The New York Times (NYT), a reputable newspaper, recently published an article that drew criticism for its claims about bitcoin miners. The piece asserted that the bitcoin mining industry produces significant greenhouse gas emissions and that miners profit from problems with the American power grid. While some of these claims have merit, the article lacked nuance and context, according to researchers such as Daniel Batten.
New York Times makes bold claims about bitcoin miners
In the article, NYT presents its case for what “the real-world costs” are of bitcoin mining. It starts the story with the winter storm that recently shook Texas, causing 40 deaths due to a lack of electricity. The author, Gabriel Dance, then goes on to tell that just outside of Austin, a large bitcoin mining farm was mining BTC and thus using electricity.
At midnight, the local government ordered the mining farm to shut down. This is part of an agreement that helps free up more capacity on the grid. In return, the mining operation is rewarded for shutting off its machines.
NYT then presents several facts to build its case further and compares the consumption of mining farms with households. The newspaper claims that Riot, a large mining company, uses as much electricity as 300.000 households. But is this a bad thing? No, says Riot. It can “shut down at a moment’s notice,” making electricity available to households. Riot states that it is not being paid for the promise of shutting down its BTC miners when requested, but instead:
“Riot is not compensated for “promises,” we are compensated for providing ERCOT [Texas] the ability to manage Riot’s energy load directly.”
Bitcoin can help stabilize the grid
Mining bitcoin does use a lot of electricity. But it is the source of that electricity that makes mining polluting or not. In the case of Texas, which has a relatively green power grid, miners can help stabilize the grid.
Miners do this by acting as a demand response tool that can help balance the supply and demand of electricity during periods of high or low energy consumption. This is accomplished by using the miners to consume excess energy that would otherwise be wasted during periods of low demand and reducing their energy consumption during peak demand.
In practice, this could look like a utility company partnering with a bitcoin mining operation to utilize its excess energy capacity during off-peak hours. The utility company would offer a lower price for electricity during these times to incentivize the miners to ramp up their energy consumption. During peak demand, the utility company could offer a higher price for electricity to incentivize the miners to reduce their energy consumption or even temporarily shut down their operations.
This system can benefit both the power grid and the bitcoin miners. The power grid would be able to balance its supply and demand more efficiently, reducing the risk of blackouts. The bitcoin miners, in turn, could take advantage of cheaper energy prices during off-peak hours, leading to lower operating costs and increased profitability.