Concerns Over Water Access Amid Renewable Energy Initiatives in El Salvador
Residents from fifteen communities within the Nueva Concepción municipality in El Salvador’s northern central region raised alarms two years ago, urging the government to cease construction of a solar power facility along the Gavilán Gorge and Lempa River. Their primary concern was the potential for diminished access to potable water. Alarmingly, neither the mayor nor the local city council were made aware of the project or its specifics. This solar installation is part of a broader array of renewable energy initiatives that support Bitcoin mining activities across the nation.
Understanding Bitcoin Mining and Its Energy Demands
La Geo Power Company, operating under President Bukele’s directive, commenced Bitcoin mining through the utilization of geothermal energy in September 2021. This initiative followed the enactment of the contentious Bitcoin Law in June, which designated Bitcoin as an official legal tender in El Salvador. Bitcoin mining, often misunderstood due to its association with traditional mining practices, refers to the process of executing software to uphold the blockchain ledger that records every Bitcoin transaction. Each user in the decentralized Bitcoin network maintains their own version of this ledger, with the longest chain recognized as the legitimate one. Miners who successfully complete a blockchain are rewarded with Bitcoin, incentivizing them to sustain the network. However, Bitcoin mining is notorious for its substantial energy consumption, which, in turn, necessitates significant water usage for cooling systems and the operation of energy plants.
Water Shortages Affecting Communities
In March 2024, residents of the Santa Teresa Project in San Martín, located east of San Salvador, faced over a month without access to running water, despite their complaints to state-operated services. Following coverage of their plight by La Prensa Gráfica, a prominent newspaper in El Salvador, the National Administration of Aqueducts and Sewers (ANDA) dispatched nine water trucks to the area. Meanwhile, in the nearby town of Ilopango, residents of the Altavista neighborhood reported a week-long absence of drinking water. Both communities fall within the San Salvador Province, which encompasses the nation’s capital. Despite numerous public grievances over the years, ANDA claims a 90 percent coverage of drinking water in San Salvador, leaving many residents dependent on family remittances, bottled water, and private services to meet their hydration needs.
Government Priorities Amidst Water Crisis
ANDA has acknowledged the insufficient water supply to meet the public’s needs across households in El Salvador. Experts largely agree that a significant water shortage exists, yet the Bukele administration has not prioritized addressing the crisis. Instead, the government has enacted The Water Resources Law, which favors water privatization. In addition to existing pollution challenges, such as those affecting Lake Ilopango due to volcanic soils, the demands of Bitcoin mining exacerbate the nation’s water scarcity issues. The law’s approval surprised many Salvadorans, particularly those unfamiliar with cryptocurrency, and critics have pointed out the forced nature of Bitcoin’s adoption. Article 7 of the Bitcoin Law mandates that economic agents accept Bitcoin for transactions involving goods and services, raising concerns about mass adoption given that less than 40 percent of Salvadorans had bank accounts in 2021.
Protests Against Resource Exploitation
In the fall of 2023, residents from various cantons in Berlin, Usulután protested against the drilling of geothermal wells due to water scarcity, pollution, and deforestation linked to construction activities. Despite public outcry, operations at the geothermal plant continued unabated. Meanwhile, Volcano Energy, a firm engaged in renewable energy and Bitcoin mining, announced the launch of Lava Pool, claiming that it utilizes renewable energy for mining. This service allows users to pool computational resources for Bitcoin mining, with the company asserting that it can potentially mitigate the environmental impact of the practice. Plans for a solar and wind power park have also been announced, though specific locations have not yet been revealed.
Environmental Concerns Surrounding Bitcoin Mining
While El Salvador has several renewable energy projects, most are directed towards Bitcoin mining, which is increasingly viewed as an unsustainable endeavor due to its resource-intensive nature. Alex de Vries, the founder of the Bitcoin Energy Consumption Index, has noted that Bitcoin mining accounts for over half a percent of the world’s energy consumption. Both critics and supporters of cryptocurrency are aware of the significant energy demands associated with Bitcoin mining, which is why there is a trend toward pairing renewable energy with these mining operations. Even in places like Iceland, geothermal energy is unable to fully offset the costs of Bitcoin mining. Additionally, water consumption is a less recognized issue linked to Bitcoin, as water is vital for cooling, air humidification, and thermoelectric power generation.
Regional Impacts and Future Challenges
According to de Vries, Bitcoin miners in the United States consume approximately 120 gigalitres of water annually, with geographical factors influencing total consumption. Kazakhstan, despite having fewer Bitcoin miners than the US, exhibits a larger water usage footprint due to its climate conditions. This raises concerns regarding the feasibility of Bitcoin mining in El Salvador’s tropical environment. De Vries has also pointed out that relying on various renewable sources is not a practical solution, as hydroelectric power entails the highest water consumption among energy sources. El Salvador currently generates hydroelectric power through four plants operated by The Lempa River Hydroelectric Executive Commission (CEL), yet the Lempa River Basin is plagued with pollution.
The Ongoing Water Equity Struggle
While the Bukele administration celebrates Bitcoin-related achievements, the reality in many districts highlights a struggle for water resources. A 2023 survey by the University Institute of Public Opinion (Iudop) revealed that 40 percent of Salvadorans with access to water once a week received it for less than six hours. On World Water Day this year, protests erupted against the General Water Resources Law, water privatization, and environmental destruction tied to deforestation. As El Salvador sets a precedent for cryptocurrency investments, neighboring nations such as Honduras, Guatemala, and Costa Rica may soon face escalating water stress. Furthermore, increasing regulations from global powers could lead to the strategic establishment of mining operations in areas with minimal environmental oversight, forcing smaller countries to bear the consequences of cryptocurrency mining on their water resources.
Correction Notice
This article was updated on July 17, 2024, to clarify that Alex de Vries, founder of the Bitcoin Energy Consumption Index, stated that Bitcoin mining accounts for more than half a percent of global energy consumption, not half of global energy consumption, as was previously misreported.
