A forthcoming New York Times article is anticipated to introduce “fractional reserve indirect carbon accounting” and goal bitcoin mining.
This is an opinion editorial by Pierre Rochard, the vice chairman of analysis at Riot Platforms.
Bitcoin mining has zero carbon emissions and insurance policies to cut back carbon emissions needs to be centered on actual carbon emitters like airplanes and coal energy crops. Focusing on zero-emission shoppers like electrical autos and Bitcoin mining is unscientific.
Electricity producers’ carbon emissions are already accounted for as “Scope 1” direct emissions per the U.S. EPA. The solely function of double-counting emissions with “Scope 2,” oblique emissions is to increase the facility of presidency paperwork. Direct Scope 1 emissions enhance carbon dioxide (CO2) within the environment, “indirect, Scope 2 emissions” are an unscientific fiction.
But it will get worse.
This week, we discovered that The New York Times is engaged on a narrative to introduce for the primary time “fractional reserve indirect carbon accounting” (FRICA). It is anticipated to rebrand this as “marginal indirect carbon accounting” to make it extra palatable.
We lately came upon the exhausting method that fiat banks don’t maintain all of our cash. They solely maintain a small proportion and lend out the remaining, an inflationary and doubtful observe generally known as “fractional reserve banking.” The New York Times’ upcoming FRICA methodology is the equal of stress-testing a fractional reserve financial institution by withdrawing one “marginal” greenback, after which asserting that not solely is the financial institution solvent, but it surely is additionally 100% money reserved. This unhealthy accounting ignores the precise stability sheet belongings. The New York Times has by no means used this methodology of measuring fictitious “indirect carbon emissions” for another business, will probably be leveraging it to assault Bitcoin mining.
The New York Times’ FRICA assumes that each incremental enhance in electrical energy consumption at all times will increase electrical energy manufacturing from a pure gasoline energy plant. The absurd conclusion of FRICA is that 100% of electrical energy is from carbon-emitting pure gasoline, as a result of any single shopper of electrical energy may flip off and reduce marginal demand.
In 2022, the Electric Reliability Council of Texas (ERCOT) reported that the Texas grid produced roughly 40% of electrical energy from zero-carbon nuclear, photo voltaic, and wind, and 60% of electrical energy from carbon-emitting pure gasoline and coal. The New York Times’ inventive accounting will intentionally conceal the truth that Texas is a frontrunner in renewable vitality. Even if just one% of electrical energy was produced by pure gasoline energy crops, FRICA would declare that 100% of electrical energy consumption is inflicting “indirect carbon emissions.”
The actuality is that extra demand for electrical energy incentivizes wind and photo voltaic producers to make investments extra in vitality infrastructure. It is unscientific to assert that will increase in base-load demand can solely incentivize short-term-peaking pure gasoline energy crops. In reality, the other is true. Bitcoin mining is extremely interruptible, that means that it offers income to renewables throughout regular grid situations and turns off when non-mining demand spikes. Bitcoin mining helps keep away from the usage of natural-gas-peaker crops thanks to demand response.
The New York Times’ FRICA is not going to simply be flawed from an electrical energy grid perspective. From a Bitcoin mining perspective, it is additionally inaccurate to assert that turning off mining rigs in Texas wouldn’t incentivize extra Bitcoin mining overseas, on adversaries’ soiled grids, like these in Russia and Venezuela. Bitcoin is an impartial world financial system, so arbitrarily taxing proof-of-work mining within the United States would solely sabotage our nation’s financial competitiveness and cut back demand for renewable vitality.
The New York Times is anticipated to inflate fictitious carbon emissions for a singular political finish: unfairly attacking Bitcoin mining within the United States. Simultaneously, the present presidential administration is pushing for a punitive tax on Bitcoin mining that might give up the United States’ management place to overseas adversaries. Good journalism and good coverage ought to reject each.
This is a visitor submit by Pierre Rochard. Opinions expressed are solely their personal and don’t essentially mirror these of BTC Inc or Bitcoin Magazine.