The U.S. Energy Information Administration (EIA) now requires large-scale commercial cryptocurrency mining operations to report their electricity consumption. This effort is part of a larger effort to regulate and penalize crypto mining due to the enormous amount of energy it consumes each year. For now, the EIA is only collecting data, but this new data should lead to new regulations penalizing miners in the future.This is due to the company announcing the results of a study (first reported on Inside Climate News) suggests that cryptocurrency mining accounts for up to 2.3% of U.S. electricity demand.
“We will continue to analyze and write about the energy impacts of crypto mining activities in the United States…” EIA Administrator Joe DeCarolis said in a January release. “We specifically focused on how the energy demands of crypto mining are evolving, identifying high-growth geographic regions and determining the power sources used to meet the demand for crypto mining. Quantify it.”
De Carolis’ words sum up that the United States will pay close attention to the environmental problems that crypto mining can cause. It can be assumed that the US government wants to crack down on mining operations that affect the reliability and sustainability of electricity, especially in densely populated areas. This can lead to higher household power costs and problems with power shortages during peak periods. As of January 2024, EIA has identified 137 cryptomining facilities.
EIA notes that cryptocurrency mining operations in the United States have increased significantly over the past few years, with all U.S.-based cryptocurrency mining operations alone consuming between 0.6% and 2.3% of the nation’s total electricity consumption. I discovered something. For comparison, the entire US Bitcoin mining industry consumes the annual electricity budget of Utah or West Virginia. Estimated electricity consumption by Bitcoin mining worldwide is predicted to be between 0.2% and 0.9% of global demand, equivalent to the electricity consumption of Greece or Australia alone.
Bitcoin mining is extremely power-intensive in the US, especially due to the vast amount of mining that actually takes place within US borders. According to EIA, the global share of Bitcoin mining conducted in the United States has increased from 3.4% in 2020 to a whopping 37.8% in 2022.
The Bitcoin industry’s incredible power demands are a result of Bitcoin mining algorithms becoming more difficult each year. Bitcoin today is not what it was 8-10 years ago when you could mine it with a single computer and make a decent profit. Currently, to collect Bitcoin, it must be mined with hundreds of specialized mining devices (ASICs). Continuing difficulties with the Bitcoin algorithm mean that as the cryptocurrency becomes harder to mine, electricity costs become increasingly expensive.
As Bitcoin grows in popularity, this power phenomenon is expected to grow even more. 2024 is expected to be one of the most eventful years in Bitcoin history, with declining mining profits leading to the cryptocurrency’s April halving event (where Bitcoin mining rewards will be halved). ), it is expected to surpass its all-time high of $69,000 soon after. and large-scale institutional implementation.