Data Centers, Bitcoin Mining and Power Bills
...sprinkled in with a little bit of magical thinking from tech bros.
A decade ago we thought it was bad when bitcoin owners started using loads of energy to “mine” bitcoins.
Most of us couldn’t get our heads around what cryptocurrency even was, let alone talk about the energy used to crunch the ungodly amounts of random numbers needed to “unlock” new coins.
But we can look back on those days with a certain nostalgia.
Ah 2015.
When we all opined about whether a certain Internet dress was white and gold or blue and black.
Back then we saw the first outlines of what became a raging debate about whether bitcoin mining as causing our untimely end. It was about as laborious than reading Reddit debates about which is better, Star Wars or Star Trek.
We can boil the whole bitcoin debate down to a pretty simple back-and-forth.
Bitcoin skeptics said, “Bitcoin mining is shifting costs on to other customers, and prolonging the use of fossil fuel power plants.”
You can learn more in this article by Earth Justice.
Bitcoin bros respond, “We are primarily using power that would otherwise be wasted because we buy it when there is an excess of power on the grid. And also, we use the excess heat from the computers used to mine bitcoin to offset the cost of heat used in some industries, called ‘district heating.”
“Not true, bro.” say’s skeptics. “Your use of district heating is laudable, but it is not true that you only use excess power that is not otherwise needed on the grid. You are creating an incentive for fossil fuel power plants that would otherwise go idle to keep running.”
And then the first guy sticks his tongue out and the other one throws his Monster energy dink in his face.
While I do find it admirable that some bitcoin bros are trying to use excess energy or clean energy to mine bitcoin, I find it a bit idealistic to think that even a plurality of bitcoin miners are doing this.
In particular, I found the promise in this article particularly laughable that bitcoin will “(u)rgently end three carbon-intensive practices (gas peaker plant proliferation, natural gas flaring, venting of landfill gas)”.
Which brings us to data centers, which are driving an unprecedented proliferation of water-wasting, dirty power plants.
Data centers make bitcoin look like Teletubbies
The bitcoin debates are so 2019.
Data centers are so “now.”
And there is bipartisan concern about them.
While the Arizona legislative majority and the Arizona Corporation Commission are tone deaf to concerns from the public, you can see alarm from both sides of the isle.
One Republican city council member in Mesa voted against a data center because it will use 9,200 homes worth of water every year to cool.
Even those lefty pinkos at Forbes Magazine write about new concerns, from the never-anticipated number of new power plants that they require to the increased CO2 emissions.
Here are five ways that data centers impact you specifically.
1) Cost per kWh at industrial rates.
Large industries pay less per kWh than regular customers and rate increases hit residential customers harder. Data centers benefit from this.
2) Tax avoidance in AZ law that favors data centers.
Back in 2013 the legislature passed generous tax incentives to attract data centers, which were extended in 2021. There’s even a handy web page at the Arizona Commerce Authority to help you apply for that sweet free money.
3) Unexpected demand affects you directly.
Somewhere around 2016 we started seeing a sharp increase in the class of energy user represented by data centers. Prior to this we were largely on track to meet carbon reduction goals. But every time a utility adds a new power plant to the system, we all pay for the capital cost to build it. And if it is a gas-fired plant, we will pay for the gas for the 30+ year life of that plant, regardless of the cost.
4) Water is for fighting…
Many data centers evaporate the hot water that cools their thousands of computers, rather than re-cooling the water in a closed loop system, like your car’s radiator. In addition, the more data centers push power companies to give them massive amounts of power, the more utilities are turning to new gas-fired power plants, which use massive amounts of groundwater.
What we can do
In a rare case of bi-partisan concern, we can come together to make important changes, while not shutting down the growing data center industry.
1) “Bring Your Own Clean Power”
When some data center want to locate their operations here, they should be required to help reduce the total new demand on the system so utilities don’t feel the need to add more dirty, water wasting gas power.
2. Require all new data centers to cool and reuse water.
It requires more energy to cool water. But if we are demanding more clean energy use on site, that can be accomplished.
3. Large power users must pay their fair share.
The Oregon legislature this year passed the POWER Act, which helps level the playing field for consumers. It creates a special rate structure for huge power users, such as data centers, cryptocurrency miners and industry.
4. Repeal the AZ law that gives tax breaks to data centers.
Those tax cuts for special groups described above mean less money in the budget for schools, roads, hospitals, etc. Let’s give folks the benefit of the doubt and say that they never expected data centers to use this much energy.
Signals from the voting public.
On election day this week two seats at the Georgia public utility commission —the more accurately named version of our Corporation Commission— switched parties in a very rare occurrence.
The winning message? “Protect us from data centers and stop giving subsidizing big corporations?
Politicians be warned.