Cryptocurrency Mining in Indiana
After China banned cryptocurrency mining in 2021, cryptomining increased significantly in the United States.
The growth of cryptomining threatens to keep polluting coal-fired power plants active, strain the grid, and raise electricity rates for Hoosiers.
At least two additional cryptomining projects have also opened in Indiana, one in Marion and the other in northern Indiana. The growth of cryptomining threatens to keep polluting coal-fired power plants active, strain the grid, and raise electricity rates for Hoosiers.
Cryptomining is largely invisible to U.S. regulators. Tracking cryptocurrency mining in the United States is difficult. The industry is notoriously opaque, and little-to-no reporting requirements exist at either the state or federal level. The most reliable sources of information are a patchwork of filings before the Securities and Exchange Commission (SEC) by publicly traded cryptocurrency.
Top-down estimates of the electricity consumption of cryptomining in the U.S. imply that the industry was responsible for an excess 27.4 million tons of carbon dioxide (CO2) between mid-2021 and 2022.
Cryptocurrency miners can procure energy in four ways:
- Outright purchase of power plants that supply energy to mining rigs “behind-the-meter";
- Custom power purchase agreements with fossil-fuel power plants or utilities;
- Electricity purchases from a local utility; and
- By burning fossil gas at oil and gas wells.
AboutBit LLC purchases power generated by the Merom coal-fired plant at a special negotiated rate that is not public.
The Merom coal-fired power plant was supposed to retire in 2023 but an out-of-state cryptomining company announced it would buy power generated at the plant and a coal mining company purchased the plant. The cryptocurrency mine may now be the largest electricity user in the Hoosier Energy service area. The co-founder of the crypto company called the critics’ assertions that the deal could keep a polluting coal plant open ‘100 percent correct.’
The Merom cryptomining facility is using over 10% of the power plant’s maximum production and around half the energy under the power plant’s sale contract with Hoosier Energy Rural Electric Cooperative. This new demand is helping support the economic viability of a dirty coal-fired plant. The coal-fired power plant has repeatedly violated legal limits on dangerous pollutants, including ammonia, lead, barium, and chromium.
Air Pollution and Toxic Coal Ash
For cryptomining facilities powered by coal-fired plants, the air pollution impacts include very unhealthy fine particles, sulfur dioxide, nitrogen oxides, and air toxics.
Burning coal produces toxic coal ash which contains hazardous pollutants, including arsenic, chromium, lead, lithium, mercury, radium, selenium, and other heavy metals, which have been linked to cancer, heart and thyroid disease, reproductive failure, and neurological harm.
Crypto mines create significant noise pollution that can severely impact local residents and wildlife. Many crypto mines use high-velocity fans to cool their banks of computers which creates significant noise pollution.
The roar of fans used to cool computers can reach 95 decibels, which is like standing next to a running motorcycle or a highway.
Consumption of Large Amounts of Water
Many cryptomining operations use massive amounts of water to power and/or cool their operations, often discharging hot water into local bodies of water.
This thermal pollution endangers health and wildlife habitability, including by increasing the potential for harmful algal blooms, fish deaths, biodiversity loss and migration, oxygen depletion, direct thermal shock, and changes in dissolved oxygen.
The specialized machines used for cryptomining have a limited life span of just a few years and are often replaced even faster than that as companies race to increase computing power.
A recent estimate found that in 2021 alone, proof-of-work mining generated more than 30,000 metric tons of waste, which is comparable to the e-waste produced by the whole country of the Netherlands
Crypto Mines Often Promise Jobs, But Do Not Deliver
Crypto mines do not bring substantial jobs to communities. These facilities use vast amounts of energy but require few employees to keep the machines running. For example, a mine in Rockdale, TX, promised to create more than 300 jobs but only hired 14 people.
Crypto Mines Often Take Advantage of Demand-Response Programs
Cryptominers are quick to take advantage of utility demand-response programs that can pay them millions of dollars, often subsidized by ordinary electricity customers. Demand-response programs are designed to stabilize the grid, not subsidize the expansion of energy-intensive industries. Consumers of at least 100 kW can also make money by participating in MISO capacity auctions as a demand-resource.
Each Indiana investor-owned electric utility has its own program to pay large energy consumers for being willing to curtail their energy use. But for cooperative-owned utilities, such as in Merom, Ind., where the AboutBit LLC mine is located, there is no transparency into the rules.
Communities can be left footing the bill when highly-mobile crypto mines relocate. Adding crypto mines to the grid sometimes requires the construction of expensive transmission and distribution lines, but often nothing stops them from leaving an area if a cheaper opportunity arises somewhere else. For example: