An upcoming New York Times article is expected to introduce “indirect fractional reserve carbon accounting” and take aim at bitcoin mining.
This is an opinion editorial by Pierre Rochard, Vice President of Research at Riot Platforms.
Bitcoin mining is zero carbon, and policies to reduce carbon emissions should focus on the actual carbon emitters, such as airplanes and coal-fired power plants. Focusing on zero-emission consumers like electric vehicles and Bitcoin mining is unscientific.
Carbon emissions from electricity producers are already counted as Direct emissions “Scope 1” by the US EPA. The sole purpose of double-counting “Scope 2” emissions, indirect emissions, 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 “indirect fractional stock carbon accounting” (FRICA) for the first time. It is hoped to rename this “marginal indirect carbon accounting” to make it more palatable.
We recently found out the hard way that trust banks don’t have all of our money. They only hold a small percentage and lend out the rest, a dubious and inflationary practice known as “fractional reserve banking.” The New York Times’ upcoming FRICA methodology is the equivalent of stress testing a fractional reserve bank withdrawing a “marginal” dollar and then announcing that the bank is not only solvent, but also has 100% reserved cash. This bad bookkeeping ignores the actual assets on the balance sheet. The New York Times has never used this method to measure fictitious “indirect carbon emissions” for any other industry, it will use it to attack Bitcoin mining.
FRICA of the New York Times assumes that each incremental increase in electricity consumption always increases the electricity output of a natural gas power plant. FRICA’s absurd conclusion is that 100% of electricity comes from carbon-emitting natural gas, because any consumer of electricity could switch off and lower marginal demand.
In 2022, the Texas Electric Reliability Council (ERCOT) reported that the Texas grid produced approximately 40% of its electricity from zero-carbon nuclear, solar, and wind power, and 60% of its electricity from carbon-emitting 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 was produced by natural gas power plants, FRICA would claim that 100% of electricity consumption is causing “indirect carbon emissions”.
The reality is that the additional demand for electricity incentivizes wind and solar power producers to invest more in energy infrastructure. It is not scientific to say that increases in baseload demand can only spur natural gas power plants in the short term. In fact, the opposite is true. Bitcoin mining is highly interruptible, meaning it provides revenue to renewables during normal grid conditions and shuts down when non-mining demand increases. Bitcoin mining helps avoid the use of state-of-the-art natural gas plants thanks to demand response.
FRICA from the New York Times won’t just have failures from a power grid perspective. From a Bitcoin mining perspective, it is also incorrect to say that shutting down mining rigs in Texas would not incentivize more Bitcoin mining abroad, on adversaries’ dirty networks, such as those in Russia and Venezuela. Bitcoin is an independent global monetary system, so arbitrarily taxing proof-of-work mining in the United States would only sabotage our nation’s economic competitiveness and reduce demand for renewable energy.
The New York Times is expected to inflate fictitious carbon emissions for a single political purpose: to unfairly attack Bitcoin mining in the United States. Simultaneously, the current presidential administration is pushing for a punitive tax on Bitcoin mining that would hand over the leadership position of the United States to foreign adversaries. Good journalism and good politics 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.
