White House looks at power reliability standards, energy efficiency rules for Bitcoin, other crypto mining
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Dive card:
- The US government should take steps to ensure that crypto-mining does not reduce the reliability of the electrical system or increase costs on the country’s power grid, according to a report published Thursday by the White House Office of Science and Technology Policy, or OSTP. That effort will fall jointly to the U.S. Department of Energy, the Federal Energy Regulatory Commission and the North American Electric Reliability Corp., and may include developing new reliability standards, OSTP said.
- The US hosts about a third of the world’s crypto-active operations, and it consumes around 0.9% to 1.7% of the country’s electricity, according to the report.
- The report also recommends that DOE develop energy efficiency standards for cryptomining equipment and collect additional data from cryptominers and electric utilities, including mining energy use and fuel mix and participation rates in demand response programs.
Diving Insights:
Additional scrutiny and oversight may be inevitable for Bitcoin and other crypto operations, some industry insiders say.
The crypto sector needs “more regulatory clarity to continue to grow and expand,” Digital Power Optimization CEO Andrew Webber said in an email. His company works with miners to help manage their energy use, saying the sector “cannot exist outside the realm of law and regulation if supporters and participants really want to see global adoption and day-to-day integration.”
Conservation advocates say lawmakers and President Joe Biden must act quickly on the report’s recommendations.
“We urge Congress and the administration to move quickly to improve monitoring and reporting of greenhouse gas emissions and electricity use, and to set energy efficiency standards that all digital assets must meet,” said Scott Faber, senior vice president of the Environmental Working Group for Government Affairs. a statement.
Biden in March directed the OSTP to assess the climate and energy impacts of cryptomining in the United States. The report concluded that crypto-asset activity is estimated to result in approximately 25-50 million tons of carbon dioxide emissions per year, “similar to emissions from diesel fuel used in railroads in the United States.”
“At a time when greenhouse gas emissions are increasing, our electric grid is strained and climate change-induced extreme weather events are present, no industry should make these existential challenges even greater,” said Faber.
The US hosts about 38% of global Bitcoin activity, according to the report. That’s a rapid increase from about 3.5% in 2020, after China banned Bitcoin in 2021.
Bitcoin accounted for 60-77% of total global electricity consumption by cryptoassets in August, according to the OSTP report. Ethereum was estimated to account for 20% to 39%, even as the network prepares to transition to a less energy-intensive consensus mechanism.
“I think it’s right that people are concerned about this,” Webber said of Bitcoin’s energy use. But he added that the energy is “greener than most people think. There have been a number of reports and studies that show it is much greener than most of the grid and many other high-energy industries.”
Webber also noted that Bitcoin mining “creates an unprecedented mechanism for demand response” and that energy consumption is inherent in keeping the network secure.
The White House report recommends that the US Energy Information Administration and other federal agencies consider collecting data on demand response participation in the crypto industry along with energy use and fuel mix for mining, power purchase agreements and any environmental legal implications.
The report also assesses the potential for new standards for grid reliability.
The report calls on the DOE, NERC, and FERC to “conduct reliability assessments of current and projected cryptoasset mining on electricity system reliability and adequacy,” and if risks are identified, to “consider developing, updating, and enforcing reliability standards and emergency operating procedures to ensure system reliability and sufficiency during the growth of crypto-asset mining.”
The Biden administration should also consider working with lawmakers to enable the DOE to develop and update “energy conservation standards for cryptoasset mining equipment, blockchain and other operations,” the report recommended.
