A group of major bitcoin (BTC) investors – including Microstrategy’s (MSTR) Michael Saylor, Block’s (SQ) Jack Dorsey, miners like Core Scientific (CORE) and Riot Blockstream (RIOT), asset managers like Fidelity and Galaxy Digital (GLXY), and venture capital players like Benchmark Capital – are among the authors of a letter sent on Monday to the U.S. Environmental Protection Agency (EPA) defending bitcoin mining and discussing the many misconceptions about environmental impacts.
This letter comes in response to a previous letter sent to the EPA on April 20 by Rep. Jared Huffman (D-Calif.) and 22 members of the Congress, which raised “serious concerns” about how bitcoin mining is polluting communities and having an outsized contribution to greenhouse gas emissions.
The congressional letter “is premised on several misperceptions about bitcoin and digital asset mining, that have previously been debunked or conflate bitcoin mining with other industries,” said Saylor, et al. in the new letter to the EPA. “It is clear that education is required to ensure that public officials understand that the digital asset mining sector does not contribute to the environmental issues raised in the Letter.”
Rebutting a congressional claim about bitcoin mining facilities polluting communities and generating harmful greenhouse gas, the authors of the new letter noted that data centers that hold miners are not power generation facilities and are no different than data centers owned and operated by megacap tech firms such as Amazon (AMZN), Apple (AAPL), Alphabet (GOOG), Meta (FB) and Microsoft (MSFT).
“Datacenters engaged in the industrial-scale mining of digital assets do not emit CO2 or any other pollutants, like other industrial facilities do; they are merely server farms engaged in computation,” the authors wrote. “These mining data centers purchase and utilize electricity generated externally from a power station, similar to the big-tech data center operations,” the letter added.
The emissions issue has been debated widely, and among recent actions by U.S. policymakers was the Securities and Exchange Commission (SEC) proposing that all publicly traded companies report greenhouse-gas emissions from their operations in addition to the amount of energy they consume. The mining industry, however, mostly welcomed the move, hoping to shed light on efforts at using renewable energy sources.
There’s also been moves at the state level, with New York’s Assembly advancing a controversial bill aiming to put a two-year moratorium on select proof-of-work (PoW) crypto mining operations in the Empire State. Although the scope of the bill is narrow, crypto advocates are concerned that its passage would pave the way for future legislation cracking down on crypto mining in that state, and maybe elsewhere.
The private sector is acting as well, with Wikimedia, the nonprofit foundation that runs Wikipedia, over this last weekend saying it has decided to stop accepting cryptocurrency donations following a three-month debate in which the environmental impact of bitcoin was a major discussion point.
Reopening coal and other fossil fuel operations?
Today’s letter also takes aim at the congressional claim of bitcoin miner efforts to reopen previously closed gas and coal facilities to help power their operations. Saylor and company note this activity represents less than 2% of the Bitcoin network hash rate. “In reality, the majority of digital asset miners are migrating away from fossil fuel-based electricity generation and increasingly targeting renewables,” the authors argue.
Notably, the Bitcoin Mining Council (BMC), a voluntary global forum of bitcoin mining companies and others in the industry, said a survey showed mining has become 63% more efficient from the previous year, with the estimated sustainable electricity mix now up to 58.4%. “This [power mix data] is markedly more sustainable than the default U.S. energy mix at 21% sustainable,” the authors wrote. “Digital asset mining is a fully digital process location agnostic, meaning miners can operate from anywhere in the world and data centers are able to target stranded or abundant renewable sources of energy,” they added.
Other steps taken by the industry to incentivize miners to use more green energy include the Sustainable Bitcoin Standard (SBS). The premise of this platform is that when a miner wins a block reward of bitcoin, it is issued a matching amount of sustainable bitcoin certificates (SBCs), which, like bitcoin, are on-chain tokens. These tokens can be held or uncoupled from the Bitcoin chain and sold to institutional and ESG-focused investors, who can then match these to their bitcoin holdings.
PoW versus PoS
Today’s letter also takes issue with the congressional argument regarding proof-of-stake (PoS) as superior to PoW due to its vastly lower energy usage. This is nowhere close to an apples-to-apples comparison, according to the letter’s authors. They contend that PoS isn’t even really mining, but instead “a technique to determine authority over a distributed ledger, [that] does not achieve decentralized distribution“
They continue: “Moreover, it has a much more limited track record, is controlled by founders, has single points of failure and it remains dubious as to whether Proof of Stake can effectively govern a global, apolitical monetary system, in a manner like Proof of Work … Given that Proof of Stake and Proof of Work are qualitatively different, it’s misleading to refer to Proof of Stake as a more ‘efficient’ form of Proof of Work, since it does not achieve the same thing.”