Because Oil Drilling Isn’t Destructive Enough, ExxonMobil Is Getting Into Bitcoin Mining, Too – The New Republic

Earlier this month, ExxonMobil made headlines for loudly and proudly exiting Russia in protest over its government invading Ukraine—even though Exxon and its CEO have been chummy with state-owned Rosneft and Putin himself for years and the company could easily recoup losses from exiting Russia by inking lucrative deals to supply Western Europe, which is eager to get off Russian gas. Now the U.S.-based oil company has produced another head-scratcher: expanding a cryptocurrency pilot program, claiming it will help the company lower emissions. 
Last week, Bloomberg reported that ExxonMobil is planning to expand its bitcoin-mining pilot in the Bakken shale formation in North Dakota, opening up new bitcoin projects in Alaska, Nigeria, Guyana, Argentina, and Germany. Funneling excess flare gas to bitcoin mining, proponents of this project argue, is an economical use for so-called “waste” energy that companies would otherwise vent or burn off into the atmosphere. In reality, using that waste to power mining still generates emissions. An even surer way to reduce emissions, of course, would be by drilling less.

A significant amount of cryptocurrency—including bitcoin—is mined through something known as proof-of-work, where highly specialized and high-powered computers, now generally housed in big data centers, compete with one another to guess numbers. Their reward is the right to verify new transactions and mint new tokens on the blockchain, the open ledger that tracks cryptocurrency. The actual miners in this instance are computers. The people who own them make money by collecting rent off the hardware they use to transform electricity into cash. 
In the process, they also generate plenty of emissions. Between April and August of last year, “miners” doubled their electricity consumption, ballooning their share of global power consumption for computing from 17 to 35 percent. Through 2021, rough estimations show that mining here emitted as much carbon as adding 3.7 million cars to U.S. roads. Across the country, mining operations spurred on by a boom of excitement about crypto are bringing coal– and gas-fired power plants that were sitting idle back online. Crypto mining consumes about half a percent of the world’s electricity, and its usage has increased tenfold in the last five years. It uses more electricity than Norway or Ukraine, and—if it was its own country—would be the earth’s twenty-seventh-biggest power consumer. As my colleague Jacob Silverman has written, crypto enthusiasts were strangely excited that Russia’s invasion and ensuing sanctions from the West might help further mainstream their subfield. “Some root openly for Vladimir Putin,” he wrote, “hoping that his government will be forced to use bitcoin to bypass Western sanctions.” 
 
Exxon reportedly choosing to expand its bitcoin pilot in Germany, especially—which faces a mounting energy crisis—could be significant. The country is eager to replace its current dependence on Russian gas. But if Exxon is setting up crypto operations in Germany, that means gas that could theoretically be used to displace Russian fuel and lower sky-high prices may instead get funneled into profits. Owing to energy price concerns, the European Parliament considered banning proof-of-work mining earlier this month, but the proposal floundered. It’s not as if Exxon shareholders are hard up for cash, either: in the five years after the Paris Agreement was brokered, the company has funneled $103.3 billion into dividends and stock buybacks. Last year, Exxon devoted just 0.16 percent of its capital expenditure toward its low-carbon efforts.
Though cryptocurrency boosters harp on its ability to “democratize finance,” nearly 80 percent of the computing power used to mine it is owned by just seven mining companies. One major cryptocurrency called ethereum is planning a move toward far less energy intensive proof-of-stake mining that’s already used by a newer generation of coins, and which reduces the electricity use of mining by 99 percent. Progress has been slow, though, and stalwarts say proof-of-work is irreplaceable, since it’s still more secure than alternatives. 
Cryptocurrency’s growth therefore presents a problem for decarbonization efforts. Essentially, the novel currency is increasing energy demand, adding to the stock of what needs to be decarbonized. And while crypto mining could be powered by renewables (estimates vary as to what extent it already is), it probably doesn’t make sense to siphon off the modest amount of wind and solar power on the grid for that.
There have been a few recent attempts to crack down. The House Energy and Commerce Committee held a hearing on the issue in January, and the White House Office of Science and Technology Policy recently issued a formal request for information about crypto’s climate impact. The White House’s energy demand reduction efforts in the current crisis have largely focused abroad, for example proposing to send heat pumps to Europe using the Defense Production Act. A bill to place a two-year moratorium on proof-of-work mining statewide passed out of committee in the New York state assembly last week, and has a decent chance of passing this legislative session. But without more serious federal constraints, miners can simply move from state to state. Barring some kind of global coordination, miners can easily hop international borders, as well. 

That’s exactly what happened when China—until recently the world’s top crypto miner—moved to ban crypto mining last year. In response, miners loaded planes with their rigs in search of cheap power and cold temperatures. (Since computers generate a lot of heat, colder climates are ideal for crypto mining since they can cut down on air conditioning costs.) They found them in the U.S., Russia and Kazakhstan. 
In the Siberian region Irkutsk last year, electricity demand quadrupled as a result of the influx. (While amassing troops along Ukraine’s borders Putin voiced support for crypto miners, disagreeing with the Russian Central Bank proposals to outlaw them.) Miners also fled to Kazakhstan in the wake of China’s ban, transforming it into the world’s second biggest destination—after the United States—for crypto mining. As of January, that used about 8 percent of the Central Asian nation’s total electricity generation capacity. The country’s aging grid was ill-prepared, and a surge in energy prices, along with ensuing blackouts and cuts, prompted mass protests and a government crackdown on demonstrators and miners alike. Crypto wasn’t the main cause of Kazakhstan’s recent turmoil, of course. But it didn’t help.
So far, the energy problems crypto is generating in the U.S. are at a simmer, not a boil, ramping up emissions bit by bit, and plant by plant. But as the administration adopts a war footing to deliver energy security to Europe, neglecting to take action on a ballooning, arguably extraneous source of emissions at home stands to undermine their geopolitical and climate goals alike. 
Kate Aronoff is a staff writer at The New Republic.

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