Facing a growing crypto-mining sector, the U.S. to require reports of power use by miners

Facing a growing crypto-mining sector, the U.S. to require reports of power use by miners

Energize Weekly, February 14, 2024

Faced with a burgeoning cryptocurrency market and its rising demand for electricity, the U.S. government is going to collect monthly data on the industry’s use of power.

The federal Energy Information Administration (EIA) has received emergency clearance from the Office of Management and Budget to begin tracking cryptocurrency mining electricity demands and impacts.

Crypto miners identified by the EIA survey will be required to supply details of their energy use to the agency.

“We will specifically focus on how the energy demand for cryptocurrency mining is evolving, identify geographic areas of high growth, and quantify the sources of electricity used to meet cryptocurrency mining demand,” EIA Administrator Joe DeCarolis said in a statement.

The EIA estimates that between 0.6 percent and 2.3 percent of the total 2023 U.S. electricity consumption of 3,900 terawatt-hours went to cryptocurrency operations. This is equivalent to the electricity demand of three million to six million homes.

At the low end of that range, it would equal the annual electricity usage for states such as Utah and West Virginia,

“The activity began to expand rapidly in 2019,” the EIA said. “Recent growth is largely due to cryptocurrency mining operations relocating to the United States from China after that country cracked down on digital currency mining in 2021.”

The Cambridge Bitcoin Electricity Consumption Index (CBECI), published by the Cambridge Centre for Alternative Finance, tracks the daily global power demand for two of the largest cryptocurrencies, Bitcoin and Ethereum.

The CBECI estimates the United States’ share of Bitcoin mining rose from 3.4 percent in January 2020 to 37.8 percent in January 2022, the last month for which published estimates are available.

Crypto mining is energy intensive as it relies on specialized computers, or mining units, operating round the clock, for bidding, verifying, and storing cryptocurrency transactions.

Operations identified by the EIA use 10,000 to 30,000 mining units, although the largest facilities are known to have as many as 100,000.

The agency has found 137 crypto-mining facilities in the U.S. and has geographical locations for 52, with Texas, Georgia and New York having the largest concentrations.

The Electric Reliability Council of Texas has 41 gigawatts (GW) of requests for new cryptocurrency mining capacity, for which 9 GW of planning studies have been approved, according to North American Electric Reliability Corp. (NERC).

The EIA was able to track the electricity generation at five small power plants in Montana, New York and Pennsylvania, where crypto mining has taken place and saw power generation doubling between 2016 and 2022 to more than 2 million megawatts-hours

Of the 137 facilities identified, the agency was able to calculate the maximum electricity use at 101 of them, estimating the annual power demand of about 450,000 MW or about 2.3 percent of U.S. power demands.

“This additional electricity use has drawn the attention of policymakers and grid planners concerned about its effects on cost, reliability, and emissions,” the EIA said.

In its latest long-term reliability assessment. NERC said that “due to unique characteristics of the operations associated with cryptocurrency mining, potential growth can have a significant effect on demand and resource projections as well as system operations.”

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