By. Aidan Ford
DOI: 10.57912/27089038
Much could be written about the negative effects Bitcoin and its ilk have brought upon the United States. From pump-and-dump scams, Ponzi schemes, and outright wire fraud separating hard-earned cash from everyday Americans to the man-hours and resources used investigating not just those crimes, but those of online drug dealers masking their identity through pseudonymous transactions and ransomware-using extortionists collecting untraceable payments. Crypto-based criminals have been a drain on American society for over 15 years.
Meanwhile, enemies of the United States have weaponized crypto for their gain. North Korea, for one, in the past year hacked numerous crypto platforms and made off with over a billion dollars in various digital currencies. The rogue state uses these assets to dodge the sanctions levied against them and acquire foreign currencies to bolster its military, and nuclear, forces. Iran has also utilized digital currencies to dodge sanctions while also using them to funnel cash to its proxies, including Hamas and Hezbollah. Individual Russian military units have even solicited crypto donations, from nationals and foreigners alike, to bolster their chances of surviving the brutal front lines in Ukraine. All this is to say, the continued proliferation of cryptocurrencies will not just weaken the U.S. but simultaneously strengthen our enemies.
Beyond all that though, the proliferation of cryptocurrencies is, by itself, a persistent national security threat and it is past time for the United States government to step in. Crypto mining, the process by which new units of a cryptocurrency, like one Bitcoin or one Ethereum, are minted, is an expensive and time-consuming process. High-powered computers competeto solve cryptographic puzzles which, upon completion, add a new “block” to the “blockchain,” the digital ledgers in which crypto transactions are recorded. For solving these puzzles miners are rewarded with a payout in the cryptocurrency they mine. Just one of these computers will run over $10,000, and that’s before factoring in cooling and energy costs.
Speaking of energy costs, Bitcoin mining alone is consuming over 150 terawatt hours and producing more than 65 megatons of carbon dioxide a year. For reference, in 2022 that is .6% of global energy usage producing .17% of carbon emissions for a digital currency with no governmental backing or physical presence. With the U.S. accounting for over a third of all Bitcoin mining that means the U.S. energy grid is losing 50 terawatt hours a year to the practice, accounting for over 1% of the country’s energy usage. A full percentage point of the world’s second largest energy consumer is spent on Bitcoin. Using similar math, and the assumption that carbon dioxide production is equivalent, the emissions produced by Bitcoin mining in the U.S. account for .4% of carbon emissions produced by the country. Rival nations have already recognized the outrageous energy demands for a product that doesn’t even physically exist. Russian President Vladimir Putin has publicly warned Russians about the threat unrestricted mining poses to the warring country’s energy grid. China has even officially banned crypto mining citing its immense environmental effects, though it continues to produce over a fifth of all newly minted Bitcoins.
But American crypto miners aren’t just using a lot of energy, they are actively holding it hostage. Last summer, Texas’s notoriously fragile energy grid was under heavy strain. The Electric Reliability Council of Texas (ERCOT), the organization that manages the grid, called for voluntary energy regulation eight times during August, 2023. The public was pressured to hold off on their laundry, raise the temperatures on their thermostat, and keep their TVs off. Meanwhile, ERCOT paid Bitcoin mining company Riot 31.7 million dollars to pause their mining operation during periods of peak demand. They earned just $8.6 million from Bitcoin sales during the same period. Far from being a one-off emergency occurrence, Riot sold $9 million in Bitcoin that September while reaping $11 million from the state for those energy credits. Texas has been throwing money to companies like this, only to without fail increase their bottom line and barely affect their crypto production.
This power grid strain isn’t just a threat from overenthusiastic capitalists, however. A New York Times investigation found that thanks to that aforementioned official ban on mining in China, 12 U.S. states are now home to crypto mining facilities owned or operated by Chinese companies, with many having indirect ties to the Chinese Communist Party. One such mine is located across the street from a Microsoft data center in Wyoming supporting the Pentagon and just a mile away from Warren Air Force Base, home to the 90th Missile Wing which controls 150 of the nation’s nuclear-equipped intercontinental ballistic missiles. Microsoft, the Air Force, and the Department of Homeland Security have all identified this mine, and others like it as a massive security threat. The known energy demands of the mine could allow Chinese intelligence operatives to covertly, according to the Microsoft Threat Management team, “pursue full-spectrum intelligence collection operations.” Government officials have also discussed the possibility of these mines being used to cause massive intentional blackouts or launching large scale cyber-attacks to destabilize critical infrastructure like dams and power plants.
It is high time to put an end to the nigh-unrestricted crypto mining environment. To ensure the security of America’s infrastructure. Congress must craft legislation to introduce a federal registry of crypto-mining operations with stringent reporting requirements. Owners of mining enterprises must be required to pass background checks, agree to federal regulation of their energy usage, and report the unique signatures of each currency they mine and who these currencies are sold to acquire the permits required to operate their businesses. This will be an important step to both minimize the currently rampant threat to American infrastructure and national security and make it easier for law enforcement and regulatory authorities to trace payments made for illicit goods and services. The longer we allow cryptocurrencies to be mined and distributed without any sort of oversight, the longer we expose ourselves to unnecessary risks that threaten American lives. From heat-caused blackouts to foreign cyberattacks, we can empower ourselves to stop these disasters before they happen through proper, strict control over this untamed industry.
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