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Techlash: Foxconn's Wisconsin Con & Bitcoin's Carbon Bubble

Americans are wising up to the failures of high-tech companies. We want change.

A growing backlash against information-technology companies is making headlines, with calls to stop social-media platforms from distributing fake news, prohibit multinational IT businesses from rapacious personal-data collection, and either impose strict regulation on data monopolies by defining them as public utilities, or break them up in the name of competition. There’s also increasing concern with the addictive effects of smartphones and other devices, a moral panic that unites corporate leaders with parents and teachers in their anxiety over the mental state of America’s youth.

Another tech-lash is looming; this one against the environmental threats posed by high-tech corporations and cryptocurrency companies. Here we focus on two sources of growing ecological dread: Foxconn and Bitcoin. One makes the gadgets we use and love, from phones to tablets. The other offers a mysterious alternative to the dollars and credit cards we use and need to buy things. Each provides a test case of how far our “gee whizz” response to new technology can dominate before we start to “hold on a minute” and analyze the costs as well as the benefits. Below, we offer two examples of how arresting taking that extra minute can be to the way people think.

We begin with the Taiwan-based company Foxconn, which makes the gadgets we buy that are named, for instance, “Apple.” Last August, we outlined the deal that the Foxconn Technology Group had reached with the state of Wisconsin. It was a sweetheart gift from a hapless governor and U.S. congressman from southeast Wisconsin, where Foxconn plans to build a factory to make flat-screen TVs and monitors. To make the deal, these state leaders made promises that would cost local and regional ecosystems their welfare.

They assured Foxconn and Wisconsin residents alike that state investment would amount to $3 billion, a cost to taxpayers of about $200,000 per new employee hired by Foxconn. After five months, that estimate grew to over $4 billion, including the purchase of land in the Racine County village of Mount Pleasant, the planned site of the new factory. Displeased Mount Pleasant residents have since filed lawsuits in a challenge to the state seizing their property via eminent domain.

The land that will be given to Foxconn for free straddles the boundary between the Mississippi River basin and Lake Michigan’s drainage basin. Foxconn wants 7 million gallons of water per day to be pumped from Lake Michigan to its factory for the production of circuitry and other components. As a private company, Foxconn is legally prohibited from doing this by the 2008 Great Lakes Compact ban on water diversion outside the Great Lakes basin (where most of the planned factory will lie). Acting on behalf of Foxconn, the city of Racine has stepped in to request an exception to the ban to get the 7 million gallons into their municipal system (since the Compact’s implementation, waivers have been granted for water supply to residents, but not to businesses). As a public entity, Racine could then divert the water to Foxconn without considering the concerns of signatories of the Compact in neighboring states. The Wisconsin Department of Natural Resources (DNR) will decide by mid-March of this year whether to grant the waiver.

The environmental costs that the DNR must evaluate include the massive corporate consumption of fresh water from the region’s main source of fresh water (over 40 million people in the US and Canada rely on the Great Lakes for clean drinking water). Racine is using something of a loophole in the Compact to enable a highly toxic technology business to bypass environmental protection laws, including air and land pollution. The additional ecological concern is the quality of the water that Foxconn will be required by law to return to Lake Michigan (60 percent) which could be filled with chemical toxins (nickel, zinc, iron, mercury, and other pollutants). The potential threat to the region’s ecosystem has led to calls from neighboring states for the DNR to decide against Foxconn. Meanwhile given the current pro-pollution federal government, it’s unlikely that the EPA will intervene.

That story encourages us to think again about the devices Foxconn makes and how central they are to our daily lives. It urges us to ponder the pleasures and needs that these devices meet, as if they magically came from nowhere.

Something similar applies to a new force of technological magic in our lives: Bitcoin. Bitcoin has been in the news recently for all the wrong reasons, from the global criminality it enables to the risks of a bursting bubble that it incarnates. The price of the virtual currency has been headlined by business pundits as the new frontier of currency trading—decentralized and free from governmental and central bank control. Its price is determined by its popularity and supply and demand, not on underlying value tied to a commodity like gold or a receipt of legal tender like a dollar. And it can be used under cover by unscrupulous felons; Bitcoin is the preferred neo-Nazi method of moving money.

The new currency’s value derives from the number of blocks added to its block chain by “miners,” who compete to create a block that earns them virtual coins. The miners figure out how to make a valid block using ever-changing protocols; their block must be accepted by other miners, who confirm its validity and add the transaction to the history of transactions, which they must record. Miners submit blocks every few seconds in a competitive race to see if they’ve come up with the right one, which is randomly selected about every 10 minutes.

This constant guesswork to solve complicated math problems requires a growing number of miners using increasing amounts of computing power. The dream of making a fortune from mining Bitcoins has driven a boom in server facilities around the world dedicated to this one cryptocurrency.

The amount of electricity needed to power and cool these dedicated servers has meant that Bitcoin now requires almost as much electricity to operate as does the island-state of Singapore. As a payment system, Bitcoin consumes the same amount of electricity as 100,000 Visa card transactions. The dependence on such high levels of electricity forces Bitcoin to seek cheaper energy. It generally relies on coal-fired electricity, which enlarges its carbon footprint—an environmental liability not calculated in the value chain of block creation.

With renewable energy becoming cheaper, some environmentally-conscious block-mining companies have sought to use hydroelectric, wind, and geothermal sources. But they are exceptions to the norm. Block chains, and Bitcoin in particular, are anti-environmental investment vehicles.

As we learn more about the crimes, sweetheart deals, socialism for capitalists, and environmental harm associated with information technology, it’s important for green citizens to see through the hype that surrounds politically expedient deals with high-tech capital and new cryptocurrency businesses. This is our moment to pause as we take pleasure in new innovations and take stock of the land we love the water we drink, and the people we are.

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