• Thu. Jun 13th, 2024

Crypto Mining Power Usage Under Scrutiny as US Begins Survey

Walter Swift

ByWalter Swift

Feb 4, 2024
Crypto Mining Power Usage Under Scrutiny as US Begins Survey

The United States Energy Information Administration (EIA) will launch an urgent survey on the power usage of cryptocurrency mining activities after gaining an emergency clearance from the Office of Management and Budget (OMB) to proceed with the program. The agency announced the development in a statement dated February 1, 2024, on the EIA website.

This approval greenlights the plan by the EIA to mandate all cryptocurrency mining firms in the US to submit their energy usage data to generate credible data to inform policy decisions in the US Department of Energy and beyond.

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Associated with the Department of Energy (DOE), the US Energy Information Administration (EIA) is a statistical agency with a collection, analysis, and dissemination mandate of accurate energy information to inform policies and further public understanding of energy and how it impacts the US economy. The agency is not involved in actual policymaking, implementation, or enforcement.

EIA-Approximately 2% of US Electricity Consumption is Crypto Mining-Related

In the February 1 statement, the agency identified how electricity demand by crypto mining operations in the United States soared rapidly in recent years, estimating that the activity (probably) represents up to 2.3% of the electricity consumption in the United States. Assuming the power supply in the US is shared equally among all 50 states, crypto mining activities currently have around the same impact as adding another state to the US power grid.

However, the EIA quickly admitted that its existing data is (solely) based on estimates, which may not represent the actual power usage by cryptocurrency miners in the United States, necessitating the need to collect accurate data from the mining operations. According to the statement, the EIA will start collecting data on the electricity consumption of US-based crypto mining businesses from February through July 2024 to collect, document, and publish accurate data about the energy consumption information of cryptocurrency miners in the United States.

How the EIA Estimates Mining Power Usage

The EIA had previously employed two primary strategies to estimate power usage by Bitcoin mining operations in the US: a top-down and a bottom-up approach. The former uses data from the Cambridge Bitcoin Electricity Consumption Index (CBECI), a collection of Bitcoin mining energy consumption data worldwide. While the index is updated every 24 hours, it has a flaw: there’s no country-by-country arrangement of the energy usage data.

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However, CBECI tracks the geographic distribution of Bitcoin miners and estimates that approximately 28% of miners live in the United States. The EIA then extrapolated and concluded that Bitcoin mining activity in the US, according to the CBECI database, utilizes between 0.6% and 2.3% of the total energy supply in the country.

Another significant flaw of using CBECI estimates is that it only compiles data usage information for Bitcoin mining, which isn’t representative of the crypto mining industry in general, as there are many other proof-of-work coins. The bottom-up approach, on the other hand, however, involves using publicly available information, including financial reports, news articles, internet searches, trade publications, and responses to letters from congress members requesting cryptocurrency energy usage data.

After combining the data sources and cleaning up the data, the EIA estimated total power usage for cryptocurrency mining firms to be 10,275 MW, amounting (to) 2.3% of the United States average annual power demand.

EIA Requests and Receives Emergency Clearance For Crypto Mining Survey

On January 24, 2024, Dr. Joseph F. DeCarolis, the EIA administrator, wrote to the Office of Management and Budget (OMB) to issue an emergency clearance for the agency’s plan to conduct emergency surveys of cryptocurrency mining facilities to collect energy usage data.

“I am making this request under 1320.13.2.i because public harm is reasonably likely if normal clearance procedures are followed,” Dr. DeCarolis explained in the letter.

On January 26, 2024, the OMB approved the EIA’s request for an emergency clearance, inspiring the latter’s press release on January 31, 2024, announcing the initiation of the mandatory data collection program. The EIA also announced its plans to solicit public comment on the program, as expressly requested by the OMB in its approval notification.

The current clearance from the OMB will last until July 31, 2024, after which it will review the program and decide whether it will continue to provide funding for the EIA to continue the data collection program.

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Walter Swift

Walter Swift

Walter Swift is an adept crypto writer, known for his deep insights into the decentralized world. His pieces artfully break down complex blockchain topics, making them accessible to a broad audience. With a passion for emerging technologies, Walter's articles are a beacon for crypto enthusiasts and novices alike.

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