Bitcoin environmental battles heat up in US

• Bitcoin reaches record prices in recent weeks 
• Biden administration proposing bitcoin energy tax
• Fights over mines spreading across the country 

LOS ANGELES - With bitcoin prices breaking new records in recent months, fights over the cryptocurrency's energy usage and environmental impact are escalating across the United States. 

President Joe Biden's administration is demanding the industry disclose how much electricity mining operations use, while cryptocurrency groups are pushing for legislation to shield mines from local regulations that limit their expansion. 

Bitcoins are awarded to miners competing against each other to complete energy-intensive computations. 

Bitcoin underwent what is known as "halving" on April 19 - cutting by half the rewards cryptocurrency miners receive for creating new tokens, making it more expensive for them to put new bitcoins into circulation.

How that will affect bitcoin production and its energy use is not yet clear, but miners have been buying up equipment to prepare for more intense competition.  

"We are not going to meet our clean energy goals if we continue to incentivize this kind of electricity use," said Mandy DeRoche, a lawyer at the environmental group EarthJustice, which has sued to block permits for mining facilities.

The industry, for its part, has long argued that it should be treated just like any other power consumer.

"Why should we be picking winners and losers of who gets to use our energy?" asked Tom Mapes, founder of the Digital Energy Council, which counts major bitcoin miners among its members.

In his budget proposal released in March, Biden proposed a 30% excise tax on bitcoin energy use - a move that Wyoming Senator Cynthia Lummis, a supporter of bitcoin mining, said would destroy the industry in the United States. 

Estimates from a model developed by the Cambridge Blockchain Network Sustainability Index found a steady uptick of the greenhouse gasses emitted from mining operations - from 48 million metric tons in 2022, to 61 million in 2023. 

The emissions for 2024 could be as much as 90 million tons, the model estimates. 

How much energy?

While some publicly traded bitcoin mining companies release details of their energy use, there is no reliable data on exactly how much electricity the industry as a whole consumes. 

The U.S. Energy Information Administration has estimated that digital currency mining in the United States may consume between 0.6% and 2.3% of all power, but that data is not based on direct reporting from facilities - some of which can consume as much energy as an entire town.

A Riot Blockchain facility in Rockdale Texas, for example, consumes as much energy as the surrounding 300,000 homes - a figure that environmental groups often use to paint the industry as wasteful. 

Bitcoin mining firms point out that unlike homeowners, miners participate in "demand response" programmes that allow them to turn off their machines to support the grid during times of strain.

"We are a tool in the tool chest to balance our energy system," said Mapes. 

In January, the Securities and Exchange Commission approved a bitcoin-ETF fund, which funnelled several billion dollars of new investment into the industry, a move that inflamed environmental groups.

The next month, the Department of Energy sent notices to 82 bitcoin miners demanding they disclose their energy usage, but Riot Blockchain and the Texas Bitcoin Council won a lawsuit that temporarily blocked the survey.  

Local fights

As the government seeks more data on the industry, fights over building and expanding bitcoin mining facilities are spreading around the country, said DeRoche with EarthJustice.

Her group is litigating an ongoing suit to block permits for a mining facility in New York. Earlier this year communities in Arkansas brought nuisance claims against mines because of the noise they make. 

In April, the Arkansas legislature advanced two new laws that would impose new licensing requirements and noise restrictions on mines in the state.

Last year, New York became the first state in the United States to put a temporary moratorium on new bitcoin operations that draw on fossil fuels. 

Mapes, with the Digital Energy Council, said that lawmakers should not be the "power police," choosing which industries get to draw on energy resources. 

In March, a community group in Pennsylvania filed a lawsuit against a bitcoin mine and the government regulators who approved it, arguing that is contravenes a constitutional provision that guaranteeing citizens a right to a clean environment.

"We are dealing with more air pollution and more water pollution," said Linda Christman, president of nonprofit group Save Carbon County that filed the lawsuit against regulators and Stronghold Digital Mining Inc, which alleges that the company's burning of coal waste and old tires in its bitcoin mine for energy pollutes the community.

A Stronghold spokesperson told Reuters last month that its operations actually clean up land and water in the area by using waste coal left behind by historic coal production in the region.

Some bitcoin industry groups have been pushing state-level laws that would make it more difficult for local communities to independently regulate mining operations in their areas.

The Satoshi Fund, the group behind the efforts, did not respond to a request for comment. 

These rules - which are known as the Blockchain basics bill - have already been introduced in more than half a dozen states.  

Mapes said that mining operations had an obligation to win over communities that they do business in: "There are companies that do this correctly," he said. "And they can be stewards of the community."

(Reporting by Avi Asher-Schapiro; Editing by Jon Hemming.)

This story was corrected on April 24, 2024 to correct the name of the company named in the lawsuit and add a spokesperson comment.