You’ve probably been hearing about the collapse of FTX, an exchange where people could buy and sell cryptocurrency like Bitcoin. It’s now mired in investigations into alleged mishandling of customer money and founder Sam Bankman-Fried — one of the largest donors to Democrats. Our next story explores another controversy related to the murky world of cryptocurrency. It has to do with tapping into an age-old power source to create Bitcoin.
Bill Spence is a pioneer on the forefront of a new high-tech trend.
Bill Spence: I always say it's like America and the world had a party at our house, and then they left and went home and we're cleaning up.
He’s in the business of cleaning up toxic waste coal piled up across Pennsylvania. Burning it at his Scrubgrass power plant in a special way that generates electricity and an ash that’s approved safe to put back in the land so people can grow plants on it and build on it again.
Scrubgrass used to sit dormant in the overnight hours, until Spence came up with a bright, new idea.
Bill Spence: I had begun to read about cryptocurrency, and consequently, I approached the guys here and said, "Have you heard about Bitcoin? And let's look into that." And we started to buy some machines, plug them in, started to run it, started to see revenue.
Backing up for a moment, Bitcoin is a cryptocurrency that doesn’t exist in physical form. The “coins” are generated or “mined" using computers, in an incredibly complex process designed by Bitcoin’s anonymous creator. The process gets increasingly difficult over time to limit how many coins are created, how fast.
The main thing you need to know here is that mining Bitcoin typically requires supercomputers that use tons of energy.
Step one of Spence's plan: to start burning waste coal for Bitcoin involved buying thousands of computers.
Bill Spence: These are small computers that search the internet for blockchain, which is, a blockchain is basically an identification system for the coin.
Fully converted today, Scrubgrass is busy generating Bitcoin when it’s not feeding electricity to the public grid.
Bill Spence: It's like a train track switch that goes back and forth between the data center and the grid as needed.
At a glance, it’s all upside: cleaning up toxic waste coal, creating jobs, and making money from Bitcoin. But there’s fierce opposition.
Rob Alternburg: The problem with Bitcoin is that it's wasteful by design, is that to create Bitcoin, you need to waste energy.
Rob Altenburg of the environmental group PennFuture says there’s a huge cost to burning waste coal for Bitcoin.
Rob Altenburg: It's far more polluting than even regular coal. It's the most polluting energy source we have in this state. They're claiming it's environmentally beneficial because they're removing these piles of waste coal. What they're not mentioning is, when you burn it, you're polluting the air.
Sharyl Attkisson: What is it about Bitcoin that takes so much energy?
Rob Altenburg: It’s a race to essentially guess a number faster than anybody else. And the first person to guess a number that qualifies is rewarded with new Bitcoins. So what, we've had something of an arms race where people use vast amounts of money and vast amounts of energy to build mining systems to win the race.
Part of his gripe is that, because Pennsylvania gives subsidies to waste coal power plants like Scrubgrass, taxpayers end up supporting the Bitcoin operations.
Rob Altenburg: We shouldn't be subsidizing wasting energy. We can have cryptocurrency. We can have blockchain. We can have all these new technologies. But there are ways to do it that don't waste energy.
That may be. But using waste coal or coal power plants to mine bitcoin is catching on. Besides Pennsylvania, they're doing it in New York, Missouri, and Montana.
The whole idea is so new, the federal government hasn’t stepped in to regulate it — yet. There are signs that’s coming. Regulating too hard risks letting China, which already dominates Bitcoin mining, run away with it.
Spence admits his plant pollutes. But he says leave the waste coal alone and it can catch fire spontaneously —
Bill Spence: That pink is where it's already caught on fire.
— sending some toxins and cancer-causing pollutants into the air and water that are scrubbed out if burned in the plant.
Bill Spence: I think what people need to look at is expand their fear factor to get into the gray area and accept it and start to look at potentially ways that would help their community generate electricity. Maybe it's not 100% perfect, but it's better than as it exists in its sort of state it's at right now. So, you know, you work towards perfection, not immediately capture it.
Sharyl (on-camera): In the past year or so, the price of a Bitcoin has been as high as $68,000 and frequently hovered around $16,000.