An upcoming New York Times article will introduce “indirect carbon accounting of fractional reserves” and bitcoin mining targets.
This is an editorial opinion by Pierre Rochard, vice president of research at Riot Platforms.
Bitcoin mining has zero carbon emissions and policies to reduce carbon emissions should be focused on real carbon emitters like airplanes and coal-fired power plants. Focusing on zero-emission consumers like electric vehicles and Bitcoin mining is unscientific.
Electricity producers’ carbon emissions have been considered “Scope 1” direct emissions per the US EPA. The only purpose of the second emission with “Scope 2,” indirect emission is to expand the power of the government bureaucracy. Direct Scope 1 emissions increase carbon dioxide (CO2) in the atmosphere, “indirect, Scope 2 emissions” are unscientific fiction.
But it gets worse.
This week, we learned that The New York Times is working on a story to introduce “fractional reserve indirect carbon accounting” (FRICA). It is expected to rebrand this as “marginal indirect carbon accounting” to make it more palatable.
We recently found out the hard way that fiat banks don’t hold all the money. They hold only a small percentage and lend the rest, an inflationary and hesitant practice known as “fractional reserve banking.” FRICA’s upcoming methodology in the New York Times is equivalent to stress testing the fractional reserve bank by withdrawing one “marginal” dollar, and then announcing that it is not only bank solvent, but also 100% cash. This bad accounting ignores real balance sheet assets. The New York Times has never used this method to measure fictitious “indirect carbon emissions” for other industries, it will be leveraged to attack Bitcoin mining.
FRICA New York Times considers that every increase in electricity consumption necessarily increases electricity production from natural gas power plants. The absurd conclusion of FRICA is that 100% of electricity from natural gas produces carbon, because every consumer of electricity can turn off and reduce marginal demand.
By 2022, the Electric Reliability Council of Texas (ERCOT) reports that the Texas grid will generate approximately 40% of its electricity from zero-carbon nuclear, solar, and wind, and 60% of its electricity from low-carbon natural gas and coal. The creative accounting of the New York Times will deliberately hide the fact that Texas is a leader in renewable energy. Even if only 1% of electricity is produced by natural gas power plants, FRICA will claim that 100% of electricity consumption results in “indirect carbon emissions.”
The reality is that the additional demand for electricity gives wind and solar producers an incentive to invest more in energy infrastructure. It is unscientific to assert that an increase in base load demand can only incentivize short-term natural gas power plants. In fact, the opposite is true. Bitcoin mining can be highly interruptible, meaning that it provides revenue for renewables during normal grid conditions and shuts down when non-mining demand increases. Bitcoin mining helps avoid using natural-gas-peaker plants thanks to demand response.
FRICA New York Times will not only be handicapped from a power grid perspective. From a Bitcoin mining perspective, it is also inaccurate to assert that shutting down mining rigs in Texas will not incentivize Bitcoin mining abroad, in adversary dirty networks, such as in Russia and Venezuela. Bitcoin is a self-sustaining global monetary system, so arbitrarily enforcing proof-of-work mining in the United States will only sabotage our nation’s economic competitiveness and reduce the demand for renewable energy.
The New York Times is expected to inflate fictitious carbon emissions for a single political end: unfairly attack Bitcoin mining in the United States. Simultaneously, the current presidential administration is pushing for a punitive tax on Bitcoin mining that would cede the United States’ leadership position to foreign adversaries. Good journalism and good policy must reject both.
This is a guest post by Pierre Rochard. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.