TeraWulf, has pledged to run cryptocurrency mining farms using more than 90% zero-carbon energy. It has two projects underway, one at an abandoned hydroelectric coal plant in upstate New York and the other at a nuclear facility in Pennsylvania.

“Everyone I talk to is talking about carbon neutrality now,” said Paul Prager, CEO of TeraWulf. “The conversation has completely changed.”

Financial priorities and technical barriers in the cryptocurrency mining industry, including more than a dozen public companies such as Argo, are preventing a radical shift to renewable energy. In late 2020, Marathon, one of the world’s largest publicly traded mining companies, began mining Bitcoin at a coal-fired power plant in Montana, citing easy access to cheap energy there.

Containers containing dielectric coolant for mining computers. Photograph: Carter Johnston for The New York Times

Hoses used to deliver dielectric coolant to mining computers. Photo: Carter Johnston for The New York Times

In Illinois, cryptocurrency mining company Sangha Systems repurposed an old steel plant in the town of Hennepin. Sangha is run by former lawyer Spencer Marr, who said he started the company to promote clean energy. But about half of the Hennepin plant's electricity comes from fossil fuels.

“It was a compromise we had to make,” Marr said. “It was a means to an end that allowed us to build our company.”

Texas has become a hotspot for cryptocurrency mining, attracting more than two dozen companies. The state has an unusual incentive structure that is well suited to the nascent industry: Texas's grid operator offers what amounts to a rebate to companies that can quickly unplug power when demand for electricity surges across the state, allowing energy to flow to ordinary homes. Many cryptocurrency mining farms can be turned on or off in seconds, allowing them to take advantage of the incentive with minimal inconvenience.

The deal was part of what attracted Argo, a London-based company founded in 2017 that operates two other mines in Quebec that run mostly on hydroelectricity. Argo was also attracted to West Texas’s abundance of green energy, Wall said. The facility outside Lubbock will connect to the western portion of the Texas energy grid, where about 85% of its electricity comes from wind and solar infrastructure, including a cluster of turbines almost next door to Argo’s construction site.

But Wall can't guarantee that Argo's new center will have no carbon footprint. That would require bypassing the grid and buying energy directly from renewable energy companies.

The electrical panel at the Argo facility under construction.

“Many renewable energy producers are still skeptical of cryptocurrencies,” he said. “Crypto miners don’t have the credit profile to sign 10- or 15-year agreements.”

In the future, Argo plans to build its own solar arrays on site in Texas and reach agreements with local renewable energy companies to purchase energy directly, he said.

The broader cryptocurrency community is divided over whether cleaning up mining is the best path to environmental sustainability. The energy-intensive authentication system that underlies Bitcoin is called proof of work; some in the industry are pushing to build new cryptocurrencies on a different system called proof of stake, which uses just 0.01% of the energy used in the mining process.

Wall said he is not opposed to experimenting with alternative systems. He said he still believes in Bitcoin’s long-term potential to transform finance, even though he would like miners to have a less extractive-sounding name, such as “validator.”

It’s a battle he’s unlikely to win. But he said the company will continue to mine bitcoin even in the face of backlash.

“It’s just going to happen. It’s a reality,” he said. “We need to do it in an environmentally friendly way.”