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Boeing 737 MAX hit with $17m FAA fine as 787 Dreamliner woes continue
Boeing faces a further $17 million in fines from the US Federal Aviation Administration (FAA) over the 737 MAX incident, the penalties announced amid rumors that 787 Dreamliner deliveries have again been delayed. The aircraft-maker saw 737 MAX planes return to service late in 2023, after nearly two years of being grounded following two fatal crashes.
The incidents forced Boeing to reexamine some of the key safety technology it had integrated into its most recent iterations of the 737 fleet. The changes – made in part to deal with repercussions of wing adjustments intended to save airlines on fuel costs – left the 737 MAX potentially overruling pilot intentions during takeoff.
Boeing addressed the situation with updates including secondary sensors and new pilot training. However, in the meantime, a production issue saw 759 new 737 MAX and NG aircraft improperly equipped with unapproved sensors. Boeing also “submitted approximately 178 Boeing 737 MAX aircraft for airworthiness certification when the aircraft potentially had nonconforming slat tracks installed,” the FAA says, “and improperly marked those slat tracks.”
The FAA has levied a $17 million penalty, which Boeing has 30 days to pay after signing the agreement with the agency. It also has a list of corrective actions that must be undertaken, including strengthening its parts validation procedures, and undergoing Safety Risk Management analyses to flag any potential oversight lapses as it readies an increase of 737 MAX production. It will also need to change its production monitoring to give the FAA more access to assessments, and improve oversight of its suppliers.
If Boeing doesn’t convince the FAA on all those points, within the agreed timeframe, the company could face up to a further $10.1 million in extra fines.
It wasn’t a one-off issue, either. According to the FAA’s investigation, for almost five years ending April 2023, Boeing had been installing head-up guidance systems on the 737 NG and 737 MAX which had sensors neither tested nor approved as being compatible.
“The FAA alleges that Boeing violated Federal Aviation Regulations when it certified these aircraft as airworthy when they were not in conformance with their type certificate,” the FAA said back in March 2023. “The agency further alleges that Boeing failed to follow its own Business Process Instructions, which are in place to help prevent such situations from occurring.”
Meanwhile, Boeing’s run-in with the FAA hasn’t been limited to the 737. Deliveries of the 787 Dreamliner have been halted, the WSJ reports, after air-safety regulators demanded more information about how Boeing would address other recent quality issues. Boeing has not publicly acknowledged any delay specifically, though the company said it was working with regulators around information on undelivered aircraft, but sources tell the newspaper that at least one plane which was scheduled to be handed over to American Airlines this week is now unlikely to see that happen until next week at the earliest.
That new hurdle – which comes just after a five month suspension of 787 Dreamliner deliveries – could end up a costly one, at least in the short term. Aircraft purchases usually see the bulk of the cost of the plane transferred when it is handed over, the newspaper says.
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Wall Street Beat: Tech Stocks Jump As Market Indexes Hit Milestones
On the back end of an earnings season that by many accounts could have been worse, tech investors appeared to be in the mood to celebrate on Friday, sending shares of IT companies higher as key stock-market indexes hit milestone highs.
Both the Dow Jones Industrial Average and the Standard and Poor’s 500 index hit never-before-reached round numbers. The Dow hit 15,000 points before closing slightly lower for the day. The S&P gained 1.05 percent to close at 1614.42.
All five of the Dow’s tech stocks rose: Hewlett-Packard by $0.18 to close at $20.63; Intel by $0.70 to close at $23.92; IBM by $2.12 to close at $204.51; Microsoft by $0.33 to close at $33.49; and Cisco by $0.10 to close at $20.83.
The Nasdaq Computer Index joined in the general exuberance, rising 0.92 percent to close at 1646.61.
Several key employment figures helped boost investor confidence. On Thursday, the U.S. Department of Labor reported that unemployment benefit applications fell last week to 324,000, the lowest since January 2008, before the virtual implosion of Wall Street in September that year. Then Friday, the employment report for April showed that 165,000 new jobs were added to the U.S. economy, a greater number than expected, and that the unemployment rate declined slightly to 7.5 percent.
The macroeconomic news appears to be boosting confidence in all sectors at a time when investors were expecting the worst. Just last week, market research firm Forrester Research reduced its forecast for U.S. business and government spending on IT goods and services in 2013 to 6.2 percent, from its January 2013 projection of 7.5 percent.
The main reason for the reduced forecast was the U.S. government cuts of about $65 billion in federal spending over the next six months as part of the so-called sequestration budget compromise.
So far this earnings season, results have been mixed, but bellwether vendors for the most part have reported better-than-expected earnings. This week, some marquee names in social networking weighed in with first-quarter reports, highlighting the importance of the mobile market.
The big tech earnings announcement this week was Facebook’s, which on Wednesday reported that for the quarter ending March 31, total revenue jumped 38 percent year over year to $1.46 billion. But net earnings did not rise nearly as high, increasing only 7 percent to $219 billion. Costs cut into profit, rising 60 percent year over year, driven primarily by infrastructure expense and increased headcount, Facebook said.
Facebook is snapping up programmers as fast as it can in a race to figure out how to monetize its vast user network, which is quickly moving to mobile devices. Questions remain about whether Facebook can keep up with this shift and whether users will be as fond of installing apps on mobile devices as they are visiting websites from desktops.
LinkedIn’s earnings, announced Thursday, at first blush looked strong. Revenue for the first quarter was $324.7 million, an increase of 72 percent year over year. Net income for the first quarter was $22.6 million, compared to net income of $5 million for the first quarter of 2012. But the online professional networking service forecast a slowdown in growth.
LinkedIn said it expects second-quarter revenue between $342 million and $347 million, while analysts had forecast $360 million, according to a poll by Thomson Reuters.
Yelp also showed strong gains in revenue and user numbers. On Wednesday, it said net revenue for the first quarter skyrocketed 68 percent year over year to $46.1 million. Its loss narrowed to $4.8 million from $9.7 million a year earlier.
Yelp pointed to several successes. For example, the number of average monthly users of Yelp’s service jumped 43 percent year over year to 102 million, while active business accounts rose by 63 percent, to 45,000 businesses.
Nate Could Hit The Gulf Coast As A Hurricane On Saturday Night
The National Hurricane Center’s forecast for Tropical Storm Nate at 11 AM on October 6, 2023. NOAA/NHC
Nate is struggling a bit this afternoon after its day-long encounter with Central America. The storm was relatively weak when reached the shores of Nicaragua and Honduras on Thursday, and its interaction with land only worsened it’s already-shaggy appearance. But weak winds and a disorganized structure don’t make the storm any less dangerous. The tropical beast killed nearly two-dozen people after heavy rains caused extensive flooding across the region’s mountainous terrain.
The tropical storm has since reemerged over the western Caribbean Sea and is now moving at a decent clip toward the Gulf of Mexico. But as it does so, Nate may not gain as much strength as it potentially could as it appears the thunderstorms surrounding its center are becoming more disorderly and unorganized. A storm needs thunderstorms to organize into a compact eyewall to gain significant strength. The good news is that, because of this, the storm will be slow to gain stamina the longer it stays messy and sprawled-out like it has this past afternoon. The bad news, however, is that the National Hurricane Center still expects Nate to approach the northern Gulf Coast on Saturday night as a hurricane. The Center says conditions still appear favorable enough for the storm to gain momentum, despite it’s current struggles.
Forecasters currently expect Nate to grow into a category one hurricane through landfall on Saturday night. Hurricane warnings are in effect from southeastern Louisiana through southern Alabama, including the cities of Biloxi, Gulfport, and Mobile. The New Orleans metro area is under a tropical storm warning. A warning means that dangerous weather conditions are expected within the next 36 hours.
The Weather Prediction Center’s rainfall forecast for the next seven days. Dennis Mersereau
Nate will pose all of the hazards you’d expect when a tropical cyclone makes landfall. Heavy rain and localized flooding is a concern across much of the eastern-third of the country as Nate’s remnants quickly travel up to the northeast. Several inches of rain are possible along Nate’s track through early next week. The Weather Prediction Center expects that some areas of the southeast could see more than five inches of rain from Nate. The heaviest of which will likely cause localized flooding issues. However, because the storm is expected to move quickly, that will limit the amount of time heavy rain can linger over a particular area.
Flooding is a particular concern for New Orleans, a city that struggles with water management due to its elevation being below sea level. Heavy rain earlier this summer led to flash flooding across the city that was exacerbated by failures in the pump system that drains excess water away from the city. New Orleans Mayor Mitch Landrieu announced in a press conference on Thursday that the city’s pumps are now operating at 92 percent capacity, but that Nate’s speedy forward motion and lower rainfall totals over eastern Louisiana should ease the flooding danger in the city. However, a westward change in track could raise the flood threat in and around New Orleans, making it a good idea to prepare for flooding regardless of current forecasts for those who live in the area.
Strong winds will also push a life-threatening storm surge into the coast as Nate comes ashore. The storm surge, which is seawater pushed inland by strong and persistent winds, should be nowhere near as devastating as previous historic hurricanes, but even a small one is dangerous for folks right along the coast. According to current forecasts, a storm surge of four to seven feet above ground level is possible from Morgan City, Louisiana, to the Alabama and Florida state line, including the entire Mississippi coast and Mobile Bay. The deepest storm surge will occur on barrier islands and in bays and concave-shaped coastlines. The highest water will coincide with the strongest winds on the eastern side of the storm.
If you’re in the path of what could become Hurricane Nate, it’s important to take the storm seriously and take all necessary precautions, despite the likelihood that it will not develop into a catastrophic one similar to what we’ve seen this year. Power outages are a serious inconvenience that can become a problem sooner than you’d expect. Make sure you have ready-to-eat food, beverages, and batteries to power flashlights and charge up your mobile devices. It’s also a good idea to fill up your gas tank and take out some cash if you can as ATMs and card swipes won’t work without electricity or communications.
Sph Professor Examines Nation’s Healthcare Woes
SPH Professor Examines Nation’s Healthcare Woes
Page Turners SPH Professor Examines Nation’s Health Woes Book excerpt: in Me vs. Us, Michael Stein outlines how the country’s focus on individual medicine endangers major public health issuesIn his new book, Me vs. Us: A Health Divided, Michael Stein examines this question: why do we care so much about health care, yet so little about public health? Stein, a Boston University School of Public Health professor of health law, policy, and management and department chair, and a primary care physician, shows how over history, public health has repeatedly been overshadowed by individual medicine, which has led to less public health funding, fewer resources for issues like obesity and climate change, and misguided priorities. This excerpt from Me vs. Us (Oxford University Press, 2023) is published with the author’s permission.
Filmmakers understand the distinction between individuals and groups. When they shoot a character in a coma or receiving a bone marrow transplant, they know the viewer is thinking: she could be me. When they sweep across the debris of a village where an earthquake has killed thousands, they know the viewer, thinking on a different scale, may be moved and disturbed, but without any route for self-identification, will be less riveted. For filmmakers, our collective reality is most comprehensible through individual life stories rather than large groups.
Similarly, our interest in health care, the medical care of individuals, supersedes our interest in public health, the well-being of collections of people. Medical care concerns itself with identifiable persons, whereas public health takes up statistical or anonymized lives, many lives seen through an extreme wide shot. Let me offer two scenarios that demonstrate these two divergent perspectives.
Scenario 1: You are the doctor seeing James, a 25-year-old man who rides a motorcycle and who has come to your medical office for a routine annual physical. At the end of his visit, you must make the choice between discussing organ donation or not bringing up the subject at all. Which would you do with James?
When imagining yourself as the doctor in this scenario, I believe that you would choose not to discuss donation. You would avoid this troubling issue because to bring it up is to move the conversation perhaps outside James’ personal concern—he merely wanted the rash on his hand checked and a flu vaccine—and to turn what might have been a perfectly smooth and upbeat medical visit into an awkward occasion that includes an imagined and fatal accident.
Scenario 2: Now approach the same question of organ donation imagining yourself as a regular, non–health care–employed citizen who lives in James’ hometown. Young men who ride motorcycles are sometimes seen in medical offices for routine annual physicals. At such visits, the choice must be made between discussing organ donation or not bringing up the subject at all. What do you think doctors should do in these situations?
I believe that you would recommend that doctors, as a group, should discuss donation with these young men.
The first scenario introduces a medical question: How do I care for this patient? The second introduces a public health question: What should we want for our town? Medical doctors deal with one motorcyclist at a time, whereas public health-ers consider aggregates of young motorcycle drivers. If you gave discrepant answers (I wouldn’t discuss donation in scenario 1, but every medical provider should discuss donation in scenario 2), it suggests that looking at a problem from different perspectives can change your judgment. The way you would treat the unique patient in front of you differs from the way you view a group of comparable patients. The physician is trained to be the perfect agent for each and every motorcycle rider. The public health practitioner, trying to come up with a policy, is trained to imagine herself as the protector of society, and considers a single patient as simply part of a collection of motorcycle riders. Discrepant answers suggest there is a conflict between these two perspectives.
We might admit that the public health perspective has a generous (though poignant) prospect—his donated organs could imaginably save the lives of others in his hometown if James has a fatal accident—but still, most of us would not insist that doctors and motorcycle-owning patients have this difficult conversation. We might agree with the group perspective and the public health interest in creating the largest possible base of transplantable organs, but we understand it is difficult to oblige doctors to follow in practice. And so, we would be hesitant to create and enforce a policy penalizing doctors if they did not discuss organ donation with motorcycle riders. Based on my informal surveys, persons who give discrepant answers to my two scenarios feel far more strongly about their “no” to the question in scenario 1 than about their “yes” to the question in scenario 2. We prefer and defer to the medical perspective; we naturally assume it.
Our fears about health have always been cleaved: Each of us worries about him- or herself (the Me perspective of medical health) and we worry about others (the Us perspective of public health). And yet, what is best for the individual may not be feasible for the group, and vice versa. Medical care and public health thus represent distinct dispositions and attitudes, competing views of health.
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From Liquidation To “Celebration:” Inside Sotheby’s $17M Grails Sales
For one night earlier this month, the bear market felt a world away.
On June 15, digital art enthusiasts packed the Sotheby’s New York showroom for its highly-anticipated Grails Part II live auction, featuring a notable trove of generative art NFTs headlined by Dmitri Cherniak’s Ringers #879 — affectionately nicknamed “The Goose.“
The collection being put to hammer came with a checkered past. Curated by pseudonymous collector Vincent Van Dough on behalf of now-defunct hedge fund Three Arrows Capital (3AC), the artwork became ensnared in liquidation proceedings after 3AC imploded following the Terra Luna collapse.
Where many saw a potential fire sale, Sotheby’s VP and head of digital art Michael Bouhanna saw an opportunity. Crowned by The Goose’s $6.2 million sale, the evening exceeded pre-auction estimates by closing at $11 million. Across two auctions and one private sale, the Grails collection totaled $17 million — an impressive result in the depths of a market downturn.
In this week’s nft now podcast interview, Bouhanna takes us behind the scenes of Grails, introduces Sotheby’s new Gen Art Program with Art Blocks, and reflects on lessons learned from the Natively Digital: Glitch-ism backlash.
Matt Medved: Briefly tell us about your background for those who might not know your story. How did you get into digital art and NFTs?
Michael Bouhanna: I’ve been at Sotheby’s for about eight years, mainly in Paris and London, as a Contemporary Art Specialist. So, I was in charge of looking after the business, getting expertise, pricing, and sales strategy. I got into NFTs through seeing what’s on social media and got very curious about them.
It took me some time to understand the technology behind it, and that was at the end of 2023. I discovered some conceptual artists who were doing some very interesting work. The market at that time started to pick up. So, I brought the first NFT sales to Sotheby’s in June 2023 for the Natively Digital auction.
We wanted to educate people about the different movements, and it was very successful. At that time, we achieved the record for a CryptoPunk and showed some artists who are today some of the top artists in the digital art space. We started from there, and it became a real passion for me to work in this new, innovative space.
Sotheby’s made big headlines with the second Grails auction on June 15. The auction resulted in $11 million in sales in the depths of a bear market, exceeding a lot of people’s expectations. How did Sotheby’s actually secure the opportunity to auction the assets that were originally with 3AC?
First of all, we specialize in selling very complex and important collections in volume, quality, and diversity. So, it was appealing to them that we could propose a global, multi-channel sale. I think our past sales really prove that it doesn’t feel like liquidation but more like a celebration of the works and artists who are in this collection.
We saw The Goose all over social media and people having fun meme-ing it; it was an enduring image that represented a lot. Beyond that, many notable pieces sold. What made the auction so successful, from your point of expertise?
There are many different components that came together. The first is the strategy to present a fine art sale and move away from just selling NFTs. It’s important to talk to collectors the same way we would talk about proper fine artwork.
Then there is the live art auction. It’s something important to the core of the NFT community. We offered a great live experience of a very traditional way of selling some masterpieces. It was amazing to have more than 150 people in the room, more than 20 people with the paddle ready to jump on some bids, on the phone, online. It was very vibrant and felt like a traditional sale and a market full of very passionate collectors looking to acquire some great pieces.
There’s also the celebration of generative art we’ve made through the narrative and curation of the sale. It was mainly Art Blocks works, and we can’t deny that generative art has a long history coming from the 1960s. Every time we speak about generative artwork on the blockchain, we need to put them in the context of 20th and 21st-century art history.
The real challenge was to turn the narrative from a liquidation, where many collectors thought they could get a big discount in purchasing this work, into a celebration, ensuring that we sell them for the full price in today’s market.
Michael Bouhanna
There are rumors that several of the underbidders in Sotheby’s digital art auctions have been traditional art collectors, as opposed to Web3 natives. What level of interest are you seeing from this demographic around NFTs?
Every sale like this is a new occasion to have discussions with this traditional type of collector. So, it’s a step-by-step process that we educate a bit more every time. And the ecosystem will evolve and become a bit more friendly for them. It connects to crypto in terms of value but also in terms of culture.
Part of the difficulty is understanding how they can enjoy it physically. That’s why we really try to showcase works and offer them the same aura of a proper work of art.
Earlier this year, Sotheby’s received criticism for its Natively Digital auction on glitch art that originally did not include women artist representation. The company subsequently relaunched the show with a more equitable lineup. What were some of the lessons learned from that?
We had done many sales before the glitch sale, and each time we were very careful in representing underrepresented communities and female artists. Two weeks before that sale, we had a sale dedicated to female artists working with Pussy Riot and Unicorn DAO.
With this glitch sale, we missed a big part of how underrepresented communities and female artists are very important in this movement, more so than other movements. We are very thankful that the community picked up the issue and, in two weeks’ time, it was relaunched with a whole new narrative and curation, including many female, transgender, and non-binary artists who’ve been very key in the evolution of this glitch movement.
So, I’m very thankful. They helped us a lot in making us rework the curation. It was very important for us to listen.
You’ve also been teasing a forthcoming project in the generative art space. What can you tell us about it?
It’s really exciting and something the whole team has been working on for more than a year. It goes with our new strategy to have a lot of engagement within the generative art movement. We are going to launch a new Gen Art program that will be powered by Art Blocks Engine.
It’s a huge honor to be partnering with Art Blocks. I’m a fan myself, and I think they’ve done an amazing job innovating and creating this whole new ecosystem for artists with these tools. There will only be two or three sales in the program each year, so it will be extremely curated in a very fine art way with exhibition videos and proper education about the works.
I’m very happy with that to inaugurate this GenArt program with Vera Molnár. She is 99 years old. She’s like the mother of generative art. She’s been all her life seeking the latest technology and innovating and pushing boundaries.
When you look at her career, it’s full of different periods, depending on the new tools she was using. And now, she looks at what the blockchain, creative coding, and long-form generative art can provide to making this new body of work. She’s been partnering with a great artist, Martine Grasseur, who’s known in the generative art space. This sale will happen at the end of July.
This interview transcript has been edited for concision and clarity.
For the full and uncut interview, listen to our podcast episode with Michael Bouhanna.
Renewable Energy Can’t Cure Bitcoin’s Environmental Woes
Somewhere in Siberia, a Soviet-era dam is generating energy for a remote mining operation. But nothing physical is coming out of the earth. Instead, the hydroelectric power plant fuels massive machines that churn out solutions to complicated mathematical problems. In other words, this renewable energy is being used to mine the cryptocurrency bitcoin. A Bitcoin analyst and self-professed “hippie miner,” Jason Deane uses computers that run exclusively on hydro power—though this eco-friendly setup is likely the exception, not the rule.
Deane’s model of work might sound like the perfect antidote to Bitcoin’s environmental woes, but renewable energy isn’t a cure-all. Bitcoin’s annual energy use is currently estimated at 127.22 terawatt hours. For comparison, that’s just over 3 percent of the total terawatt hours consumed in the US in 2023. As this number continually grows, we will need to find solutions to reckon with this kind of consumption.
What is Bitcoin?The allure of Bitcoin is that it’s a decentralized digital cryptocurrency system. Anyone can sell, buy, or exchange without middlemen or intermediaries like big banks. It also exists outside of any government’s control. Bitcoin was the first and is still the most prominent cryptocurrency, despite the rise of other coins like Ethereum, Cardano, and the joke currency Dogecoin.
Bitcoin uses blockchain technology to secure, validate, and document transactions. Blockchains, named rather intuitively, operate by storing transactions in “blocks” that are validated by the “nodes,” or computers, that make up the network. Once validated, that block is connected to the other blocks, and cannot be rolled back or reversed. This creates a chain of data blocks—hence the term “blockchain.”
You can also think of a blockchain as a digital ledger, documenting all the transactions that occur on it. The nodes that validate those outstanding transactions and lock them into a block are referred to as “miners,” who solve complex mathematical problems as part of Bitcoin’s code. For doing so they are rewarded with bitcoin.
There are only a finite number of bitcoins in the system—21 million total, to be exact. So far over 18.5 million have been mined. To make sure they don’t exhaust the supply too quickly, the difficulty of the math problems miners have to complete continually increases in complexity. So much so, that the last bitcoin isn’t estimated to be mined till 2140.
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There are lots of miners trying to solve these math problems—all at the same time. But only the first miner to solve the math problem gets the bitcoin reward. This competition, along with the growing scale of the Bitcoin blockchain, means miners are upgrading and grouping computers to make them more powerful.
But this also means it requires increasingly more computing power—and electricity—to carry out the mining. Long gone are the days of personal computers and niche hobbies. Mining is an industrial operation.
To quantify Bitcoin’s energy use, follow the miners—if you canAll this computing requires energy. A lot of it. And people are starting to take issue with that.
On the day tech billionaire Elon Musk announced that Tesla would no longer accept bitcoin as payment for its cars, the value of bitcoin dramatically plummeted, wiping away hundreds of billions of dollars in value. Musk justified his decision by citing concerns over Bitcoin’s increasing use of fossil fuels to power mining and transactions.
This is the crux of the current uproar: Is Bitcoin as green as mining enthusiasts claim? Or is the crypto ecosystem wreaking climate havoc on the physical world?
It’s not a simple question to answer. Bitcoin’s energy consumption has been compared to the total consumption of many countries, from Sweden to Argentina to Pakistan. These energy consumption estimates—from sources like the widely quoted Cambridge Bitcoin Electricity Consumption Index and Alex de Vries’ Digiconomist—vary and are hard to conceptualize, as there is no centralized source of data for bitcoin mining, with most analysis based on models.
[Related: NFTs are blowing up the digital art and collectibles worlds. Here’s how they work.]
Despite the difficulty of pinpointing Bitcoin’s exact energy use, these numbers are arguably easier to calculate for cryptocurrencies than for other high energy-consumption industries like banking or gold mining—although some estimates do put their consumption far higher than Bitcoin.
“Bitcoin uses a tiny amount of power compared to the banking sector or other systems along those lines,” says Deane. “It’s a tiny, tiny percentage, but people really go on about it because there’s this whole perception of ‘Well, but do we actually need Bitcoin?’”
Because Bitcoin consumes energy in a network of anonymity, analysts calculate the consumption through “hash rates,” or the amount of computing and processing power used in mining and transaction operations. Mining equipment uses electricity, and that electricity has to come from the grid.
Nearly two-thirds of all bitcoin mining happens in China (although authorities there have recently started to crack down on the practice). While tracking down exactly where Bitcoin’s energy is being supplied from is tricky, researchers can make approximations based on who is doing the mining and where their energy comes from. Approximations of the grid mix and energy use allow them to arrive at estimates.
“We don’t know where an individual miner is located,” says Benjamin Jones, an assistant professor of economics at the University of New Mexico. “This whole idea of decentralized currency is that these miners are anonymous, but in some cases, they will self-identify.”
When miners self-identify, it’s easier to locate “mining pools,” places where miners combine their resources together to scale up their operations. In the US for example, these pools are concentrated in the Pacific Northwest, according to Jones. Still, the exact location of most bitcoin miners is unknown.
Without that information, researchers have to make certain assumptions to approximate how much energy bitcoin mining consumes—and whether that energy comes from renewable or non-renewable sources.
One way to do this is by looking at the general electricity mix across a country to create an average electricity profile. For example, electricity yielded from coal accounts for around 20 percent of all electricity produced in the US. So if a miner is located here, then 20 percent of all output through mining would be produced using coal. But averages are just averages, and could be more or less accurate depending on the location of the miner, the time of year, and even the business model.
What Bitcoin really does to the environment—and public healthEnergy use, whether it’s renewable or fossil-fueled, always comes at a cost. Several studies have looked into quantifying Bitcoin’s carbon costs or pinning down its carbon footprint. But Jones wanted to calculate more of the downstream effects.
In a study published in 2023, Jones and other researchers sought to quantify how much air pollution mining camps generated in the surrounding communities, and what the impact on climate would be. They applied standard economic cost metrics to health and climate impacts.
“We linked energy use to emissions at fossil fuel power plants, and then linked those emissions to things such as particulate matter, nitrogen oxides, and sulfur dioxide,” says Jones. “And then linked those to human mortality.”
The researchers first calculated emissions profiles for the US and China. Then they used an air pollution mapping model developed by the Center for Air, Climate, and Energy Solutions, a research center at Carnegie Mellon that was created in partnership with the Environmental Protection Agency.
“[The study is] saying for every dollar value created—and this is created to the miner, it’s like my personal value from mining this to society—[mining is] generating 49 cents in damages, and those damages are premature mortality and climate change effects associated with carbon dioxide emissions from fossil fuel power plants,” says Jones.
“So it’s basically a trade-off of a private value: $1 in private value, compared to a 49 cents in social costs that society faces through health and the environment.”
There are no excess renewablesThe crypto miner Jason Deane argues that miners usually congregate at places with excess power—like surplus hydropower generated during a rainy season that would otherwise go to waste.
This excess power is what lures miners to places with cheap electricity and large profit margins. For proponents of green mining like Deane, this means using renewable energy. But right now, renewable energy only accounts for roughly 20 percent of the US electricity supply.
“Maybe 30, 40 years from now, we will have a bunch of excess renewables. But right now, as we’re making the transition away from fossil fuels, the renewables are all being utilized for some purpose, and so if bitcoin miners or cryptocurrency miners are going to take that renewable, that means it’s not there for somebody else to use,” says Jones. For example, to power an electric car, your home, a business, or factory.
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Like many other industries, there are slow albeit palpable shifts toward using renewable resources. But until more capacity to produce electricity through renewables exists, there will always be an opportunity cost.
“I do believe it is the absolute responsibility of all miners to run on renewable energy. There’s no question in my mind that it is collectively our responsibility to do so. But we make no apologies for the power that it consumes,” says Deane. “And that’s the difference, I think, because the network has to use that power. We’ve got to be responsible, how to source it and how it’s created.”
Pioneering greener consensus mechanismsHigh electricity consumption is built into the very design of cryptocurrencies like Bitcoin and Ethereum partly because they operate with “proof-of-work” consensus mechanisms. This “consensus” prevents digital currency from being spent twice when there’s no central entity in charge.
As miners race to solve increasingly complex mathematical problems and validate transactions, proof-of-work demands more and more energy over time. This consensus mechanism helps secure the network against economic attacks, since there is only one validated ledger of transactions that has been agreed upon by every single participant in the network. It prevents data from being overwritten or altered, but this comes at an intensive energy cost.
But what if there was another way?
Recently, Ethereum caused waves in the cryptosphere when co-founder Vitalik Buterin announced that its next iteration, Ethereum 2.0, would transition the virtual coin to a proof-of-stake model of operation.
Proof-of-stake (PoS) is an alternative consensus mechanism where instead of every blockchain being sent to every computer in the system, it’s randomly sent to one miner who validates the transaction. To ensure security, miners are asked to stake coins as collateral. The energy consumption drops rather dramatically as miners aren’t racing to secure transitions in return for minted coins.
The cost of transitioning to proof-of-stake is not cheap; Ethereum is currently investing millions of dollars into this pivot.
As Zaki Manian, a co-founder of various crypto projects like iqlusion and Sommelier, points out, nearly all of the new cryptocurrencies appearing on the market have already adopted the PoS model. They can be built greener by design because they have no legacy ecosystem like Bitcoin or Ethereum to uphold.
“They can just create a de novo design for their cryptocurrency that you leverage as proof-of-stake and can leverage all of this existing software and technology that already exists,” says Manian. “Let’s say we wanted to move Dogecoin proof-of-stake? I don’t think I could do it for less than $10 million.”
“These modern consensus algorithms that we use for proof of stake took years, dozens of researchers, dozens of engineers, enormous expertise to work,” says Manian. “But now that these things are working and securing tens of billions of dollars of value, we have increasing confidence that they work.”
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