Seven of the largest Bitcoin mining companies in the United States are set up to use nearly as much electricity as Houston homes, according to data released Friday as part of an investigation by Congressional Democrats who say miners must report their energy use.
The United States has seen an influx of cryptocurrency miners, who use powerful, energy-intensive computers to create and track the virtual currency, after China cracked down on the practice last year. Democrats led by Senator Elizabeth Warren are also calling on companies to report their emissions of carbon dioxide, the greenhouse gas that is the main cause of climate change.
“This limited data alone reveals that cryptominers are major energy consumers responsible for a significant — and rapidly growing — amount of carbon emissions,” Sen wrote. Warren and five other members of Congress in a letter to the heads of the Environmental Protection Agency and Department of Energy. “But little is known about the full scope of crypto mining activities,” they wrote.
Research has shown that an increase in crypto mining also significantly increases energy costs for local residents and small businesses, and has increased the strain on the electrical grid in states like Texas, the letter said.
Cryptocurrencies like Bitcoin have grown exponentially since they were introduced more than a decade ago, and in recent years there have been concerns about crypto mining, the process of creating a virtual currency. That process, a complex guessing game that uses powerful and energy-consuming computers, is very energy-intensive. Globally, Bitcoin mining uses more electricity than many countries.
Earlier this year, a group of congressional Democrats launched an investigation into energy consumption at the country’s largest crypto mining companies. They asked seven crypto mining companies for data on their activities, and the group’s findings, published Friday, are based on the companies’ responses.
That data showed that the seven companies were set up to tap a whopping 1,045 megawatts of power alone, or enough electricity to power all homes in a city the size of Houston, the nation’s fourth-largest city with 2.3 million inhabitants. The companies also said they plan to expand their capacity at an eye-watering pace.
One of the largest crypto mining companies in the United States, Marathon Digital Holdings, told the probe it was operating nearly 33,000 highly specialized, energy-intensive computers known as “mining rigs” in February, up from just over 2,000 at the beginning of February. 2021. By early next year, it plans to increase that number to 199,000 rigs, a nearly 100fold increase in two years, it said.
The company currently operates a crypto mining center powered by the Hardin Generating Station in Montana, which generates electricity by burning coal, the dirtiest fuel. But in April, Marathon announced it would move those operations to “new locations with more renewable energies” and that the company was moving toward carbon neutrality. It gave no further details.
Crypto mining companies are often located near power sources due to their high demand for electricity.
Greenidge Generation Holdings, which operates a Bitcoin mining center powered by a natural gas plant in upstate New York, said it expected it to increase its mining capacity tenfold by 2025 in multiple locations, including South Carolina and Texas. But New York last month refused to renew an air pollution permit for the facility, calling Greenidge’s crypto mining activities a threat to state goals to limit greenhouse gas emissions to combat climate change. Greenidge has said it can continue to operate under its current license while challenging the state’s decision.
Overall, the seven largest crypto mining companies expect their total mining capacity to increase by at least 2,399 megawatts in the coming years, an increase of nearly 230 percent from current levels, and enough energy to power 1.9 million homes. to provide.
Some crypto mining companies say they work with renewable energy. Riot Blockchain, in response to the senators’ request for information, pointed to its Coinmint mining facility in Massena, NY, which uses hydroelectricity almost exclusively. But the much larger Whinstone facility draws power from the Texas grid, which relies on coal or natural gas for more than 60 percent of its production capacity, the letter said.
The company’s CEO, Jason Les, said in a statement that renewable energy continued to grow in Texas and that cryptominers had the flexibility to shut down during high periods of demand, easing pressure on the grid.
The rising demand of crypto mining, meanwhile, is also responsible for driving up local electricity bills. A study by researchers at the University of California, Berkeley, found that the power needs of cryptominers in New York State had pushed up annual electricity bills for small businesses by about $165 million and for individual households by $79 million. That worked out to about an additional $71 per year for the average household, or about 6 percent more.
It was unclear how a recent drop in cryptocurrency prices would affect expansion plans. And the overall picture of cryptominers’ energy use outside the seven companies was not clear either.
Given these concerns, Senator Warren said in her letter, the EPA and DOE should work together to establish rules that would require cryptominers to report their energy use and emissions. That would allow the federal government to monitor energy consumption and trends with a view to beginning to regulate a largely unregulated industry.
The White House is also studying policy recommendations to reduce the energy consumption and emissions footprint of cryptocurrency mining, Bloomberg Law reported last month.
China’s crackdown on cryptocurrencies last year rocked the crypto world, leading to a mass exodus of miners. Data collected by Cambridge researchers shows that the United States is now the world’s largest Bitcoin mining hub, accounting for about 37 percent of the global hashrate, a measure of the computing power used for mining.
