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If you think Bitcoin Spews Carbon, Wait Till You Hear About...Banking
Crypto's bad, and Citi, Chase et al are 79 times worse
Trying to calculate precisely how much energy cryptocurrency uses, and hence how much it damages the effort to rein in global warming, has been an absorbing game for years now. Because Bitcoin and many of its peers require “miners” to perform strenuous mathematical exercises with vast banks of computers in order to mint the currency, the energy use for running and cooling servers can be prodigious: depending on who’s making the calculation and when, it takes as much electricity as Argentina with the carbon footprint of Turkmenistan. Or Washington State. Roughly the equivalent of the energy draw of Malaysia or Sweden. More than Norway. Maybe Denmark, Serbia, Ireland or Bahrain. Or perhaps Finland. More than if all the teakettles in the UK boiled water simultaneously for 26 years. More than all the refrigerators in the U.S. If cryptocurrency was a nation it would be the 27th biggest consumer of energy. Crypto mining in Texas alone might add “another Houston to the grid” by next year.
All of this is bad, and made worse by the fact that cryptocurrency is so deeply pointless. The “use case” (which I think in a less-inflated day we used to call the ‘use’) for this libertarian fantasia seems centered on exacting ransom, though one should not discount allowing slightly passe celebs to purchase incredibly expensive and ugly NFTs for their digital art collections.
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But if you’re worried about finance and its state of the climate, it turns out you should spend about a Finland of your time thinking about crypto, and concentrate instead on the regular old banking system. Money that sits in the vaults of banks you’ve heard of—Chase, Citi, Wells-Fargo, Bank of America to name the four biggest—actually gets used for real stuff, like solar panels and wind turbines, but also oil pipelines, liquefied natural gas terminals, and fracking wells. Which means that money generates carbon—lots and lots.
Let’s look just at the United States. A new report from Earthjustice and the Sierra Club lays out the domestic damage from bitcoin and its sister currencies, and it is undeniably serious. It finds that in the 12 months through June, Bitcoin consumed an estimated 36 billion kilowatt-hours (kWh) of electricity, as much as all of the electricity consumed in Maine, New Hampshire, Vermont, and Rhode Island put together in that same time period. “Indeed, big mining operations have shown a willingness to invest in otherwise uneconomic power sources, like defunct coal plants or low-capacity gas plants, as long as that electricity can be made available quickly.” It adds up: “Based on the current grid generation mix and estimated Bitcoin energy consumption, we estimate Bitcoin mining in the United States is responsible for between 11 to 76 million annual excess tons of CO2 in the last year, with a central estimate of 27.4 million tons CO2.” For context, that is about three times as much CO2 as was emitted by the largest coal plant in the United States in 2021, or the equivalent of about 15.5 million cars.
Now look at banks, the unscary kind you can find in any suburban strip mall. According to data from “Wall Street’s Carbon Bubble”, a report published by the Center for American Progress and Sierra Club that examines the emissions generated by just eight of the big banks and ten of the big asset managers, the carbon emissions from the money these institutions provided to the fossil fuel industry and their other lending and investing activities in 2020 produced a total of 2.169 billion tons of carbon dioxide. That’s seventy nine times more than crypto mining. If these banks were a country, they would be the world’s fifth largest emitter, right behind Russia.
Recently, another coalition of NGOs – The Outdoor Policy Outfit, BankFWD, and Climate Safe Lending Network – published "The Carbon Bankroll” report, which looked at the carbon emissions from bank deposits and investments held by some of the biggest companies in the country, concentrating especially on the cash-rich tech sector. The numbers are large: Microsoft generates three times more carbon from its cash and investments than from everyone using all of its products, and Amazon more carbon from its treasury than its delivery vans.
Now compare them with crypto: best estimates show that Apple and Microsoft alone passively produce more carbon dioxide just from their mountains of money than all the emissions generated by crypto mining in the U.S.—30.9 million tons versus 27.4 million tons. As Paul Moinester, TOPO’s Executive Director and an author of the Bankroll report told me, “It’s great we are increasingly focused on addressing crypto’s growing carbon footprint. But if people truly understood the emissions generated by their banking and investing practices, decarbonizing their cash and the financial system as a whole would become a top priority for every climate-focused politician, company, university, foundation, and individual.”
The bottom line is, crypto is an environmental problem, but regular banking may be the dirtiest industry on earth, because Big Oil couldn’t survive without it. “Debt finance, largely bank loans and bond issuances, accounts for 90% of new capital for fossil-fuel companies,” Lily Tomson, senior research associate at Jesus College in Cambridge University told Bloomberg last week. That bank down on the corner might as well have an enormous smokestack on top.
Some crytocurrencies are actually reorganizing themselves not to be such energy hogs. And n at least a few places, politicians have begun to try and limit the excesses of crypto miners—the New York State legislature recently passed a two-year moratorium on crypto-mining expansion, which governor Kathy Hochul has yet to sign or veto. By contrast, the banks have been left to self-regulate. Last year at the Glasgow climate summit they made a few nebulous promises about going net-zero, but it seems likely even those may be broken soon: the Financial Times reported recently that the biggest American banks are likely to quit the Glasgow Finance Alliance for Net Zero rather than stop funding fossil fuel expansion. That’s why many of us at groups like Third Act are organizing to push the Citis and Chases of the world (stay tuned for details on cutting up credit cards).
It’s somehow easier to see a brand-new problem: crypto is brash and noisy, so we pay attention. But it’s the stately old brick-and-mortar banks that are eating the planet.
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In other news from the world of climate and energy
+New mini wind turbines, designed for the flat roofs of factories and warehouses, are designed to work alongside solar panels on the same roofs.
Because the units sit at the edge of the building, with 20 to 40 lined up in a row, the rest of the roof can still use solar. Because wind tends to be more powerful later in the day than solar, the two approaches work well together. And if a building adds batteries to store energy, it won’t need as many of those batteries. With the combination of wind, solar, and batteries, some buildings may be able to avoid using grid power completely.
+Old colleague Nico Haeringer has some sage words on the Van Gogh soup kerfluffle. As he points out, the Louvre has now been repeatedly flooded by rampaging floodwaters in the Seine; if we want to protect art, we best protect the planet
+A warming climate has produced “severe yield reductions” from what would have been expected in Australia’s heat crop, a new study finds.
+Former Maldivian president Mohammed Nasheed’s plans for a debt strike among climate-impacted countries seems to be gathering momentum
Mr. Nasheed said poor nations were locked in a Sisyphean trap: they must borrow money to ward off rising seas and storms — only to see disasters made worse by climate change destroy the improvements they make. But the debt remains, and often countries are left to borrow once again.
Mr. Nasheed said he believed focusing on a debt swap could bypass contentious debates over creating a new international fund for reparations. He also noted that many funds that have been created have gone unfilled, he said.