A breakdown of the recent New York Times hit piece against Bitcoin mining.
Some rivalries are legendary and remembered forever:
Frazier vs Ali
Magic Johnson vs Larry Bird
Gary Gensler vs Cryptocurrency
One fierce rivalry gets often overlooked: The New York Times against Bitcoin. It has been a fairly one-sided affair, with one party (The Times) relentlessly going after the other (Bitcoin).
In their latest head-to-head, the New York Times went for another knockout attempt to finally reveal Bitcoin as the electricity-guzzling environmental disaster it really is (or so the NYT seems to think). The NYT wrote The Real-World Costs of the Digital Race for Bitcoin, and Bitcoiners did not like it one bit! This article provides:
- A summary of the NYT's arguments and claims.
- A summary of the Bitcoin community's rebuttals.
- An as-objective-as-possible assessment of who won this round.
Let's get ready to rumble!
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What The NYT Says About Bitcoin Mining
It's not the first time The New York Times has written about Bitcoin. Previous articles and opinion pieces include:
- The Crypto Collapse and the End of the Magical Thinking That Infected Capitalism
- Has Bitcoin Benefited From the Banking Crisis? Not in the Way Its Fans Hoped
- The Crypto Industry Struggles for a Way Forward
While The Times has not only written negative pieces about Bitcoin, you can't help but notice an anti-crypto undertone in its articles. The piece by Gabriel J.X. Dance discusses the environmental impact of Bitcoin mining, letting the reader know in no unclear terms that it's not beneficial at all.
Here are some of the main points that the article makes:
Bitcoin mining consumes a huge amount of electricity, equivalent to another New York City’s worth of residences. This puts immense pressure on the power grid and wastes a lot of energy, as most of the computations performed by the miners are useless for any other purpose
Bitcoin mining causes immense carbon pollution, as much as adding 3.5 million gas-powered cars to America’s roads. This contributes to global warming and climate change. Bitcoin mining also relies heavily on fossil fuels, especially coal, which are the dirtiest sources of energy.
Bitcoin mining can increase electricity prices for other customers, as seen in Texas where bills rose nearly 5 percent. This is because Bitcoin miners can bid up the price of electricity in wholesale markets, or take advantage of subsidies or incentives that are meant for other purposes. Bitcoin mining also creates unfair competition for other industries that need electricity, such as manufacturing or agriculture.
Bitcoin mining can exploit loopholes in energy markets and regulations, such as getting paid to shut down during power shortages. This is what happened in Texas during a winter storm in 2021, when a Bitcoin company made more than $18 million for not operating, while tens of thousands of homes were left without power and nearly 40 people died.
Bitcoin mining does not provide any social or economic benefits to justify its environmental costs. Unlike other forms of digital innovation, such as cloud computing or e-commerce, Bitcoin mining does not create any value or service for society. Bitcoin mining also does not support any social or humanitarian causes, such as financial inclusion or human rights. Bitcoin mining only benefits a small group of speculators and investors who profit from the volatility and scarcity of the cryptocurrency.
Ok, now that Bitcoiners reading this are sufficiently triggered, let’s see how the Bitcoin community reacted to this “hit piece.”
How The Bitcoin Community Reacted
The community reaction ranged from disbelief over ridicule to outrage. The rebuttal by the Bitcoin Policy Institute titled The Absurdity of the NYT’s Latest Bitcoin Hit Piece focused on several alleged misrepresentations made by the NYT.
For one, it addresses that demand response, the fact that miners can turn off the farms in real time, adds value to the power grid. That contradicts the depiction by the NYT, which made it seem as if miners are clever enough to exploit a loophole and leech value off the network. Our article Bitcoin and Energy: Bitcoin Mining — a Revolution in our Energy Production? explains how mining could, in theory, help the power grid become more flexible thanks to its ability to respond to changes in demand instantly.
The Bitcoin Policy Institute also calls into question some of the sources used by The Times. For instance, two studies commissioned by the NYT claim that Bitcoin miners use 78-99% fossil fuels. The BTC Policy Institute questions the validity of these claims, although it does not provide any evidence to the contrary.
Bitcoiners on Crypto Twitter were equally outraged. Troy Cross, an author at the Bitcoin Policy Institute, called the equation of Bitcoin’s energy consumption to that of residential disingenuous:
Daniel Batten, a Bitcoin ESG Analyst, made the case in favor of Bitcoin as flexible load for the power grid:
He also criticized the newspaper for failing to provide context about what role Bitcoin plays in this regard. Instead of shaking down unsuspecting taxpayers for subsidies, as Bitcoiners claim the NYT tries to frame it, Bitcoin provides a valuable “buyer of last resort” with its flexibility.
He also pointed out that the network runs on vastly more renewables than The Times claims. Moreover, according to Batten, the piece overstates the use of fossil fuels for miners in Texas specifically:
Batten also highlighted that The Times did not interview several mining experts and analysts.
So, in this age-old rivalry, who is winning the latest battle?
Who Is Right: The New York Times Or The Bitcoin Community?
Oh well. If it just was easy to score this one, but, unfortunately, it is not.
Arvind Ravikumar, an expert on energy systems, had the following to say:
He pointed out that many of the counterarguments suffer from whataboutism, lack of data and bias, just what they accuse the original article of. For instance, flaring has been reduced over the last few years, but this was not an achievement driven by Bitcoin, according to Ravikumar.
But how can we possibly distinguish who’s right here?
That’s difficult, but it is useful to understand the basics:
- Bitcoin can be mined with flared gas and methane, two byproducts of natural gas production that can be “monetized” by letting miners use them.
- There are a lot of myths about Bitcoin mining out there, and the community is right in claiming that Bitcoin tends to get singled out unfairly.
However, while claims of “misleading numbers” are correct, the data does not lie either. The network does consume a lot of energy and it does have a very limited use case. Pair that with Bitcoin’s security model problems, and you can see that Bitcoin isn’t exactly making it difficult to construct a negative narrative about the network.
Let’s look at the scorecard then. The New York Times:
- Unfairly blames rising electricity prices on Bitcoin (prices rose nationwide).
- Presents demand response as a clever way to hustle consumers (it is not).
- Implies between the lines that miners destabilize the grid (they do not).
- But also correctly points out Bitcoin’s massive energy consumption (frame it as you want, it’s big).
- Rightly questions the benefit beyond ‘HODLing’ Bitcoin.
The Bitcoin community:
- Correctly puts the NYT in its place for having a blatant bias.
- Tries to present additional data and have a dialogue with the legacy paper.
- But also seems oblivious to very real fundamental and narrative problems Bitcoin has had for years.
Overall, this is a slight win by decision for the Bitcoin community. However, Bitcoin has struggled with the same issues for years. And it has not won over any meaningful share of “neutral observers” in the meantime. The community will have to do a much better job of explaining its cause and backing it up with data to win the hearts and minds of the commons.
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