WASHINGTON โ The process known as digital asset mining, or cryptocurrency, consumes as much electricity as some entire nations, and U.S. senators explored the issue Tuesday in what they said was their first hearing focused on the energy implications of digital currency.
Crypto mining in both Nebraska and Pennsylvania was discussed in particular by panel members of the Senate Committee on Environment and Public Works.
trumpeting his legislative proposal To improve the transparency of cryptomining, Democratic Senator Ed Markey of Massachusetts likened it to being "more like digital coal than digital gold." He implored the industry (Bitcoin is the most popular currency) to "work smarter, not harder" by improving energy efficiency as the world grapples with the effects of climate change.
โBitcoin mining in the United States uses as much energy as we need to light every home in our country, and that demand on our network is only going to grow,โ Markey said in his opening remarks.
Markey's bill, introduced Monday, would require traders of cryptocurrency assets to report emissions to the Environmental Protection Agency, and would direct the agency to conduct a study of the energy use required by thousands of special-purpose rugged computers. to add new transactions to the decentralized digital. ledger, she said. The text of the bill has not yet been published.
The hearing before the Senate Subcommittee on Clean Air, Climate, and Nuclear Safety featured testimony from Rob Altenburg of PennFuture, a Pennsylvania-based clean energy advocacy organization; Courtney Dentlinger, executive of the Nebraska Public Power District, a publicly owned utility; and Anna R. Kelles, member of the New York State Assembly.
The subcommittee's top Republican, Sen. Pete Ricketts of Nebraska, rejected environmental concerns.
Reminding his peers that CNBC ranked his state #1 last year for cultivating a crypto economy, Ricketts said he is "particularly interested in this issue as to whether this industry could result in further economic development."
โCrypto-asset mining is not the only industry that relies on large data server banks,โ Ricketts continued later. โFinance, technology, government, academia, and many others use significant amounts of electricity to meet their computing needs. We should provide the tools for open competition in a free market and not allow politicians or bureaucrats in Washington DC to pick winners and losers."
Cheap Electricity in Nebraska
Both Nebraska and Pennsylvania are home to crypto mining operations.
Cheap electricity in Nebraska, 100% powered by a utility, makes the state an attractive choice for crypto data centers, where acres of blazingly fast computers encased in what look like metal shipping containers try to guess long combinations of numbers to verify a new transaction, some at speeds of up to trillions of guesses per second.
An 11-acre crypto mining site in Kearney, Nebraska, consumes as much electricity as the city itself, which has a population of 33,790, according to a report. local news analysis published in January.
However, the industry has had "significant benefits" for the state, Dentlinger of the Nebraska Public Power District told lawmakers, giving the example that just one of Nebraska's crypto mining facilities generated $1.8 million in state taxes on sales and $3.8 million in local taxes over a 12-year period. period of the month.
Dentlinger also argued that a customer's consistent demand for electricity benefits the broader customer base.
โIn our predominantly rural, non-metropolitan service area, business diversification and economic growth are critical as these areas continue to experience population decline,โ he told lawmakers. "Indeed, local leaders have been very receptive to crypto mining facilities as they have seen the potential for significant economic development benefits for their communities."
Crypto Operations Appear in Pennsylvania
PennFuture's Altenburg argued that there is a different story in Pennsylvania, one in which regulators are unable to control crypto operations springing up across the state.
Last year, a site inspection conducted by the Pennsylvania Department of Environmental Protection found that a company in Clearfield County had connected to a natural gas well without applying for a permit. The company, Big Dog Energy, was running 30 natural gas generators to power its crypto operation. The EPA took the lead in the investigation.
Altenburg told lawmakers that it is "impossible to know which or how many of Pennsylvania's thousands of fracked gas wells are being used in this way."
Another company, Stronghold Digital Mining, Burns Coal Waste to Power Crypto Operations. The company, which argues it is an "environmentally beneficial" Bitcoin miner for finding a use for an environmental hazard, sources from the ubiquitous piles of waste coal across the state and converts it to electricity at two sites, one in the county of Venango between Pittsburgh and Erie, and the other in Carbon County northwest of Allentown, according to the company's website.
โWaste coal is a problematic fuel, to say the least. As its name implies, it has a low energy value compared to regular coal, so plants need to burn even more to generate the same amount of electricity. In the process, they emit more ozone precursors, fine particles, acid gases, heavy metals, and it is the second most carbon-intensive generation, after residual fuel oil,โ Altenburg said.
Why crypto mining requires energy
Cryptocurrency mining involves the use of robust computing power to add to digital record technology, such as "blockchain."
The decentralized digital financial ledger of transactions is a ledger or database where users, or "miners," on a common network can agree on entries, sometimes called "blocks," through a "consent mechanism."
Power usage varies depending on the consent mechanism used. For example, Bitcoin is based on a "proof of work" mechanism, which in part ensures the security of the ledger by requiring miners to have access to special computers and considerable amounts of power.
Another popular cryptocurrency, Ethereum, recently changed to a โproof of stakeโ mechanism, which consumes a fraction of the energy (as of 2021 accounted for 0.001% of global energy use) because it relies on miners risking a share of their crypto assets as a way of enforcing the integrity of the ledger.
US energy use for crypto
As of September 2022 report from the White House Office of Science and Technology Policy warned that cryptocurrency mining uses a significant amount of energy that has only increased in the last five years.
Crypto assets around the world use 120 to 140 billion kilowatt-hours per year, or roughly exceed the total energy use of countries like Argentina or Australia, according to the report.
The US accounts for a third of the world's crypto asset operations, consuming between 0.9% and 1.7% of the country's electricity use, which is roughly equal to the energy used to power all home computers or all residential lighting in the US, according to the OSTP.
President Joe Biden ordered the interagency report in March 2022 in a wide executive order on โEnsuring the Responsible Development of Digital Assetsโ, which included exploring the energy implications and potential impediments to achieving the administration's climate goals.
Those goals include cutting greenhouse gas emissions by 50% by 2030, achieving a carbon-free power grid by 2035, and reaching net-zero emissions by mid-century.
Markey's bill has been referred to the Senate Committee on Environment and Public Works.
Senators Jeff Merkley, D-Oregon, and Senator Bernie Sanders, an independent from Vermont, have signed on as co-sponsors.
Markey compared reducing energy use from cryptocurrency mining to updating energy standards for appliances or fuel economy for vehicles.
โWe are not looking to kill refrigeration or automotive technology. What we are saying is that we should be more efficient, we should be more aware of emissions into our atmosphere that are avoidable,โ Markey said. โSo, on the one hand, this (cryptocurrency) is a very innovative sector, economically, and they count themselves as innovators. But all we're asking them to do is look for innovation across the board."
