Could Norwegian fjords and waterfalls stop bitcoin from destroying the planet?Source: The Independent
Deep beneath a mountain on the fjord-filled fringes of Norway, tucked within 28 kilometres of tunnels, are 15 shipping containers. Stacked three-high in neat rows, each container is filled with millions of dollars’ worth of computers that pump out thousands of dollars’ worth of digital currency each day through a process of electronic mining. Together with countless other operations around the world, these containers form the foundation of the bitcoin network.
Standing inside one of the 40-foot containers, the temperature is 45C and the roar of the cooling fans is so loud you can’t hear yourself speak. Unlike traditional money, bitcoin doesn’t have a central government or bank in charge of distributing and backing the currency. Instead, it relies on the processing power of computers to solve mathematical problems to generate new units of the cryptocurrency, while simultaneously verifying and recording any transactions on the network to an online ledger called the blockchain.
When bitcoin was first conceived in 2009, only a handful of regular computers were used and it was possible to mine the cryptocurrency from a laptop. But as its popularity grew, so did its energy needs. Almost a decade later, millions of these machines are required to support bitcoin and the 2,000 other cryptocurrencies that have since come into existence. Altogether, they consume more energy than the entire nation of Ireland.
“Bitcoin is essentially the monetisation of energy,” says Hass McCook, a chartered civil engineer who has spent the past four years researching the environmental impact of bitcoin and cryptocurrency. “It turns energy into hard money, meaning bitcoin miners are chasing the cheapest power in the world, not the cleanest. Unfortunately for the environment, that means most mining machines are in China, where the coal-generated electricity is cheap.”
Scientists say this has put the world on the brink of an environmental disaster. The carbon emissions produced by the vast energy demands of bitcoin could push global warming above 2C in just two decades, according to a recent study in Nature Climate Change. The subterranean complex that houses these containers could be the key to preventing such a catastrophe.
Until 2009, the mountain was home to a much more traditional type of mine, which saw millions of tons of the mineral olivine excavated annually, before it shut down for nearly 10 years and eventually transformed into what it is today: the Lefdal Mine Datacentre. Stepping outside the container and corkscrewing to the surface in a car, one of my hosts explains it’s not just the location that makes this bitcoin mining operation unusual.
“This whole place runs off green energy,” says Dr Hajo Durr from Northern Bitcoin, the Frankfurt-based cryptocurrency mining company which owns the containers. “For us it seems absurd to mine something so new with something so old, like coal. Bitcoin is the future of money and renewables are the future of energy. It’s the perfect fit.”
Inside another mountain on the other side of the Nordfjord fjord, just a short ferry ride away from the Lefdal mine, is where the power for Northern Bitcoin’s mining machines is generated. The Askara hydro power plant, which was built in a hollowed out section dug one kilometre into the mountain, is fed by melting glacier water and reservoirs. It is capable of passing 17,000 litres of water through its turbines every second, enough to fill 100 large bathtubs. But this is nowhere near enough to meet its hydropower potential. The day I visited, a gushing waterfall nearby signalled that its magazines were full. “You may see a waterfall,” one of the workers said to me, “but all I see is wasted energy.”
Looking at Norway on a globe, it might not seem at first glance the country with the world’s second longest coastline. But zooming in on its fjord-filled fringes reveals 58,000 kilometres of shore that is topped only by Canada – carved out by glaciers that have made it the ideal place for hydro power to thrive. With such an abundance of clean energy, it’s no surprise that electricity costs in Norway are low.
The 200 megawatt capacity of the Lefdal Mine Datacentre would be two-and-a-half times more expensive to run in the UK, which is why more than just cryptocurrency mines are moving here. Technology giant IBM is moving in to make use of the server space to serve its European clients, thanks to its relatively central position in northern Europe. (It took me 15 hours, two trains, four flights, a ferry and a taxi ride to reach the mine from London; it takes just 17 milliseconds for the data to make the trip to the UK – there and back.)
At more than 50 metres below sea level, a near-constant temperature of 8C in the mine means Northern Bitcoin’s containers also need less energy to keep the machines cool. The adjacent fjord also acts like a fridge, with ice-cold water pumped in to help lower costs even further. Thanks to this, the firm estimates it costs around $2,700 (£2,101) to mine a single bitcoin. At the cryptocurrency’s current market price of $3,800, this represents a profit of almost $1,100.
The final benefit is the mountain surrounding the mine, which also serves to smother the roaring breath of the machines’ fans. This last feature is not insignificant. A few hundred kilometres away, a major mining operation on the outskirts of Oslo recently provoked a barrage of complaints from neighbours disturbed by the noise. One anonymous local was so incensed by the constant whirring of the computers’ cooling fans that they sent the facility a bomb threat.
“This is sabotage,” the note stated. “If you are expanding crypto mining and filling the country with noise, then you will be sabotaging this peace. I am threatening to send you some explosives.”
The noise produced by mining cryptocurrency has even resulted in the uncovering of some rogue operations. Earlier this month, a school in China’s Hunan province fired its headmaster after teachers became concerned about a constant whirring sound that was coming from the school’s computer classroom, even at night. Local media reported the eight mining rigs he had set up had racked up an electricity bill of 15,000 yuan (£1,700).
The low cost of electricity in China, which averages less than half the energy prices of those in the UK, mean this was not the only instance of surreptitious mining in the country. In October, a man from Shanxi province was sentenced to three years in prison after stealing more than £11,000 worth of electricity from a train network to mine cryptocurrency. China is currently trying to clamp down on mining, with a government notice issued by the Economic and Information Commission in July stating: “Local utility agencies and companies will be held accountable if they fail to shut down illegal bitcoin mining operations.”
But so far the crackdown appears to have had little impact on the large-scale miners in the country. While electricity costs remain so much lower than the renewable alternatives in other countries, this is unlikely to change in any significant way. One compromise put forward by Julian Treger, CEO of Anglo Pacific Group, is to promote the use of so-called “clean coal” in China to lower carbon emissions.
“Bitcoin mining has put an increased burden on China’s energy network, at a time when Beijing is trying to address pollution and smog produced by coal plants,” Treger says. “Coal isn’t going away. It is a patronising, first-world view to deny developing nations access to cheaper energy, so the answer could be ‘clean coal’ that is less polluting but still cheaper than renewable sources.
Given bitcoin’s vast energy demands, such a fractional measure is not seen as a solution by anyone with an environmental conscience within the cryptocurrency industry. But the profit incentives of bitcoin mean miners will usually look no further than the cheapest energy source. In April, an Australian company signed a deal to reopen a coal power plant to provide energy to a local cryptocurrency miner, after the power firm said it would offer electricity at a fraction of the cost of local prices.
When bitcoin was first conceived by the pseudonymous Satoshi Nakamoto a decade ago, a hidden message was included in a line of code in the first block of bitcoins mined: “Chancellor on brink of second bailout for banks.” At the time, the world was reeling from the worst financial crisis since the Great Depression, and part of bitcoin’s promise lay in the fact that it offered a form of payment that was outside the scope of banks and governments. As a decentralised digital currency, it is immune to the pressure and whims of such institutions.
Bitcoin mining researcher Hass McCook believes advocates and miners will therefore continue to resist regulation and free market forces will prevail. “If people want something, they’ll get it,” he says. “The miners may be inconvenienced for a while, but they will find a way. As soon as those Scandinavian clean-energy solutions are cheaper than Chinese coal, then miners will move there on mass.”
Fortunately for the environment, there are signs that renewable energy costs are going in the right direction. A report from the International Renewable Energy Agency earlier this year found that continuous technological improvements combined with investments in green infrastructure projects means renewable energy will be cheaper than fossil fuels in two years.
The stark warnings of the Nature Climate Change study presume the bitcoin network will continue to rely on the carbon coughing mining operations in China and elsewhere. It also presumes that cryptocurrencies will continue to grow at the same rate as other broadly adopted technologies such as dishwashers and ebooks, leading some experts to cast doubts on the extreme outcomes predicted.
“While the future growth of cryptocurrencies like bitcoin is highly unpredictable, we do know that the global electric power sector is decarbonising and that information technologies – including cryptocurrency mining rigs – are becoming much more energy efficient,” says Professor Eric Masanet, who researchers energy and sustainability at Northwestern University in the US. “It appears the [study’s] authors have overlooked these two latter trends in their projections, while simultaneously insisting on tremendous growth in cryptocurrency adoption.”
Whether or not bitcoin will still be such an energy drain in a few years’ time is impossible to tell. It is worth less than a quarter of its value from one year ago, after the remarkable gains of 2017 were succeeded by a market-wide collapse this year. Two price crashes that occurred in quick succession in November caused dozens of bitcoin mining operations to shut down in the US and China, while a recent announcement by the Norwegian government to end electricity subsidies for bitcoin mining facilities may even threaten the economic viability of mining companies like Northern Bitcoin.
If the price of bitcoin continues to fall and mining becomes even less profitable, then operations will continue to shut down around the world. The knock-on effect of this will be that the energy the network consumes will plummet and bitcoin’s environmental impact will no longer be such an issue.
The hot noise inside the shipping containers of Lefdal mine is only bearable for a short time. In the entire history of money, it might only be a short time that bitcoin demands such intense consumption of resources. However, the potential growth of this industry that many see as inevitable means a solution is needed. These containers may offer a tiny piece of that solution, but the questions they ask of the cryptocurrency industry are huge. As Dr Durr puts it: “If bitcoin really is the currency of the future, it is essential that we consider the future of the planet.”