The US government is about to find out just how much energy bitcoin mining uses

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In 2021, when China banned Bitcoin and other cryptocurrencies, crypto miners have flocked to the United States in search of cheap electricity and looser regulations. In just a few years, the United States' share of global cryptocurrency mining operations has increased. from 3.5 percent to 38 percentforming the largest crypto mining industry in the world.

The impacts of this change have not gone unnoticed. From New York to Kentucky to Texas, crypto mining warehouses have dramatically increased local demand for electricity to power their 24/7 computing operations. Their energy use has strained local grids, increased electricity bills for nearby residents and kept once-defunct fossil fuel plants operating. Yet to this day, no one knows exactly how much electricity the U.S. cryptocurrency mining industry uses.

That's about to change as federal authorities launch the first comprehensive effort to collect data on cryptocurrency mining's energy consumption. This week, the U.S. Energy Information Administration, an energy statistics arm of the federal Department of Energy, requiring 82 commercial crypto miners to report how much energy they consume. It's the first investigation in a new program aimed at shedding light on an opaque industry by leveraging the agency's unique authority to require disclosure of large companies' energy use.

“This is nonpartisan data collected from the miners themselves and that no one else has,” said Mandy DeRoche, deputy general counsel for the law nonprofit’s clean energy program. of the environment Earthjustice. “Understanding this data is the first step to understanding what we can do next.”

Cryptocurrencies like bitcoin eliminate the need for financial institutions to add data to a public ledger, or “blockchain,” to verify all transactions. To make money, computers using energy-intensive mining software rush to confirm additions to the blockchain. According to the first estimates published last week by the United States Energy Information Administration, cryptocurrency mining could represent between 0.6 percent and 2.3 percent of total annual electricity consumption in the United States. To put this into perspective, in 2022 the entire state of Utah consumed approximately 0.8 percent of electricity consumed in the United States Washington state, home to nearly 8 million people, consumed 2.3 percent.

“It’s a huge amount of energy that we’re not being transparent about and we don’t understand the details of,” DeRoche told Grist. One of the reasons it's so difficult to track crypto mining energy consumption is the size of mining facilities, which can range from individual computers to giant warehouses. Smaller installations are often exempt from local permit requirements and frequently switch to a cheaper source of electricity. Energy consumption data for large operations is often hidden in private contracts with local utilities or tied to disputes over individual facilities, DeRoche said.

The Energy Information Administration, or EIA, is in an exceptionally powerful position to demand greater transparency from crypto miners. Under federal law, the agency can require any business engaged in “high energy consumption” to provide information about its energy use. 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 this authority over crypto miners and “implement a mandatory disclosure regime as quickly as possible.”

At the end of January, the EIA sent a letter to the White House Office of Management and Budget requesting emergency approval to investigate crypto mining facilities, thereby taking the first step toward creating such a regime. The letter raised concerns that the price of Bitcoin had increased by 50 percent over the past three months, encouraging more mining activity that could strain local power grids already strained by cold weather and winter storms.

“Given the emerging and rapidly evolving nature of this problem and because we cannot quantitatively assess the likelihood of public harm, we feel a sense of urgency to generate credible data that would provide insight into this ongoing problem ” wrote EIA Administrator Joseph DeCarolis in the letter. The White House approved the investigation on January 26.

Although its total electricity consumption is poorly understood, the impacts of cryptocurrency mining on utility bills and carbon pollution have been widely documented. A recent analysis from energy consulting firm Wood Mackenzie found that bitcoin mining in Texas has already increased electricity costs for residents of $1.8 billion per year. During the winter of 2018, utility bills for residents of Plattsburgh, New York increased up to $300 like nearby Bitcoin miners gobbled up low-cost hydropowerforcing the city to buy more expensive electricity elsewhere.

Crypto's growing demand for electricity has also revived previously shuttered fossil fuel generators. Near Dresden, New York, the once-shuttered Greenidge natural gas plant reopened in 2017 exclusively to power Bitcoin mining. In Indiana, a coal-fired power plant scheduled to be decommissioned in 2023 will now continue to operate, and a cryptocurrency mining facility is coming next door. About Bit, the crypto mining startup that owns the facility, told Indianapolis media outlet IndyStar that the installation had nothing to do with the coal plant remaining open. DeRoche pointed to other gas plants in new York And Kentucky where cryptocurrency mining operations have created 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 in Texas have achieved at least $60 million of the program, according to the New York Times. These subsidies don't generate much profit or jobs for local residents, DeRoche said: Even large mining operations employ only a few dozen people at most, the Times reported.

Bitcoin mining companies, however, argue that they benefit local residents. Riot Platforms, one of the largest bitcoin mining companies in the country, said in a statement 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 misusing energy resources. In a Letter from May 2022 At the Environmental Protection Agency, the Bitcoin Mining Council, a group representing Bitcoin mining companies, has made the dubious claim that “Bitcoin miners have zero emissions.” The group added: “Digital asset miners simply purchase the electricity made available to them on the open market, just like any industrial buyer. »

Policymakers are finally starting to wake up to the industry's impacts on the climate and neighboring communities. In November 2022, New York State adopted a two-year moratorium on new cryptocurrency mining facilities that source their energy from fossil fuel plants.

The EIA's surveys of cryptocurrency mining companies beginning this week will identify “sources of electricity used to meet the demand for cryptocurrency mining,” said DeCarolis, the administrator of the EIA, in a press release. The data will be published on the EIA website later this year.

This article was originally published in Grist has

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