Here’s how much energy crypto mining is gobbling up in the US

Crypto industry operations in the United States use about as much electricity as all of the nation’s home computers combined, according to a report released today by the White House Office of Science and Technology Policy. The report paints the clearest picture yet of what crypto operations cost both the power grid and the environment in the United States. It also outlines some potential actions the Biden administration could take to address these challenges.

Democratic lawmakers in particular have been concerned about whether the crypto industry that has exploded in the United States over the past year could derail climate goals. And as extreme weather pushes power grids to their limits across the United States, there is growing concern that the most electricity-hungry cryptocurrencies could put even more strain on already vulnerable energy systems.

Crypto asset operations consume between 0.9 and 1.7 percent of total US electricity use, according to the new report. And burning through that much electricity generates greenhouse gas emissions that warm the planet. Crypto asset activity in the United States is responsible for about as much greenhouse gas pollution as all the diesel fuel used on the nation’s railroads, the report said. That’s 25 to 50 million tons of carbon dioxide per year, or 0.4 to 0.8 percent of total US greenhouse gas emissions.

The data in the report includes cryptocurrencies, NFTs and other tokens that use blockchain technologies. But there is one particular technology that drives most of these challenges: it is a kind of security system called proof of work that currently underpins the largest cryptocurrency networks: Bitcoin and Ethereum.

Proof of work eats up most of the energy that the crypto industry uses. With proof of work, crypto “miners” race to solve puzzles for the chance to validate blocks of transactions. These blocks are added to the blockchain, and the miners receive new tokens in return. This system encourages miners to increase their computing power to have a better chance of winning that reward.

All that computing power is what makes blockchains like Bitcoin and Ethereum so energy hungry. Fortunately, there are other newer blockchains that have found different methods that use a fraction of the energy to verify transactions. Within weeks, for example, Ethereum is expected to switch over to one of the new methods. The merger, as the long-awaited transition away from proof of work is called, is intended to cut Ethereum’s energy consumption by up to 99.95 percent.

But as long as Bitcoin sticks with proof of work and remains the dominant cryptocurrency, crypto miners will continue to cause problems. In the USA, they have driven up the electricity bills in local communities where they have set up shop. All the hardware they use adds to piles of e-waste. And as long as fossil fuels dominate America’s electricity mix, energy used for cryptomining will generate air pollution that warms the planet and damages local air quality.

Some crypto mining operations have even revived aging coal and gas-fired power plants that were otherwise expected to close. It could derail US efforts to combat climate change. “Restarting coal and other fossil fuel plants erodes some of the progress the United States has made” in cutting greenhouse gas emissions, the report said.

China used to be the home base for most Bitcoin mining operations. But miners found out across the globe after China cracked down on them in 2021. The US quickly became the new biggest hub for crypto mining, with around 38 percent of the world’s Bitcoin mining.

That has lawmakers scrambling to figure out how to respond to Bitcoin miners on the move. New York State became an early epicenter for crypto miners in the United States. But some mining operations there are already starting to leave as state lawmakers begin creating restrictions on the growing industry. Texas has welcomed the crypto industry, but the influx of new mining farms is putting increased stress on an already vulnerable grid and could also increase residents’ energy bills.

The report urges federal agencies to take action to avoid the potential risks that come with crypto mining. First, it says the Environmental Protection Agency, Department of Energy and other federal agencies are working with local policymakers and the crypto industry to develop performance standards for “environmentally responsible” crypto technologies. These standards should push industry to transition to clean energy while using less energy overall, the report said.

“Should these measures prove ineffective in mitigating impacts, the administration should explore executive action, and Congress may consider legislation,” the report said. The more aggressive moves could aim to “restrict or eliminate” the use of proof of work, according to the report. It will specifically target Bitcoin if Ethereum succeeds in leaving proof of work.

The report also calls on federal agencies to collect data from utilities and crypto miners about their energy use. In the past, it has been difficult to find out how much energy miners used because many of them did not usually disclose this information. The OSTP report uses figures taken from other published research, as well as estimates of energy use and emissions based on the US share of the world’s crypto mining.

That kind of information can be used to ensure that cryptomining doesn’t derail climate goals or jeopardize the stability of the web. But for now, these actions are still only recommendations. A senior administration official on a press call yesterday for the report would not share details of any next steps when probed about whether the Biden administration has any plans to implement the policy recommendations outlined in the report.