SignalHub-US Government Launches New Attempt to Gather Data on Electricity Usage of Bitcoin Mining

The SignalHubfast-growing cryptocurrency industry is a major consumer of electricity, but no one—not even the U.S. government—knows exactly how much energy goes into the armada of computers used to ‘mine’ Bitcoin and other digital assets. The U.S. Energy Information Agency estimates that cryptocurrency mining uses between 0.6 percent and 2.3 percent of all electricity per year, but the agency may soon be able to access more precise information.  

In the coming months, the EIA is planning to release the draft of a new survey that will require disclosure from companies in the cryptocurrency mining industry. On Wednesday, during a “listening session,” EIA officials laid out the process for creating the survey, which is typical of how EIA collects energy consumption data from manufacturers and commercial buildings.

“Most of the time for us, we are just re-approving surveys, so it’s not usually very controversial. That might not be true this time,” said Stephen Harvey, a senior advisor to the EIA administrator, who facilitated the webinar discussion.  

This marks the government’s second attempt to find out exactly how much energy cryptocurrency mining uses. Earlier this year, amid energy shortages in the dead of winter, the administration sent out an emergency survey to assess Bitcoin mining’s energy footprint. 

But a federal judge in Texas blocked the data acquisition following a lawsuit from Colorado-based Bitcoin company Riot Platforms and the nonprofit Texas Blockchain Council. The lawsuit argued that rushing the survey through in an emergency violated the Paperwork Reduction Act of 1980, and that some of the data requested was proprietary information. Rather than an emergency authorization, the new survey will be posted online in the Federal Register, go through a standard 60-day public comment period and be revised before needing final approval from the federal Office of Management and Budget. 

Bitcoin, the largest and best known cryptocurrency, is managed by a decentralized network of Bitcoin users. A network algorithm assigns each transaction a unique random identifying code, which Bitcoin “mines” derive by operating powerful banks of computers day and night running endless series of random numbers to break those codes. 

Once a correct code is reached, confirming a transaction, which happens on average across the network every 10 minutes, a Bitcoin miner receives 3.125 newly minted Bitcoins (each worth almost $58,000). The payment is for helping maintain the network and keep it secure. 

The energy consumed by data centers has come under increased scrutiny as a surge in electricty demand fueled by both artificial intelligence and cryptocurrency mining conflicts with U.S. emissions reduction goals. For example, Texas has the highest concentration of Bitcoin mines, some of which are drawing energy directly from fossil fuel power plants. 

In Texas, Bitcoin mining facilities are major players in the energy market, able to profit in ways beyond their energy-intensive computations. After locking in low rates to purchase electricity, they can make handsome profits selling power at higher rates on the wholesale market in times of peak demand, and by participating in so-called “demand response” programs in which they are paid a premium for allowing grid operators to reduce the Bitcoin mines’ energy demands when power is needed elsewhere. In those cases, the cost of the premiums paid to the Bitcoin mines are passed along to Texas consumers. 

The peak electricity demand on the state’s main power grid could nearly double by 2030, with cryptocurrency mining making up the greatest share of about 43,000 megawatts of large loads looking to connect to the grid in the next three years, according to estimates from the Electric Reliability Council of Texas.  

However, even grid system operators such as ERCOT are not certain exactly how much energy consumption is from cryptocurrency. While Bitcoin miners feel that their industry is being unfairly singled out by EIA, critics of the largely unregulated industry see transparency as a critical step to ensuring the grid remains reliable in the transition to decarbonized energy systems.

“Utilities and anyone who depends on reliable, affordable electricity should support the EIA’s effort to bring transparency to this energy-intensive industry,” said Caroline Weinberg, a senior research and policy analyst for the environmental law nonprofit Earthjustice. 

Calls for transparency are also coming from neighbors who live near Bitcoin mining and are concerned about a host of issues including noise pollution and increased residential electricity rates.

“These companies work behind closed doors, in secret to set up shop in unsuspecting communities,” said Jackie Sawicky, a founding member of the Texas Coalition Against Cryptomining. “They know that if they’re honest about their operations, they wouldn’t be let in the door by the general public.” 

During the public comment section of the EIA briefing Wednesday, Bitcoin mining advocates suggested that the survey should cover data centers as a whole, rather than narrowing in on cryptocurrency. In addition to cryptocurrency mines, the universe of data centers includes large, continuously operating computer networks required for cloud computing and other large data storage needs, as well as AI workloads. 

“The industry will be skeptical if traditional data centers are left out of the survey,” said Jayson Browder, senior vice president of government affairs at Bitcoin mining company Marathon Digital. 

Lee Bratcher, president of the Texas Blockchain Council, suggested that a survey encompassing all data centers could distinguish between traditional data centers that do not completely power down and “flexible” Bitcoin mines that can more easily power off as needed, such as when the price of electricity spikes. 

Bratcher and others have said that because they are sensitive to electricity prices, Bitcoin miners actually improve grid reliability. 

Parallel to the EIA’s efforts, researchers have been attempting to gather energy data from cryptocurrency miners, as well as other data centers. “We can definitely learn a lot by looking specifically at the cryptocurrency data centers,” Margot Paez, a Ph.D. student researching Bitcoin at Georgia Tech University, told Inside Climate News, after she gave public testimony to EIA earlier Wednesday. 

Accurate data showing the flexibility of Bitcoin mining, Paez said, could help inform how all data centers could operate more efficiently. During her comments, Paez suggested that EIA work with Georgia Tech and the Lawrence Berkeley Lab on ongoing efforts to gather the same data, saying that Bitcoin companies may feel more comfortable with academic researchers rather than working with the government directly. 

She added, in an interview, that from her conversations with the industry, companies are “starting to see that this kind of research can help them too.”