Cryptomining Capacity in US Rivals Energy Use of Houston, Find Show

Seven of the largest Bitcoin mining companies in the United States are set to use nearly as much electricity as all the homes in Houston, according to data revealed Friday as part of an investigation by congressional Democrats who say miners should be required to report their energy . use.

The US has seen an influx of cryptocurrency miners, who use powerful, energy-hungry computers to create and track the 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 major energy users that account for a significant — and rapidly growing — amount of carbon emissions,” Senator Warren and five other members of Congress wrote in a letter to the heads of the Environmental Protection Agency and the Department. of energy. “However, 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 has increased the load on the power grid in states like Texas, the letter noted.

Cryptocurrencies like Bitcoin have grown exponentially since they were introduced more than a decade ago, and in recent years there have also been concerns about cryptomining, the process of creating a virtual coin. This process, a complex guessing game that uses powerful and power-hungry computers, is very energy-intensive. Worldwide, Bitcoin mining consumes more electricity than many countries.

Earlier this year, a group of congressional Democrats launched an investigation into the energy use of the nation’s largest cryptomining companies. They asked seven cryptomining companies for data about their operations, and the group’s findings, released Friday, are based on the companies’ responses.

That data showed that the seven companies alone were set to draw as much as 1,045 megawatts of electricity, or enough electricity to power all the homes in a city the size of Houston, the nation’s fourth largest city with a population of 2.3 million. The companies also said they plan to expand capacity at an eye-watering rate.

One of the largest cryptomining companies in the US, Marathon Digital Holdings, told the probe that it operated nearly 33,000 highly specialized, power-intensive computers, known as “mining rigs,” as of February, up from just over 2,000 at its inception. by 2021. Early next year, it intends to get that number up to 199,000 rigs, an almost hundredfold 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 that it would move those operations to “new locations with more sustainable power sources” and that the company was moving toward achieving carbon neutrality. It did not provide further details.

Cryptomining 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 New York state, said it expected to tenfold its mining capacity at several locations, including in South Carolina and Texas, by 2025. But New York last month refused to renew a air pollution permit for the facility, calling Greenidge’s cryptomining operations a threat to the state’s goal of limiting greenhouse gas emissions to combat climate change. Greenidge has said it can continue to operate under its current permit while challenging the state’s decision.

Overall, the top seven crypto mining companies expected to increase their total mining capacity by at least 2,399 megawatts in the coming years, an increase of almost 230 percent from current levels, and enough energy to power 1.9 million homes.

Some cryptomining companies say they operate with renewable energy. Riot Blockchain, in its response to the senators’ request for information, pointed to the Coinmint mining facility in Massena, NY, which uses almost exclusively hydropower. But the much larger Whinstone plant draws power from the Texas grid, which relies on coal or natural gas for more than 60 percent of its generation capacity, the letter said.

The company’s CEO, Jason Les, said in a statement that renewable energy in Texas continued to grow and that cryptominers had the flexibility to shut down during peak periods of demand, easing pressure on the grid.

Rising demand from cryptomining, meanwhile, has also been blamed for increasing 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 by about $165 million for small businesses and $79 million for individual households. That came out to about $71 a year extra for the average household, or about a 6 percent increase.

It was unclear how a recent decline in cryptocurrency prices would affect the expansion plans. And the overall picture of cryptominers’ energy use beyond 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 crypto miners to report their energy use and emissions. It would allow the federal government to monitor energy use and trends with a view to beginning to regulate a largely unregulated industry.

The White House is also studying policy recommendations to lower cryptocurrency mining’s energy consumption and emissions footprint, Bloomberg Law reported last month.

China’s crackdown on cryptocurrencies upended the crypto world last year, sparking a mass exodus of miners. Data compiled by researchers at Cambridge 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.