The United States Department of Energy recently announced it will collect energy use data from crypto miners next week.
Crypto Miners Required To Give Their Energy Use Details
On January 31, The US Energy Information Administration (EIA) announced the initiation of a provisional survey to collect electricity consumption data from identified crypto-mining companies operating in the country.
The proposed emergency survey, named “Cryptocurrency Mining Facilities,” was authorized as an “emergency collection of data request” by the Office of Management and Budget (OMB) on January 26, 2024.
We’re initiating collection of data regarding #electricity use by US #cryptocurrency miners.
We’ll ask about their electricity consumption so we can better understand their energy demands.
👉https://t.co/gYpZgtiD6J pic.twitter.com/pQ9ULoLAAU
— EIA (@EIAgov) January 31, 2024
The EIA will start collecting data on a sample of commercial crypto-miners next week. Miners will be “required to respond with details related to their energy use.” The agency will also solicit public comment on collecting crypto miners’ energy use data.
As the OMB’s conclusion details, the EIA collection of energy data use information will:
Develop a baseline snapshot of the cryptomining companies in the sample; quantify the rate of change in cryptomining activity among the companies in the sample; identify electricity sources for US cryptominers in the sample; and, identify regions of the United States with concentrated cryptomining activity is located based off the companies in the sample.
The EIA administrator, Joe DeCarolis, expressed the agency’s intention to analyze and write the energy implications of crypto mining activities in the US, detailing in the EIA’s press release that the agency “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.”
Electricity Expert at EIA Glenn McGrath told Reuters, “We do think it is a significant source of demand which is worthy of our efforts to quantify it,” adding that “Until we can substantiate the activity with better data, we, too, have more questions to answer.”
The Potential Increase In Bitcoin Mining Activity
According to the International Energy Agency (IEA) report, in 2022, crypto mining accounted for 0.4% of the global annual electricity consumption, with about 110TWh consumed. In 2023, the figure increased to 130TWh consumed, with Bitcoin accounting for 120TWh out of the total in that year.
The report estimates that the electricity consumption from crypto mining will increase by 40% in 2026, reaching 160 TWh.
Breakdown of crypto use, AI data centers, and traditional data center electricity demand, 2022 and 2026, base case. Source: EIA.
The United States became the largest mining hub in the world after China banned crypto mining operations in 2021. McGrath recognized that the EIA “has received requests from various sectors to begin to quantify cryptocurrency mining energy use,” according to Reuters.
In the EIA’s memo requesting emergency approval of the project, the agency explained that the 50% surge in Bitcoin’s price in the last three months increases the likeliness of “public harm,” as the higher price reward will incentivize more crypto mining activity, subsequentially increasing the electricity consumption.
To the Agency, a crypto mining-related surge in demand could affect the already “stressed electricity system,” the system operations, and consumer prices, justifying the emergency collection data request.
However, the Bitcoin community and independent institutions such as the Cambridge Centre for Alternative Finance (CCAF) have heavily questioned similar data and conclusions from other governments and BTC critics. An analyst stated the following regarding the report from the CCAF and Bitcoin’s energy consumption:
Cambridge have just updated their Bitcoin power/energy consumption methodology. It’s decreased around 25% and is now looking much more accurate. My model says 13.095 GW. Very similar to Cambridge now.
Bitcoin is trading at $42,565.83 in the hourly chart. Source: BTCUSDT on TradingView.com
Featured image from Unsplash.com, Chart from Tradingview.com
