The US government just approved an emergency investigation into how much energy cryptocurrency miners are siphoning from the US power grid.
More specifically, the Energy Information Administration, part of the US Department of Energy, has received funding for a six month study in cryptocurrency energy use, which will involve collecting and analyzing network utilization data from dozens of mining operations.
The EIA justified [PDF] the emergency nature of their investigation, arguing that an ongoing severe cold snap in the country coupled with a recent rise in the price of Bitcoin, and therefore demand for digital money, could cause an unnecessary drag on the power grid of the US this year and push up people's bills.
"The price of Bitcoin has increased approximately 50 percent over the past three months, and higher prices incentivize greater crypto mining activity, which in turn increases electricity consumption," wrote EIA administrator Joseph DeCarolis, in a letter last month.
The combined effects of increased crypto mining and stressed electrical systems create greater uncertainty in electrical energy markets.
"As of this writing, much of the central United States is in the grips of a major cold snap that has resulted in high demand for electricity. The combined effects of increased crypto mining and stressed electrical systems "create greater uncertainty in electric power markets, which could result in demand spikes that affect system operations and consumer prices."
Cryptocurrencies like Bitcoin use a system known as โproof of workโ to validate transactions and add them to the blockchain, producing currency for miners in the process. This requires performing calculations over and over again to solve increasingly difficult mathematical puzzles that are primarily done using specialized mining hardware that consumes a good amount of electricity.
Ethereum, the second most popular cryptocurrency after Bitcoin by market capitalization, switched to a "proof-of-stake" system, which aims to use much less energy, in 2022. Several cryptocurrencies use proof-of-work or proof-of-stake.
Digiconimist, which has been tracking Bitcoin energy usage for years, claims Electrical energy used by Bitcoin miners currently amounts to approximately 138 TWh per year, and peaked in the first half of 2022 at 205 TWh per year. A single Bitcoin transaction apparently consumes about 762.89 kWh, the same amount of energy an average American home would use in 26.15 days.
Of course, all that energy consumption generates a lot of heat, which means using water for cooling and such is absurd also. A single Bitcoin transaction, Digiconimist claims, uses 12,023 liters of H2Or: about the amount you would find in a modest backyard above-ground pool, while the entire global Bitcoin mining industry is said to use about the same amount of water in a year as Switzerland.
Energy usage of cryptocurrency networks rises and falls with prices. As the value of Bitcoin has risen continuously throughout much of 2023 and into this year, energy consumption by miners has only increased.
Taking a quick first look
The EIA will begin sending surveys to 82 crypto mining companies in the United States next week, which it said will need to respond with details of their energy use, including self-generated electricity.
โWe have developed general estimates of electricity use by U.S. cryptocurrency mining operations using both top-down and bottom-up approaches,โ management said. saying in a preliminary analysis of crypto mining energy use published Thursday.
"To develop more rigorous estimates of electricity use by US cryptocurrency miners... we plan to begin collecting data monthly from February to July 2024."
Register asked the EIA about the ultimate goal of the survey, specifically whether it plans to use the data to develop restrictions or regulations on energy use by cryptocurrency miners, but the agency declined to answer, saying it was only getting a better understanding.
"The EIA is in a unique position to collect information directly from companies, and the data we collect will assist in our assessment," an EIA spokesperson told us.
The EIA told us that it hopes to develop a basic snapshot of crypto mining companies and their energy use, quantify how much energy use by identified miners fluctuates, identify energy sources, and identify regions where crypto mining is concentrated.
โWe will focus specifically on how energy demand for cryptocurrency mining is evolving, identify high-growth geographic areas, and quantify the sources of electricity used to meet cryptocurrency mining demand,โ DeCarolis said in a statement. canned statement.
The EIA estimates that cryptocurrency mining is responsible for between 0.6 and 2.3 percent of all U.S. electricity consumption. According to the watchdog, more concerns are being heard from network operators from China. repressed on cryptocurrency mining in 2021, causing operations to migrate out of the Middle Kingdom.
"Stresses on the power grid during periods of peak demand, the potential for higher electricity prices, as well as the effects on energy-related carbon dioxide (CO2)2) "emissions," the EIA said. "Grid planners have also begun to express concern."
Approval for the EIA cryptocurrency mining study expires on July 31, 2024. We are told that the results of the next six months will determine whether the agency obtains funding to continue collecting and gathering this type of data. ยฎ
