In 2021, when China has banned bitcoin and other cryptocurrencies, crypto miners flocked to the United States in search of cheap electricity and looser regulations. In a few short years, the US’s share of global crypto mining operations has grown from 3.5 percent to 38 percentforming the world’s largest crypto mining industry.
The impact of this shift has not gone unnoticed. From New York to Kentucky to Texas, crypto mining warehouses have greatly increased local electricity demand to power their 24/7 computing operations. Their power use stressed local grids, drove up electricity bills for nearby residents and kept once-defunct fossil fuel plants running. To date, no one knows exactly how much electricity the US crypto mining industry uses.
That’s about to change as federal officials launch the first comprehensive effort to collect data on the energy use of cryptocurrencies. This week is the US Energy Information Administration, an energy statistics arm of the federal Department of Energy which requires 82 commercial crypto miners to report how much energy they consume. It is the first survey in a new program aimed at shedding light on an opaque industry by using the agency’s unique authority to compel disclosure of energy use by large companies.
“This is nonpartisan data collected from the miners themselves that no one else has,” said Mandy DeRoche, deputy managing attorney in the clean energy program at the environmental law nonprofit Earthjustice. “Understanding this data is the first step to understanding what we can do next.”
Cryptocurrencies like bitcoin bypass the need for financial institutions by adding data to a public ledger, or “blockchain,” to verify all transactions. To win money, computers using energy-intensive mining software race to confirm additions to the blockchain. According to initial estimates published by the US Energy Information Administration last week, cryptocurrency mining could be responsible for between 0.6 percent and 2.3 percent of total annual US electricity consumption. To put this in perspective, in 2022 the entire state of Utah consumed approx 0.8 percent of electricity consumption in the US Washington state, home to nearly 8 million people, consumed 2.3 percent.
“It’s a tremendous amount of energy that we don’t have transparency into and we don’t understand the details of,” DeRoche told Grist. One reason why it is so difficult to track cryptomining’s energy consumption is the size of mining facilities, which can range from individual computers to giant warehouses. Smaller facilities are often exempt from local permit requirements and frequently move to obtain cheaper electricity. Data about larger operations’ energy use is often hidden in private contracts with local utilities or tied up in litigation over individual facilities, DeRoche said.
The Energy Information Administration, or EIA, is in an unusually powerful position to demand greater transparency from crypto miners. Under federal law, the agency can require any company involved in “large energy consumption” to provide information about its power consumption. In July 2022 and February 2023, Democratic members of Congress, including Senator Elizabeth Warren and Representative Rashida Tlaib sent letters to the Environmental Protection Agency and the Department of Energy, calling on the agencies to exercise that authority over crypto miners and “implement a mandatory disclosure regime as quickly as possible.”
At the end of January, the EIA issued a letter to the White House Office of Management and Budget requesting emergency approval to investigate crypto-mining facilities, taking the first step in creating such a regime. The letter expressed concern about the price of bitcoin 50 percent increased in the past three months, prompting more mining activity that could stress local power grids already under pressure from cold weather and winter storms.
“Given the emerging and rapidly changing nature of this issue and because we cannot quantitatively assess the likelihood of public harm, we feel a sense of urgency to generate credible data that will provide insight into this unfolding issue,” the EIA said. -administrator Joseph DeCarolis wrote. letter. The White House approved the survey on January 26.
Although total electricity consumption is poorly understood, the impact of cryptocurrency mining on utility bills and carbon pollution has been widely documented. A recent analysis by energy consulting firm Wood Mackenzie found that bitcoin mining in Texas has already increased electricity costs for residents by $1.8 billion a year. In the winter of 2018, utility bills went up for residents in Plattsburgh, New York with up to $300 like near bitcoin miners gobbled up low-cost hydropowerforcing the city to buy more expensive electricity elsewhere.
Crypto’s rising electricity demand has also revived previously shut down fossil fuel generators. Near Dresden, New York, the previously closed Greenidge natural gas plant reopened in 2017. solely to power bitcoin mining. In Indiana, a coal-fired plant slated to shut down in 2023 will continue operating now, and a crypto-mining facility is setting up shop next door. AboutBit, the crypto-mining startup that owns the facility, told the Indianapolis outlet IndyStar that the facility had nothing to do with the coal plant that remained open. DeRoche pointed to other gas plants New York and Kentucky where crypto-mining operations have created a renewed demand for fossil fuels.
In Texas, crypto miners are also paid by the state’s power grid operator to shut down during heat waves and other periods of high demand. Since 2020, five facilities have been made in Texas at least $60 million of the show, according to The New York Times. Those subsidies come without much compensation or work for local residents, DeRoche said: Even large mining operations employ only a few dozen people at most, the Times reported.
However, Bitcoin mining companies maintain that they favor local residents. Riot Platforms, one of the country’s largest bitcoin mining companies, has in a Press release in September that the company “employs hundreds of Texans and helps revitalize communities that have experienced economic hardship.” Crypto mining companies also dispute claims that they are overusing energy resources. In a May 2022 letter to the Environmental Protection Agency, the Bitcoin Mining Council, a group representing bitcoin mining companies, made the dubious claim that “Bitcoin miners have zero emissions whatsoever.” The group added: “Digital asset miners simply buy electricity that is made available to them on the open market, just like any industrial buyer.”
Policymakers are finally starting to catch up with the industry’s impact on the climate and neighboring communities. In November 2022, New York State passed a two year moratorium on new crypto mining facilities that draw power from fossil fuel plants.
The EIA’s surveys of crypto mining companies starting this week will “identify the sources of electricity used to meet cryptocurrency mining demand,” DeCarolis, the EIA administrator, said in a press release. The data will be published on the EIA’s website later this year.
