The cryptocurrency minting business here in the United States is growing bigger by the day. As of January 2020, only 3.4% of the world’s Bitcoin mining took place here. In just two years, this number has ballooned to nearly 38% for him.
As we’ve talked about on this show, mining Bitcoin and other cryptocurrencies consumes a lot of electricity. The Energy Information Administration is interested in tracking this activity by reviewing media articles and company reports. But the federal agency has decided to start collecting information from cryptocurrency miners themselves about where they operate and how much energy they use.
Marketplace’s Lily Jamali asked Mark Morley, EIA’s senior advisor for power analysis, about the project. Below is an edited transcript of their conversation.
Mark Morley: The problem is that even if we were able to conduct our own research, and there are plenty of resources available to do so, we don’t really have a good grasp of energy usage by crypto miners, both in scope, regionally, and in total. , there are many unknowns. That’s why we designed this survey, gathered respondents, and received approval to send the survey. And that’s what led us to where we are today in terms of the press release and research you saw last week.
Lily Jamari: Well, I’m really surprised by the stats in your recent analysis on this. You estimate that annual electricity usage from cryptocurrency mining in the United States is between 0.6% and 2.3%. Both sides of that spectrum sound like a lot to me, but it’s also very broad, and I think this speaks to how much we actually know about the scope of this activity.
Morley: it’s true. It’s wide-ranging. But let’s go back to the beginning and look at the numbers. If we look at the total amount of power, obviously we need two numbers when calculating these percentages. This means we need figures for the energy usage of crypto mining operations and our possible energy usage overall. And that total is the number we collected. One of the great characteristics of EIA is that it collects all kinds of data. So you have very solid numbers about what your electricity demand is from month to month and year to year. Therefore, there is a proper measurement method to derive that percentage. If you look at these percentages, they are strictly estimated.
However, as the report released on Friday states, this was done using several existing sources that track only overall activity in the crypto mining space, not energy itself. It was a down analysis function. So we looked top-down at the quotes provided by others and then did our own bottom-up. Therefore, we conducted an internal investigation into the number of sites engaged in cryptocurrency mining. To conduct the census, we looked at everything we could: reports, the Internet, financial documents. The second part involves identifying individual sources and then checking to see if they publish numbers in megawatts of the capacity they believe or estimate they are using. . So we were able to derive the numbers. Let’s say we multiply the number of sites we found by the amount of energy we say we’ve expended to come up with the bottom-up numbers. And all the ranges are just looking at a very small amount of activity in terms of crypto mining and large or maximum amounts. And that’s where those percentages come from. But obviously those are just estimates, which is why we need better and more specific data, and that’s the reason for this study.
Jamari: And how difficult has it been to identify cryptocurrency mining activity in the past because these facilities are so mobile? They can be picked up or go somewhere where electricity is cheaper. , it seems like monitoring all this would be even more complicated.
Morley: absolutely. Not only is the facility itself movable, but so is the machinery within the facility. You can find a place where you might have had a facility, but move that location because electricity might be cheaper somewhere else and you might move all the machinery. I decided to. Or we’ve seen cases where one location had a large number of machines, but some were purchased and moved to another location. Therefore, there is a significant facility relocation underway, which also led to the reason we sought approval to conduct this study.
Jamari: Are you going to work with local authorities in any of these places? Based on my own reporting on crypto mining, many people who run local public utilities and run local county executive offices Because of the black box, we have the impression that they also want this information. You can’t claim tax if you don’t know how much you use. I was a little surprised at the level of opacity.
Morley: The information we are collecting is strictly trying to determine where and how much energy is being used in these facilities. I’m trying to get monthly information. I would also like to say that this study focuses on facility-level reporting structures. So if a company has three or four facilities, we’re trying to collect data for those individual facilities to understand how they’re reporting. There is a lot of activity going on there. Now, in terms of the information we receive, it is our responsibility to compile it in a way that people can understand about the scope of energy use in this sector. And it’s all public information.
Jamari: What concrete results can we get from this data? What do we expect?
Morley: We expect this sector’s energy use to be highly valued. Much of this research was done just to understand the magnitude of this. Is it bigger or smaller than we expect? That’s exactly where we are at the moment.
Jamari: And for what purpose? Once you have that information, what do you do with it?
Morley: Ideally, therefore, information will be published that will help people understand this energy sector more deeply. So if you go to our website, you will find a lot of these surveys. And I think people go there to find data that represents what’s going on in the energy business.
For those wondering whether this new data request by the EIA has anything to do with the recent approval of the Spot Bitcoin Exchange Traded Fund, Morley assured us that it is not. The decision was announced by the Securities and Exchange Commission last month. Ben Hertz Shargel, an analyst at consultancy Wood Mackenzie, recently said he expects the decision to further increase demand for the original cryptocurrency, Bitcoin.
However, information gathering is not going well in the virtual currency industry. Marketplace’s Henry Epp reports from that angle. He spoke with officials from the Texas Blockchain Council who said that releasing what federal authorities call sensitive information could put crypto mining companies at a competitive disadvantage. To no one’s surprise, legal action is being considered.