Who Benefits From The New York Times’ Attacks On Bitcoin?

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A latest editorial assault on Bitcoin mining by The New York Occasions raises questions on its journalistic integrity and editorial course of.

That is an opinion editorial by Level39, a researcher targeted on Bitcoin, expertise, historical past, ethics and vitality.

Does one of many largest particular person shareholders of The New York Occasions profit from the publication’s latest hit piece on Bitcoin mining?

The article, “The Actual-World Prices Of The Digital Race For Bitcoin,” attacked the position of Bitcoin miners who take part in sanctioned demand-response applications inside the Electrical energy Reliability Council Of Texas (ERCOT), the state’s vitality grid. These applications present ancillary and demand-response companies that allow variable renewable energy to be worthwhile and available when shopper demand rises. In addition they enable for grids to stay dependable throughout excessive climate occasions, corresponding to Winter Storm Uri in February 2021.

In its haste to assault Bitcoin mining, The New York Occasions seems to have reversed greater than a decade of help for pro-renewable, demand-response applications and has probably handed the Texas legislature fodder to restrict competitors on the Texas grid, in favor of insurance policies that promote pure gasoline peaker vegetation and pipelines.

Who Is Carlos Slim?

Carlos Slim Helú, a Mexican enterprise magnate who offered the newspaper with a $250 million mortgage in 2009, presently owns roughly 8% of The New York Occasions Firm’s class A shares. He’s the eleventh-richest particular person on this planet with a web value of $86 billion, making him the richest particular person in Latin America. Slim’s fortune largely derives from telecommunications networks, corresponding to América Móvil — Latin America’s largest cell phone firm that dominates Mexico’s telecommunications trade. The corporate has saved the nation’s telephone charges among the many highest on this planet and is regarded as a key issue restraining Mexico’s financial growth.

Slim has investments within the Texas vitality market, by oil and gasoline corporations. His company conglomerate, Carso Grupo, owns Carso Power, which transports and sells Texas pure gasoline to Mexico’s state-run energy corporations by pipelines. By attacking Bitcoin mining, The New York Occasions not directly helps midstream corporations corresponding to Carso Power, which improve its earnings from transporting and promoting pure gasoline to Mexico.

Carlos Slim’s second eldest son, Marco Antonio Slim Domit, manages the monetary facet of their household’s enterprise empire and is a member of the board of administrators of Grupo Carso and an impartial director at BlackRock, along with being a member of its board of administrators. BlackRock is the second-largest investor of the New York Occasions Firm, holding 8.67% of sophistication A shares.

Slim’s Connection To Texas Oil And Gasoline

The Wahalajara system is a brand new community of pipelines that transports pure gasoline from the Permian Basin to inhabitants facilities in Guadalajara and western-central Mexico. The community originates from the Waha hub in western Texas, a essential provide hub for Permian Basin pure gasoline producers.

A three way partnership between Carso Power and Power Switch Companions operates two essential pipelines to Mexico that originate from the Waha hub — the Waha-Presidio “Trans-Picos” pipeline and Waha-San Elizario “Comanche Path” pipeline, getting into service in 2017. Carso Power has a 51% stake within the three way partnership. Carso Power has a 100% stake within the Sásabe-Samalayuc pipeline, in Mexico, which is fed from Waha through San Elizario and entered service in 2021. With the assistance of extra Carso Power pipelines and different sources of pure gasoline, the Secretaría de Energía (SENER), Mexico’s ministry of vitality, expects so as to add 30,000 megawatts of combined-cycle, gas-fired energy era capability to the nation’s electrical grid over the subsequent decade.

Pure Gasoline Costs At The Waha Hub

Roughly 70% of Mexico’s pure gasoline imports are provided by U.S. pipelines. Due to this fact, it’s common for pure gasoline contracts in Mexico to be linked to areas within the U.S. the place pricing is decided, such because the Waha hub, Henry hub and Houston Ship Channel.

The Waha hub is without doubt one of the most vital pricing level for pure gasoline in Mexico, partly as a result of every of the Wahalajara pipelines collectively operated by Carso Power and Power Switch are designed to move and promote over 1 billion of cubic ft of pure gasoline per day to Mexico’s state-owned Comisión Federal de Electricidad (CFE) energy vegetation.

The pure gasoline worth index for the Mexican market, referred to as the IPGN, is calculated with the Waha benchmark worth by the Comisión Reguladora de Energía (CRE), a authorities vitality regulatory fee. Carso Power’s transport earnings usually advantages from increased costs on the Waha hub. The CRE makes use of the Waha benchmark to calculate a every day reference worth for pure gasoline utilized by CFE, which helps decide the worth of pure gasoline offered to the CFE by Carso Power, together with the midstream prices of transportation and different charges related to importing pure gasoline. The CFE is without doubt one of the largest prospects of pure gasoline in Mexico and by the tip of subsequent 12 months, the CFE is predicted to generate 65% of Mexico’s energy. Promoting pure gasoline to the CFE can develop into extraordinarily worthwhile throughout extreme climate occasions in Texas, as a result of heavily-inflated spikes within the Waha benchmark worth.

Extreme climate occasions apart, the Waha hub has been plagued with takeaway capability constraints, inflicting file low costs within the Waha benchmark of pure gasoline which have persistently fallen beneath the Henry hub in Erath, Louisiana. The New York Mercantile Change (NYMEX) primarily makes use of the Henry hub worth for pure gasoline futures contracts. Bodily provide and demand dynamics on the Waha hub can have results that affect the Henry hub and NYMEX pure gasoline futures. The Wahalajara pipelines had been anticipated to assist slim the steep Waha hub low cost to the Henry hub, nonetheless, the Waha benchmark nonetheless went unfavorable 20 occasions within the final three years as a result of different elements that stay a difficulty.

Destructive pricing on the Waha hub can happen when there may be an oversupply of pure gasoline and never sufficient pipeline capability to move the gasoline. When this occurs, producers could also be pressured to pay consumers to take their pure gasoline as a way to keep away from having to completely shut down manufacturing. This will result in unfavorable pricing, which may current plenty of challenges for Waha pipelines.

“Waha is within the Permian basin, and is characterised as a market that’s perpetually lengthy provide, and must commerce at a reduction to its marginal demand market. That demand market is nearly at all times outdoors of the Permian basin. Due to this fact, foundation is decided by the quantity of extra gasoline that must be moved to a different location. The relative abundance or shortage of this egress capability influences Waha foundation significantly…

“Each day, wind era immediately competes with pure gasoline. As new wind (and photo voltaic) farms are constructed, renewable vitality sources are taking a bigger share of whole era. If renewables era grows sooner than load (demand for energy), then gasoline demand usually suffers.”

–“Waha Foundation: Forces Affecting Worth,” AEGIS Reference 

Bitcoin Mining Competes With Pure Gasoline Pipelines

Low costs cut back the motivation for producers to promote pure gasoline within the Waha market, which in flip can result in decrease throughput volumes for the Wahalajara pipelines. Shale oil wells within the Permian Basin have develop into extraordinarily gassy — producing extra related pure gasoline as they age and oil manufacturing falls. This ends in elevated exploration for shale oil, which leads to extra gassy wells and an oversupply of pure gasoline. As costs keep low, or go unfavorable, it turns into extra worthwhile to waste pure gasoline by both venting it or flaring it.

Venting methane is dangerous for the setting as it’s a potent greenhouse gasoline that traps 80 occasions extra warmth than carbon dioxide (CO2) over a 20-year interval. Flaring is healthier than venting, however is just 92% environment friendly, that means that 8% of all flared methane nonetheless escapes into the environment.

Bitcoin mining is almost 100% environment friendly at mitigating methane emissions, so it is extra ecologically sound and worthwhile to mine Bitcoin with methane from stranded Permian Basin wells than it’s to waste it. Bitcoin miners may even be used to cut back fugitive emissions from deserted oil wells as soon as the wells are now not productive. Finally, this all means there may be much less incentive to construct costly infrastructure to move Permian pure gasoline to the Waha hub the place it could promote for virtually nothing.

It is a main downside for operators of the Wahalajara pipeline system. Midstream corporations corresponding to Carso Power and Power Transport develop earnings by rising the quantity and worth of transported pure gasoline. The oil and gasoline trade has concluded that prices must rise as a result of the present value construction is unsustainable as losses for pure gasoline explorers proceed to mount.

Bitcoin Mining Competes With Pure Gasoline Peaker Crops

To make issues more difficult for the oil and gasoline trade, analysis signifies that utilizing giant, versatile hundreds, corresponding to these favored by Bitcoin mining operations, can have a web decarbonizing impact on grids over the long run. That is believed to occur when hundreds stability fluctuations in variable renewable era, which in flip facilitates increased penetrations of renewable assets when these energy sources can be found.

Brad Jones, the previous interim CEO of ERCOT, has publicly affirmed that Bitcoin mining has already performed a serious position in bringing renewables into the Texas grid, by supporting the financials of photo voltaic and wind amenities, and offering a balancing impact between customers and extra era that will in any other case be negatively priced or curtailed.

“For a few years, ERCOT had been on the lookout for a great deal of scale that would reply in a requirement responsive method that may assist us stability our grid… It is right here now. And it is an important factor for serving to us to handle the grid. Serving to us to handle our assets. Bitcoin has the character of actually turning down when costs start to rise, in a method that we may give that energy again to different customers. And on the identical time, as we convey an increasing number of renewables into the state, it turns into a driver of extra renewables. As a result of proper now if we herald all of the renewables which can be signed as much as need to come to our state, there shall be a major despair of pricing in the course of the day. By having Bitcoin there to help, to stabilize these costs all through the day, it will drive extra renewables into our system. And that is good for Texas.” 

–Brad Jones, former Interim CEO of ERCOT

Furthermore, analysis means that demand-response applications are rivals to conventional, flexible-generation vegetation and, by proxy, the pure gasoline corporations that present gasoline to these vegetation.

“Widespread adoption of demand response might not be considered favourably by all individuals within the energy market. Specifically, if the capability worth, or the supply in occasions of want, of demand response is critical, house owners of peaking vegetation will possible see their capability elements lower as demand response takes over some or all the duty for regulation, load following and ramping… This may have a major affect on the potential for generator house owners to get better their funding, probably resulting in the decommissioning of in any other case operational vegetation. Such a situation would clearly be significantly opposed by operators of versatile turbines, though it could current an environment friendly answer for the system as a complete.” 

–“Advantages And Challenges Of Electrical Demand Response: A Essential Evaluation”

If versatile demand response can result in the decommissioning of versatile era, there would clearly be fewer potential consumers of pure gasoline in periods of peak demand. As variable renewables proceed to extend market share inside ERCOT, Carso Power and Power Switch would have good cause to view demand-response applications that Bitcoin mining operations take part in as rivals to peaker vegetation that reliably purchase and devour pure gasoline.

In fact, pure gasoline peaker vegetation are mandatory when photo voltaic and wind aren’t accessible, enabling miners to proceed mining throughout these hours. On the floor, this would seem to make Bitcoin miners and pure gasoline corporations shut allies. Nonetheless, if oil and gasoline executives concur with Jones and the analysis above, there could be a motive for oil and gasoline corporations to negatively colour the general public’s notion of Bitcoin’s participation in ERCOT demand-response applications. Pure gasoline could also be sustaining its market share inside ERCOT as renewables develop, however the trade would relatively improve its market share and eradicate competitors to safe its long-term future.

Oil And Gasoline Lobbies The Texas Legislature

Warren Buffett additionally has a motive to view Bitcoin mining’s position in demand response as competitors. Buffett owns Berkshire Hathaway Power, a subsidiary of Berkshire Hathaway, which is presently lobbying the Texas legislature to construct 10 new peaker vegetation totaling 10 gigawatts of era capability by November 2023 — paid for by an extra cost on Texans’ energy payments. Peaker vegetation are usually pure gasoline energy vegetation that solely run when there’s a excessive demand for vitality. New peaker vegetation would substitute the necessity for demand-response prospects.

It’s no surprise Buffett has described Bitcoin as “rat poison squared.” Regardless of what Elizabeth Warren says, attacking Bitcoin mining’s position in demand response ends in increased electrical energy payments for Texans, to pay charges for peaker vegetation.

The Texas Senate not too long ago handed Senate Invoice 6, which might funnel at the very least $10 billion to construct these pure gasoline peaker vegetation, and probably as much as $18 billion, for them to take a seat idle till excessive demand and excessive climate occasions. In testimony at a committee assembly in March, Berkshire Hathaway was the lone supporter of the invoice. Power analysts and The Wall Avenue Journal have criticized the plan as being unhealthy for Texas, as a result of it being expensive and undermining competitors from photo voltaic and wind. Senate Invoice 7 provides oversight necessities to ERCOT for peaker vegetation and supplies allowances for vegetation that can function at a loss when extreme climate isn’t noticed. It is a subtle method of claiming the trade is requiring the state to offer the oil and gasoline trade with a subsidy, for which the individuals of Texas shall be on the hook.

In the meantime, the Texas Senate handed Senate Invoice 1751 unanimously out of committee and with just one “no” vote from the senate flooring, which unfairly prohibits bitcoin miners from competing to obtain generally used tax incentives. Worse, it stymies miners of their efforts to make the Texas electrical grid extra resilient in emergency conditions by arbitrarily limiting Bitcoin mining’s participation in ancillary and demand-response companies to 10%, which the trade possible already exceeds. One other invoice, Senate Invoice 2015 would set up a aim for 50% of latest producing capability put in in ERCOT by 2024, to come back from dispatchable era, which is primarily pure gasoline.

It’s well-known that the oil and gasoline trade showers Texas Governor Greg Abbott and different politicians with cash. After Winter Storm Uri, Power Switch’s CEO donated $1 million to Governor Abbott after the corporate pocketed billions of {dollars} from the lethal storm.

Atmos Pipeline-Texas and NuStar Power are operators of a number of the largest pipelines and pure gasoline storage networks in Texas and intention to extend takeaway capability from the Permian Basin the place the Waha hub is situated. In 2022, each Atmos and NuStar donated, in whole, $40,500 to the campaigns of Lois Kolkhorst, Donna Campbell, Robert Nichols and Jose Menendez — the 4 co-sponsors of the anti-Bitcoin-mining Senate Invoice 1751. These 4 state senators acquired $163,500 from the oil and gasoline trade as a complete.

If Bitcoin actually have been to advertise using fossil fuels over the long term, why are Texas senators — who considerably profit from the oil and gasoline trade — introducing laws that unfairly targets Bitcoin miners?

Bitcoin Mining Relocates To Texas And Balances Its Grid

Previous to China’s ban on Bitcoin mining enacted in June 2021, extreme climate occasions in Texas resulted in windfall earnings for pure gasoline corporations. For instance, Power Switch raked in $2.4 billion in the course of the February 2021 blackout of Winter Storm Uri, by utilizing pure gasoline as a peaking asset — storing it when the worth is low, and promoting when demand skyrocketed.

Exporting pure gasoline to Mexico throughout a extreme climate occasion in Texas will be much more worthwhile for the Wahalajara pipeline operators, because the Mexican worth is perhaps even increased — particularly If ERCOT have been extra reliant on pure gasoline peakers. Through the 2021 Texas winter blackouts, the worth of pure gasoline in Mexico skyrocketed to 100 occasions regular costs. Pure gasoline peaker vegetation struggled throughout Uri, as pure gasoline was freezing in pipes.

After an inflow of mining rigs from China relocated to Texas in late 2021, many turned sanctioned as giant versatile hundreds (LFLs) inside ERCOT. Immediately, LFLs are offering and benefiting from ancillary companies that pure gasoline peaker vegetation would have beforehand dominated. And they’re doing so at a cheaper price level that peaker vegetation wrestle to compete with — saving Texans cash on their electrical payments by getting extra for much less. The truth is, LFLs helped stability the grid and keep away from blackouts in the course of the summer season warmth wave of 2022 and through Winter Storm Elliot, over Christmas of 2022 — releasing up over 3,000 megawatts of spare capability on the grid. This success was forecasted by ERCOT a number of weeks previous to Winter Storm Elliot, in a report that heralded Bitcoin miners as useful to balancing the grid throughout excessive climate occasions.

The Grey Girl Assaults Bitcoin

In November 2022, 5 months earlier than his anti-Bitcoin mining article was printed, Gabriel Dance — deputy investigations editor at The New York Occasions — attended the Texas Blockchain Summit, in Austin, as a part of his investigative analysis. A couple of weeks later, he started emailing individuals from the convention, promising to incorporate their nuanced views in his upcoming article.

Dance in the end proved this was all a ruse. When his article was lastly printed, it turned evident that he selected to omit all the pro-Bitcoin mining arguments and solely included unbecoming quotes from its proponents.

The substance of Dance’s article deserves harsh criticism. It was crammed with disinformation and fallacious reporting in regards to the position of demand response that has since been completely debunked by the Bitcoin Coverage Institute. Dance’s reporting contradicted the U.S. Division of Power, which views demand response favorably. It additionally conflicted with earlier endorsements of demand response from The New York Occasions, going again at the very least to 2007.

Here’s a number of earlier endorsements from the Occasions:

“Throughout the USA, a number of thousand companies and residential prospects are ceding management of their electrical programs throughout moments of unusually excessive demand. And they’re getting paid to do it. The system, based mostly on an idea referred to as ‘demand response,’ is without doubt one of the newest ways in which Web expertise is being utilized to handle over-stretched U.S. energy provides higher.”

–“Demand Response Know-how Shaves Peak Power Consumption By Distant Management,” The New York Occasions, November 7, 2007

In 2009, The New York Occasions reported that demand response had been endorsed by the Obama administration’s Federal Power Regulatory Fee chairman, Jon Wellinghoff.

“The Obama administration, Congress and the brand new Federal Power Regulatory Fee chairman, Jon Wellinghoff, have all targeted on decreasing peak demand. Mr. Wellinghoff has referred to as demand response the ‘killer software’ of the sensible grid.”

–“Dimming The Lights To Meet Demand,” The New York Occasions, April 17, 2009

In 2010, in its “Power And Setting” part of the paper, the Occasions continued to extol the advantages of demand response to its readers.

“This idea, referred to as demand response, has gained traction in utility circles. In essence, it entails paying customers to make small sacrifices when there may be an pressing want for further energy (the ‘peak’). The utility can then depend on reducing some demand on its system at essential occasions and, in concept, keep away from the price of constructing a brand new plant simply to satisfy these peak wants… For farmers, nonetheless, this course of is not simple. Employees should be dispatched to show the pumps on and off, and there’s a threat of crop injury.”

–“Why Is A Utility Paying Clients?,” The New York Occasions, January 23, 2010

Once more, later in 2010, the Occasions reiterated the Obama administration’s constructive view of demand response.

“…[Wellinghoff] sees customers as energetic elements of the grid … stabilizing the grid by adjusting demand by clever home equipment or habits modification, referred to as demand response; and storing vitality for varied grid duties. He thinks customers ought to receives a commission to offer these companies.” 

–“Making The Shopper An Energetic Participant In The Grid,” The New York Occasions, November 29, 2010

The newspaper even quoted environmentalists who needed Texas to undertake extra demand response.

“Environmentalists argue that the strains on the grid ought to spur Texas to work on energy-saving methods. Specifically, they’re pushing a program referred to as demand response, wherein companies and customers are paid to cut back energy at occasions of excessive demand, like late summer season afternoons. Colin Meehan, a clear vitality analyst with the Environmental Protection Fund in Texas, mentioned in an e-mail that Texas had ‘to this point solely taken very small steps’ on demand response.” 

–“Electrical Grid In Texas Faces A number of Challenges,” The New York Occasions, December 22, 2011

The Occasions continued to reward demand response all through the Obama administration, virtually as if it was doing the administration’s job to advertise the expertise.

“However balancing the grid entails extra than simply rising capability. Maybe the state’s most promising conservation device is ‘demand response,’ … The applications, that are voluntary in Texas, can take many types… Demand response ‘in all probability deserves extra focus and a spotlight,’ mentioned Doyle Beneby, the president of C.P.S. Power, a municipally owned utility that has not taken a place within the capability market debate. ‘In Texas, it may very well be an enormous a part of the answer.’” 

–“With Pressure On Electrical Grid, A Push To Prioritize Conservation,” The New York Occasions, January 23, 2014

And but, Dance’s hit piece in opposition to Bitcoin mining single-handedly reversed the Occasions’ place on demand response. Dance wrote the next passage, which makes demand response sound like an evil scheme for versatile prospects to defraud retail prospects:

“Their huge vitality consumption mixed with their capability to close off virtually immediately permits some corporations to save cash and earn cash by deftly pulling the levers of U.S. energy markets. They’ll keep away from charges charged throughout peak demand, resell their electrical energy at a premium when costs spike and even be paid for providing to show off. Different main vitality customers, like factories and hospitals, can’t cut back their energy use as routinely or dramatically with out extreme penalties.” 

–“The Actual-World Prices Of The Digital Race For Bitcoin,” The New York Occasions, April 9, 2023

All of it begs an extended checklist of questions: Why did The New York Occasions spend months researching an article that distracts readers from critical environmental points, solely to give attention to a expertise that’s solely liable for an infinitesimal 0.14% of worldwide emissions? Why did it ignore a December 2022 ERCOT research that confirmed giant versatile hundreds, corresponding to these favored by Bitcoin mining operations, have been useful to the Texas grid? Why did The New York Occasions ignore the truth that Bitcoin mining performed a major position in avoiding blackouts throughout Winter Storm Elliot, over Christmas and in the course of the 2022 summer season warmth wave? Why did it ignore that Bitcoin mining reliably supplies a worth flooring for overbuilding renewable era on the ERCOT grid? Why single out a sanctioned demand-response buyer that was, based on ERCOT’s former interim CEO, largely liable for bringing in large-scale, variable renewable tasks into Texas? Why did The New York Occasions reverse greater than a decade of help for pro-renewable demand response applications that have been championed by the U.S. Division of Power and Obama’s Federal Power Regulatory Fee chairman? Why, after months of analysis, did The New York Occasions publish its anti-Bitcoin mining story exactly when the Texas legislature was voting on payments that assault Bitcoin mining demand-response applications and substitute them with pure gasoline peaker vegetation? Why did the Occasions’ editors use allegedly-manipulated footage that made it seem as if there was smog in Rockdale, Texas?

Little or no in regards to the hit piece makes any sense. Is it a coincidence that The New York Occasions attacked Texas Bitcoin mining at simply the appropriate time that it may benefit considered one of its largest shareholders?

“The purpose is, Slim doesn’t must intrude in any respect. I do know from expertise that publishers do intervene within the editorial course of, as is their prerogative. And I can guarantee you that Slim’s funding shall be an element, even when unstated, in editorial decision-making henceforth on the Occasions. Maybe Mexico’s crony capitalism will stay a principally uncared for subject — however now conspiracies shall be learn into the neglect.” 

–Andreas Martinez, former columnist for The New York Occasions

We could by no means know if Slim influenced the editorial course of within the newspaper’s newest hit piece attacking Bitcoin mining. Nonetheless, it could match an ongoing sample of The New York Occasions defending Slim’s enterprise pursuits along with patterns of alleged, calculated, systemic bias and distortions. Whether or not these are all coincidences, or one thing extra, could also be up for debate. Nonetheless, editors of the Occasions appear greater than keen to sacrifice the newspaper’s remaining shreds of journalistic integrity for no matter motivates them to run such hit items.

Increasingly more readers, alternatively, are starting to mistrust mainstream media and it doesn’t assist when the biggest shareholders of media corporations are positioned to reap earnings from the reporting. There may be little recourse in such issues, nonetheless, bringing consideration to potential conflicts of curiosity could at the very least present some context to in any other case inexplicable editorial choices.

Because of Justin Orkney for help with this text.

It is a visitor put up by Level39. Opinions expressed are solely their very own and don’t essentially replicate these of BTC Inc or Bitcoin Journal.

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