US Government Takes Urgent Measures to Assess Cryptocurrency Miners’ Impact on Energy Grid
The United States Department of Energy (DOE) is responding to growing concerns about the surging energy consumption associated with cryptocurrency mining. In an unprecedented move, the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the DOE, has initiated an emergency survey to collect data on electricity usage from identified cryptocurrency mining companies operating in the United States.
The EIA’s urgency is fueled by the recent 50% surge in Bitcoin’s price over the last three months, which it believes will further incentivize crypto mining activities and subsequently increase electricity consumption. The emergency clearance, authorized by the Office of Management and Budget (OMB), highlights the potential public harm caused by the combination of heightened crypto mining and stressed electricity systems, particularly during periods of high demand.
Beginning next week, the EIA will survey commercial cryptocurrency miners, compelling them to provide detailed information on their energy use. The agency is also seeking public input on the collection of data related to cryptocurrency miners’ energy consumption. EIA Administrator Joe DeCarolis emphasized the agency’s commitment to assessing the evolving energy demand for cryptocurrency mining, identifying areas of high growth, and quantifying the sources of electricity used.
The move comes amid rapid growth in cryptocurrency mining activities in the United States, driven in part by miners relocating from China following the country’s crackdown on digital currency mining in 2021. Policymakers and grid planners have raised concerns about the energy-intensive nature of cryptocurrency mining, its impact on the electricity grid, and potential consequences for electricity prices and carbon dioxide emissions.
The EIA has adopted both top-down and bottom-up approaches to estimate electricity use by U.S. cryptocurrency mining operations. The Cambridge Bitcoin Electricity Consumption Index (CBECI) provides estimates of power demand from Bitcoin and Ethereum mining globally, indicating that cryptocurrency mining may represent 0.6% to 2.3% of U.S. electricity consumption. The EIA has identified 137 U.S. cryptocurrency mining facilities and plans to conduct a mandatory survey to systematically evaluate their electricity consumption.
Government scrutiny on cryptocurrency mining’s energy consumption is not new. In 2022, Congress held a hearing on the industry, and in early 2023, U.S. President Joe Biden proposed a 30% incremental tax on crypto miners’ electricity costs to reduce mining activity. The EIA’s current emergency data collection underscores the government’s determination to address the energy implications of cryptocurrency mining comprehensively.
As the U.S. government intensifies efforts to monitor and regulate cryptocurrency mining, industry participants, including miners, investors, and policymakers, await the insights that the collected data will provide. The findings will be crucial for informing planning decisions, educating the public, and developing a more comprehensive understanding of the cryptocurrency mining landscape in the United States.