Some Cryptocurrencies Are an Environmental Disaster. It Doesn’t Have to Be This Way.


As cryptocurrencies gain increased attention, the environmental impacts of the underlying technology around some of these coins are raising concerns. The climate crisis requires all industries to reduce their energy consumption and carbon pollution as much and as fast as possible. The energy demand of cryptocurrencies, specifically cryptocurrencies created through the “proof of work” method, threatens our path to decarbonization and zero emissions.

How is cryptocurrency created?

  • The new digital currencies are generated or “mined” through a network of computers that create a secure currency system without a centralized authority to regulate it. Cryptocurrencies are created by verifying transactions between users using blockchain technology.
  • The most common process is known as “proof of work”. The popular bitcoin cryptocurrency is an example of a currency that is based on the proof-of-work validation method.
  • The proof of work sets up a global competition between massive computer arrays to first solve a mathematical puzzle; the winner receives a newly minted coin as payment and the general system obtains validation of recent transactions. The difficulty of the puzzle increases over time and as more computing power is devoted to the problem.
  • Proof of work is not the only way to validate cryptocurrencies. Other methods, such as proof-of-stake methodology, use over 99% less energy than proof-of-work mining by randomly choosing a winner from those with coins, proportional to how much they temporarily contribute or “stake” .
  • Other methods that consume less power include proof of authority, open representative voting, federated consensus, proof of liveness, and proof of burn.

In a nutshell, the proof-of-work system exchanges computational power (energy) for new currency. Other methods require less power consumption.

What is the impact?

  • Following China’s ban on cryptocurrency mining in 2021, the United States is now home to the largest cryptocurrency mining operations in the world.
  • Miners are capturing fossil fuel-burning power plants in New York, Pennsylvania and Montana.
  • Mining works 24 hours a day, 365 days a year, emitting millions of tons of greenhouse gases that would not otherwise have been emitted.

Current estimates put bitcoin electricity demand only on par with countries like the Netherlands.

Coal plants that were operating very little or scheduled to close are now being reactivated and running solely to fuel massive trial-of-work mining operations. Gas plants are now also being dedicated to this purpose at a time when the transition from coal and gas to renewable energy is critical to avoiding the worst of the climate crisis.

What is Earthjustice doing?

  • Earthjustice is challenging permits on one of the first cryptocurrency-captured power plants, the Greenidge Power Plant on New York’s Seneca Lake.
  • Greenidge was once a retired coal plant that sat idle for six years. Investors bought it, repurposed it to burn gas, and now it runs 24/7 to operate 15,300 computers for proof-of-work mining, vastly increasing its climate-warming emissions, local pollutants from the air, water pollution, noise pollution and electronic waste. .
  • Earthjustice is supporting communities surrounding power plants in Dresden and North Tonawanda, New York, and Hardin, Montana, as they fight planned cryptocurrency mining operations there.
  • Earthjustice is also calling on New York Governor Kathy Hochul to institute a moratorium on trial-of-work mining until its environmental and energy impacts can be studied.