Jack Dorsey and Michael Saylor send letter to EPA defending BTC mining

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As speculation on BTC and other digital assets break into the mainstream, more and more attention is being paid to the environmental impact of block reward mining.

Recently, a group of influential BTC investors, including Michael Saylor and Jack Dorsey, sent a letter to the Environmental Protection Agency (EPA) outlining what they called “misconceptions” about mining.

What did the letter say, and what was it responding to?

We’ve all heard the talking points in the last few years; BTC is an environmental catastrophe, it uses more electricity than Switzerland, and it is a wasteful use of resources that creates no value for society.

While the BTC investors’ letter addressed some of these points, more formally, it was a response to an April 20 letter from Rep. Jared Huffman and 22 members of Congress asking that the EPA ensure digital currency mining does not violate foundational environmental statutes such as the Clean Air Act or the Clean Water Act.

In their response, the BTC investors claimed that these concerns were based on “several misconceptions about Bitcoin and digital assets mining that have been previously debunked or conflate Bitcoin mining with other industries.” It addressed several points, including:

(1) BTC mining facilities are polluting communities and are having an outsized impact on greenhouse gas emissions.

The letter responds that this confuses data centers with power generation facilities. It claims that mining facilities are no different than data centers operated by Amazon, Google, etc. While right in saying that these facilities utilize energy generated externally, it’s interesting that BTC maximalists would liken mining facilities to data centers after spending years denying Bitcoin’s data management capabilities.

While it’s technically true that the data centers don’t necessarily emit CO2 themselves, it’s deceptive to frame it this way; they create demand for electricity that’s often generated in a way that pollutes. That wouldn’t be a problem if BTC scaled massively and could demonstrate that its energy input per transaction was lower than the existing financial and data processing systems. However, by not scaling, BTC has left itself as a sitting duck for these sorts of attacks.

(2) It’s essential to understand the environmental risks and pollution associated with the industry.

Again, the BTC investors try to frame this in such a way that the data centers themselves do not generate emissions. However, environmental impact assessments are not carried out this way. They consider everything from the source of the electricity to the end product, so stating that the electricity is sourced externally will not wash with the EPA.

While it’s fair to say that the above is true of all data centers, such as those owned and operated by Google and Meta, the difference is that these companies can demonstrate utility; there’s a benefit to the environmental costs they impose. The same can not be said for BTC miners.

(3) Praise for the EPA’s decision denying extensions for Ameren and Greenbridge digital asset mining facilities to continue operating coal ash ponds on their properties past a certain deadline.

In response to this, the BTC investors’ letter simply repeats the fallacious argument that the power is generated externally and, therefore, should not be considered an impact related to mining digital currencies.

As previously outlined, everything is included in real-world environmental impact assessments. How and where an operation sources its power is considered part of its environmental footprint, and associated externalities and costs fall on them. There’s no escaping this.

(4) Efforts are underway to re-open closed gas and coal facilities to power the digital asset mining industry and undermine our battle to combat the climate crisis.

The BTC investors state that they disagree with this statement and that it refers to two examples that comprise roughly 2% of the BTC network. They state that most digital asset miners are moving toward renewables, and some have expressed intentions to shut coal-powered facilities within the near-term future.

It’s largely accurate that many miners are embracing renewable and alternative sources of energy. This response is largely correct, but until renewables can power the entire network or at least the majority of it, it would be useful if BTC supporters could demonstrate some network utility to justify the environmental costs imposed on society. This is especially true as power prices rise rapidly across the globe and families grapple with the inflation these same maximalists so often decry.

(5) A single BTC transaction could power the average U.S. household for a month.

The letter dismisses this as “patently and provably false” and claims that BTC transactions do not carry an energy payload. It claims that the high price of BTC and its yearly new issuance causes miners to consume energy.

The first thing to address here is that there is no new issuance because all 21 million coins were issued by Satoshi Nakamoto long ago. The second is that while the response is technically correct that the broadcasting of transactions itself is not energy-intensive, this in no way justifies the vast quantities of energy consumed to mine for coins that don’t provide any value to anyone other than their holders.

The letter rightly points out that the block subsidy will be reduced by 50% in two years, meaning that the same or more energy will be used to mine even fewer coins, intensifying rather than solving the problem being outlined. It then disagrees with the ‘cost per transaction’ calculation more generally, then outright lying that BTC’s transaction count is “strictly limited by the protocol.”

However, it does admit one truth, that “the layered model [on which lightning will work] mirrors almost exactly how established payment systems work.” This is correct; it generates fees for the exact same players, too, while starving the BTC network of the fee revenue it needs to survive long-term.

(6) Less energy-intensive digital currency mining technologies, such as Proof of Stake (PoS), are available and have 99.99 percent lower energy demands than Proof of Work (PoW) to validate transactions.

Dr. Craig Wright and others have outlined the limitations and flaws of proof of stake systems over the years. The investors outline some of them in their letter; it has a limited track record, it is largely controlled by founders, and it remains dubious whether proof of stake can effectively govern a global, apolitical monetary system in a manner like proof of work. They argue that given the two are fundamentally different, it’s misleading to say that proof of stake is a more efficient version of proof of work.

There are no disagreements here. The two are fundamentally different, and the drawbacks of proof of stake are well documented. However, the BTC investors slip into falsehoods, stating that BTC is more decentralized (it is not; only a handful of mining nodes exist on the network). Likewise, the response says that “Bitcoin (BTC) was specifically designed to disempower intermediaries” without explaining how the Lightning Network, the investors’ supposed layered solution to scaling, reintroduces them.

(7) PoW mining relies on massive server farms, which results in major electronic waste challenges due to the highly specialized and short-lived computing hardware needed to secure the network.

This statement itself contains within it a falsehood that the investors do not address—miners do not secure the network, and security is ensured by economic incentives. However, that’s not the main point the response seeks to address. It’s about electronic waste.

The investors object to the notion that ASIC miners have an estimated shelf-life of 1.3 years, leading to a “shocking e-waste figure.” They point to evidence that older models still trade on secondary marketplaces and are still visible on the BTC network, meaning they have a much longer shelf life. They point out that S9 miners, now over six years old, have accounted for over 40% of the hash rate on the BTC blockchain in the past year. Likewise, the letter points out that mining equipment is entirely recyclable and does not contain any toxic or hard-to-recycle components.

This is one section of the letter that is true. The idea that mining gear is toxic and quickly becomes obsolete is demonstrably false and disproven by the data highlighted in the investors’ response.

So much misunderstanding to protect lies and falsehoods

To be fair to the BTC investors, and even though their responses were deceptive on several points, the Congresspeople who penned the initial letter have misunderstood Bitcoin to a large extent. Ironically, it’s the lies promoted by individuals like Michael Saylor and Jack Dorsey that cause the misunderstandings that are now coming back to bite them in the form of government calls for action.

What is the big lie they promote? It’s the idea that Bitcoin is some sort of asset, like gold, that must be mined for and hoarded and that it is only capable of 7 transactions per second. In reality, Bitcoin can handle hundreds of thousands of transactions per second today and will soon be able to take millions, and it only requires a fraction of the energy inputs used by block reward miners. Bitcoin is and always was an infinitely scalable payments and data management system. It can take all of the energy inputs required by the world’s banks, payments companies, and data centers and reduce them substantially, creating a more secure network in the process.

If the EPA does clamp down on BTC mining facilities, there’ll no doubt be cries of a government conspiracy to hold Bitcoin back. Still, few of those making the claims will realize their own culpability in all of this or that it is they that are holding Bitcoin back from reaching its true potential. If only they had embraced Satoshi’s vision for Bitcoin, all of the concerns penned by the Congresspeople would have been dead on arrival.

Watch: CoinGeek New York panel, How to Achieve Green Bitcoin: Energy Consumption & Environmental Sustainability