Demand for electricity to “mine” crypto currencies is growing rapidly, driven by record prices and the increasing complexity of requisite “proof of work”. This surging energy demand is frequently met by increased fossil-fuel combustion, often from economically-marginal power plants. While local environmental externalities from cryptomining may be large, they have not previously been linked causally to mining incentives.1 This gap is likely due the scarcity of data on rapidly expanding crypto mining activities, particularly at the crypto-firm level. Here we exploit daily variation in mining incentives as a natural experiment in local air pollution from three coal-fired power plants in Pennsylvanian with on-site Bitcoin mining. We consider how mining incentives drive coal use and the emissions of local pollutants (NOX and SO2), as captured by EPA’s continuous emissions monitoring system data. After confirming a resulting deterioration in local air quality, we combine our pollution data with daily administrative payroll data. Analyzing 7,613 unique workers over 1,034 days employed within 20 km of the power plants, IV results indicate a reduction in the number of minutes worked when local air quality deteriorates due to expanded cryptomining – between 5 and 16 minutes per day at mean emissions levels. An exception to this pattern is the healthcare and social assistance industry, where if anything time at work increases with increased pollution. We conclude that expanded Bitcoin mining has large and previously undocumented externalities on both air quality and labor markets.
