Seven of the largest Bitcoin mining companies in the United States are set to use nearly as much electricity as homes in Houston, according to data leaked Friday as part of an investigation by congressional Democrats who say miners should be required to report their energy consumption. .
The United States has seen an influx of cryptocurrency miners, who use powerful, power-hungry computers to create and track virtual currencies, after China cracked down on the practice last year. Democrats led by Senator Elizabeth Warren are also asking companies to report their emissions of carbon dioxide, the greenhouse gas that is the main driver of climate change.
“These limited data alone reveal that cryptominers are energy-intensive consumers that account for a significant — and rapidly growing — amount of carbon emissions,” Sen. Warren and five other congressmen wrote in a letter. to heads of the Environmental Protection Agency and Department of Energy. “But little is known about the full extent of cryptomining activity,” they wrote.
Research has shown that an increase in cryptomining also significantly increases energy costs for local residents and small businesses, and added to the strain on the power grid in states like Texas, the letter notes.
Cryptocurrencies like Bitcoin have grown exponentially since their introduction over a decade ago, and in recent years there have been concerns about cryptomining, the process of creating a virtual coin. This process, a complex guessing game using powerful and power-hungry computers, is very energy-intensive. Worldwide, Bitcoin mining uses more electricity than many countries.
Earlier this year, a group of congressional Democrats launched an investigation into power consumption at the nation’s largest cryptomining companies. They asked seven cryptomining companies for data on their operations, and the group’s findings, released on Friday, are based on the companies’ responses.
This data showed that the seven companies alone had put in place up to 1,045 megawatts of electricity, enough electricity to power all residences in a city the size of Houston, the fourth largest city. of the country with 2.3 million inhabitants. The companies also said they plan to expand capacity at a staggering rate.
One of the largest cryptomining companies in the United States, Marathon Digital Holdings, told the probe it was operating nearly 33,000 highly specialized, power-hungry computers, called “mining rigs”, in February, against just over 2,000 at the start. of 2021. By the start of next year, it aims to increase that number to 199,000 platforms, an increase of almost a hundred times in two years, he said.
The company currently operates a cryptomining center powered by the Hardin Power Plant 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 sustainable energy sources” and that the company is moving toward carbon neutrality. He did not provide further details.
Cryptomining businesses are often located near power sources due to their high demand for electricity.
Greenidge Generation Holdings, which operates a natural gas plant-powered bitcoin mining hub in upstate New York, said it plans to increase its mining capacity tenfold in multiple locations, including South Carolina and in Texas by 2025. But New York last month refused to renew an air pollution permit for the facility, calling Greenidge’s cryptomining operations a threat to the state’s goals of limiting greenhouse gas emissions to combat climate change. Greenidge said he could continue to operate under his current license while challenging the state’s decision.
Overall, the seven largest cryptomining companies planned to increase their total mining capacity by at least 2,399 megawatts in the coming years, an increase of almost 230% from current levels, and enough energy to power 1.9 million homes.
Some cryptomining companies claim to operate using renewable energy. Riot Blockchain, in its response to the Senators’ request for information, pointed to its Coinmint mining facility in Massena, NY, which uses almost exclusively hydroelectricity. But its much larger Whinstone facility draws its power from the Texas grid, which relies on coal or natural gas for more than 60% of its generating capacity, the letter says.
The company’s chief executive, Jason Les, said in a statement that renewable energy in Texas continues to make progress. And cryptominers had the ability to shut down during times of high demand, relieving pressure on the network.
Rising demand for cryptomining, meanwhile, has also been blamed for driving up local electricity bills. A study by researchers at the University of California, Berkeley found that the electricity demands of upstate New York cryptominers have driven up annual electricity bills by around $165 million for small businesses and $79 million for individual households. That was about $71 more per year for the average household, an increase of about 6%.
It was unclear how a recent drop in cryptocurrency prices would affect expansion plans. And the overall picture of cryptominer power consumption beyond the seven companies was also unclear.
Given these concerns, Senator Warren said in her letter that the EPA and DOE should work together to establish rules that would require cryptominers to report their energy consumption and emissions. This would allow the federal government to monitor energy use and trends in order to begin regulating a largely unregulated industry.
The White House is also considering policy recommendations to reduce the energy consumption and emissions footprint of cryptocurrency mining, Bloomberg Law reported last month.
China’s crackdown on cryptocurrencies rocked the crypto world last year, triggering a mass exodus of miners. Data compiled by Cambridge researchers shows that the United States is now the largest Bitcoin mining center in the world, accounting for around 37% of the global hashrate, a measure of the computing power used for mining.