Cryptocurrency Miners Need to Report their Energy Use

Recently, several cryptocurrency mining companies sued the US Energy Information Administration (EIA) instead of responding to a survey about their energy use. After several cases where energy-intensive proof-of-work cryptocurrency mining threatened to destabilize the network and caused price spikes, the EIA, an agency of the Department of Energy, launched an interim survey of cryptocurrency consumption. electricity from U.S. cryptocurrency mining companies in February 2024. That initial survey was paused by industry demand, but the EIA will now proceed with a public comment process on reporting requirements for cryptocurrency miners, the first step toward establishing permanent requirements for miners to report their energy usage data.

All other major energy-using industries report this type of data to the EIA, so that the EIA can produce studies and reports to assist utilities, grid operators, and regulators with their energy planning. As the EIA recognized, there is a pressing need for the cryptocurrency industry to begin to account for its growing energy demands, which have threatened to overwhelm current systems to ensure reliable electric service and increase electricity prices in the states where they have important operations.

Earthjustice and its partners urged the EIA in 2022 to collect such data because the lack of transparency and regulation of these highly polluting and energy-intensive operations means that the public and regulators cannot fully understand the true impact of their operations on the network and local communities.

Cryptocurrency operations are huge and difficult to trace

Cryptocurrency mining is an energy-intensive process that threatens the United States' ability to maintain the stability of our electric grid and rates, as well as our ability to reduce our dependence on climate-warming fossil fuels. In its February 2024 analysis, Estimated EIA that cryptocurrency mining in the US can represent up to 2.3% of total US electricity demand.

Although cryptocurrency mining operations have become increasingly specialized, concentrated, price-sensitive and capital-intensive (and therefore identifiable as a distinct class of businesses and energy users), it is difficult or It is impossible to find information about the scale, location or fuel source of many cryptocurrency mining operations in the United States.

Cryptocurrency mining is largely invisible to US regulators, with little to no reporting requirements at the state or federal level. Currently, the main sources of publicly available information on the energy use and environmental impacts of cryptocurrencies are local journalists, company press releases, and Securities and Exchange Commission (SEC) filings from mining companies. of publicly traded cryptocurrencies. Among the few companies that file reports with the SEC, many do not disclose the locations or fuel sources associated with the listed miners in their financial reports, or when they do, they provide only partial, selective or misleading information, such as Describe your energy supply as “environmentally friendly”, “reliable, renewable” or “high emissions-free”..”

The EIA has the legal authority to collect data on the energy use of cryptocurrency miners, as it has done since the manufacturing industry and other industries, in order to provide reports to inform energy planning decisions across the country. Reporting charges are minimum.

Regulators and the public have a right to know this information because, as the EIA noted, during times of peak demand, such as cold waves or heat waves, the power demands of cryptocurrency miners can affect network operations and cause blackouts and voltage drops. Not only is it appropriate for the EIA to collect information on such a large electricity consumer, but such collection is necessary so that utilities and the public have the information they need to properly evaluate the grid, climate, price and the local implications of cryptocurrency. mining industry in addition to individual operations.

If EIA does not collect and publish this data, existing impacts on the grid and taxpayers will only worsen.

Cryptocurrency mining threatens the network

Take it from the network operators themselves: Last summer, Texas state grid operator ERCOT warned that cryptocurrency miners “exhibited inconsistent behavior during resource shortage events” that pushed the network dangerously low. verge of failure. ERCOT noted that the lack of transparency and coordination over energy consumption by cryptocurrency miners during winter storms Uri and Elliot, and during heat waves, has impacted ERCOT's ability to adequately forecast energy demand and response. . ERCOT explicitly noted that crypto miners "have shown inconsistent behavior during resource shortage events" and if crypto miners "had not voluntarily curtailed on June 20, 2023, ERCOT would have been forced to conduct emergency operations."

The Tennessee Valley Authority (TVA), which covers large areas in seven states, has had to take action significant adjustments to adapt to the growth of crypto mining and its impacts on electricity service and rates.

Last year in Kentucky, the Public Service Commission denied a proposed discounted electricity rate contract for a crypto mining facility over concerns that it could not be trusted to reduce its load if necessary during peak power periods and that its demands on the grid would increase costs for all customers of the utility company.

TO government report on the winter storm Elliott found that one of the main factors that led to deadly blackouts during the storm was the inability of utility companies to reliably predict demand. ERCOT noted that the lack of transparency and coordination regarding energy consumption by cryptocurrency miners during winter storm Uri and Elliot affected ERCOT's ability to adequately forecast energy demand and response. ERCOT projects that cryptocurrency mining will consume 37 GW by 2028.

Utilities and grid operators must have reliable and up-to-date information on cryptocurrency mining operations to maintain grid stability, especially when power generation may be in short supply. In fact, the EIA has determined that there is an urgent need for this information, requesting an emergency review and citing the national network. Monitor NERC's 2023 Long-Term Reliability Assessment which warned that cryptocurrency mining has a significant effect on the network.

Cryptocurrency mining threatens taxpayers

As cryptocurrency mining operations expand in the US, electricity prices are rising for other ratepayers. We have documented examples of this in Washington, NY, Kentuckyand more.

In Texas, Bitcoin mining has already raised electricity costs for non-mining Texans by $1.8 billion a year, or 4.7%, according to conservative estimates by a consulting firm. mackenzie wood.

Similarly, a BloombergNEF report, ERCOT Market Outlook: It's All Up to Bitcoin, found that energy prices in Texas will skyrocket for consumers if Bitcoin mining continues its rapid expansion. The models show that peak energy prices increase by 30% in a scenario where the maximum cryptomining load amount roughly triples, and increase by around 80% in a scenario where the maximum cryptomining load amount Crypto mining multiplies by six. The report states: “ERCOT power prices will be a function of new bitcoin mining facilities.”

Taxpayers should not be affected by the massive energy consumption of cryptocurrency mining. The EIA should collect this information to provide grid operators, electric service providers, and the public with full access to information about the size, location, and characteristics of cryptocurrency mining operations in the US.

The public deserves to understand the polluting impacts of cryptocurrency mining.

In addition to affecting grid stability and customers' electricity rates, cryptocurrency mining keeps coal and gas plants running, causing local air and water pollution and long-term climate damage. Due to the lack of transparency around information about cryptocurrency mining operations and how they obtain energy, it is impossible to accurately assess the emissions intensity of cryptocurrency mining operations in the US. The EIA consistently clues and reports on the emissions intensity of power generation in the US, and it is also appropriate that they collect information related to emissions from cryptocurrency mining operations. Earthjustice urged the EIA to collect data by expanding its Manufacturing Energy Consumption Survey (MECS) to include cryptocurrency mining and ensuring that its surveys of electricity generators capture information on direct service or diversion of behind-the-meter electricity to cryptocurrency miners.

In addition to air and water pollution, cryptocurrency mining operations generate significant noise pollution in local communities, resulting in health impacts, as reported in Arkansas and Texas. The public deserves information about these operations that impact their daily lives.

The EIA should continue its efforts to collect and publish this information publicly so that host communities can accurately understand how their local environment may be affected by cryptocurrency mining operations and so that the climate risks of this industry can be accurately assessed.

EIA must finalize requirements for companies to report this data

The EIA must act quickly to collect and analyze this data as soon as possible. The EIA announced that it will now seek public comment on the data collection. This could Proceed fairly quickly in a few months, but only if the agency makes it a priority. Cryptocurrency mining operations cannot be allowed to continue hiding their energy use. Inconsistent behavior by cryptocurrency miners during times of peak power demand has brought the power grid dangerously close to failure in Texas, nearly forcing blackouts.

The EIA must move forward requiring these reports as quickly as possible to protect public health and safety. Utilities and anyone who depends on reliable, affordable electricity should support the EIA's effort to bring some transparency to this industry.

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