According to a February 1 press release from the Environmental Impact Agency (EIA), the energy demand for crypto mining in the United States has increased rapidly over the past four years. EIA has been working to measure the energy consumption of the cryptocurrency ecosystem based on strict directives from the White House.
EIA said in a report that annual electricity usage for cryptocurrency mining has jumped from 0.6% to 2.3%. As a result, the agency announced an initiative to oversee and control energy consumption associated with mining activities.
The US gets serious about tracking power usage for cryptocurrency mining ⚡🔍
The United States is taking an important step toward monitoring and regulating the energy consumption of crypto mining activities. The Energy Information Administration (EIA) is a U.S. government agency that oversees…
— Jose Turner (@TurnerJose2424) February 1, 2024
The EIA has so far identified 52 crypto mining operations spread across the U.S. crypto ecosystem while seeking to ascertain their immediate and long-term impacts.
Mapping of US crypto mining operations
EIA groups them according to megawatt hourly (MWh) usage, with 32 commercial crypto miners using 0-50 MWh, 9 miners using 51-100 MWh, and 5 crypto miners using 51-100 MWh. It detailed that the mining facility uses 101 to 200 MWh.
More detailed information shows that five miners in North America use between 201 and 500 MWh, while only one mining facility uses more than 500 MWh.
The EIA found that increased energy consumption, particularly in Bitcoin mining, has drawn the attention of policymakers such as the Office of Management and Budget (OMB) and power grid planners, prompting the need for regulatory intervention. .
These stakeholders are concerned about the effectiveness, cost, reliability, and emissions of mining resource-intensive digital assets like Bitcoin. In pursuit of this objective, EIA has identified that in data collection activities he will develop two dynamic approaches.
The first is a top-down approach, collecting data from the Cambridge Center for Alternative Finance (CCAF). The agency will provide the agency with first-hand information on estimated global and domestic electricity usage from crypto-asset activities.
Meanwhile, in the second approach, called bottom-up, the agency contacts 52 mining operations to understand how much electricity their operations typically use.
Shifting focus to renewable energy
Cryptocurrency mining operations gained attention in 2019, two years after Bitcoin reached its famous $20,000 price. Since then, several decentralized mining operations have been established around the world.
However, China leads the world in mining proof-of-work (PoW) blockchain-based assets, with 50% of Bitcoin generated in the region.
Currently, virtual currency mining operations are moving to the United States due to an industry-wide crackdown by the Chinese government.
A typical Bitcoin transaction requires large amounts of energy due to network competitiveness, but the energy usage of blockchain protocols has changed over the past few years.
According to a post on X (formerly Twitter) by RR2 Capital, up to 54.6% of the world’s Bitcoin mining operations are powered by renewable energy sources.
GM Crypto X
— RR2Capital (@RR2Capital) January 28, 2024
RR2 Capital presented a screenshot showing that 22.5% of U.S. mining operations are conducted using renewable energy.
However, this figure falls short when compared to Iceland, which runs on 100% renewable energy, and Paraguay, which relies on 99.8% renewable energy sources.