Senate panel examines how crypto mining increases energy consumption
WASHINGTON — So-called digital asset mining, or cryptocurrency, uses as much electricity as some entire nations, and U.S. senators explored the issue Tuesday in what they said was their first ever hearing focused on the energy implications of digital currency.
Cryptomining in both Nebraska and Pennsylvania was particularly discussed by the members of the panel of the Senate Committee on Environment and Public Works.
Touting his legislative suggestion to improve the transparency of cryptomining, Democratic Senator Ed Markey of Massachusetts likened it to being “more like digital coal than digital gold” and called on the industry – Bitcoin is the most popular currency – to “work smarter, not harder” by improving energy efficiency as the world faces the effects of climate change.
“Bitcoin mining in the United States uses as much electricity as we need to light every single home in our country, and that demand on our grid is only going to grow,” Markey said in his opening remarks.
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Markey’s bill, introduced Monday, would require cryptocurrency asset operators to report emissions to the Environmental Protection Agency and would mandate the agency to conduct a study of the energy use required by thousands of ruggedized special-purpose computers to add new transactions to the decentralized digital ledger, he said. The text of the bill has not yet been published.
The hearing before the Senate Subcommittee on Clean Air, Climate and Nuclear Safety featured testimony from Rob Altenburg, of PennFuture, a Pennsylvania-based clean energy advocacy organization; Courtney Dentlinger, an executive at the Nebraska Public Power District, a publicly owned utility; and Anna R. Kelles, member of the New York State Assembly.
The subcommittee’s top Republican, Senator Pete Ricketts of Nebraska, pushed back on environmental concerns.
Ricketts reminds fellow members that CNBC ranked his state No. 1 last year for cultivating a crypto-economy, and said he is “particularly interested in this topic whether this industry can lead to more economic development.”
“Crypto-asset mining is hardly alone in being an industry dependent on large data server banks,” Ricketts later continued. “Finance, technology, government, academia and many others use significant amounts of electricity to power their computing needs. We should provide the tools for open competition in a free market and not let politicians or bureaucrats in Washington DC pick winners and losers.”
Cheap electricity in Nebraska
Both Nebraska and Pennsylvania are home to crypto mining.
Cheap electricity in Nebraska — 100% powered by a publicly owned utility — makes the state an attractive option for crypto data centers, where acres of ultra-fast computers encased in what look like metal shipping containers attempt to guess long combinations of numbers to confirm a new transaction , some with speeds of up to trillions of guesses per second.
An 11-acre crypto mining site in Kearney, Nebraska, uses as much electricity as the city itself, which has a population of 33,790, according to a local news analysis published in January.
However, the industry has had “significant benefits” to the state, Dentlinger of the Nebraska Public Power District told lawmakers, citing the example that just one of Nebraska’s crypto mining facilities generated $1.8 million in state sales tax and $3.8 million in local taxes over a 12-month period.
Dentlinger also argued that consistent demand for power from one customer benefits the broader customer base.
“In our predominantly non-metro and rural service area, business diversification and economic growth are critical as these areas continue to see population decline,” she told lawmakers. “In fact, local leaders have been very receptive to crypto mining facilities as they have seen the potential for significant economic development benefits for their communities.”
Crypto operations are popping up in Pennsylvania
PennFuture’s Altenburg argued that it’s a different story in Pennsylvania, one where regulators can’t keep up with crypto operations popping up across the state.
Last year, an on-site inspection by the Pennsylvania Department of Environmental Protection found that a Clearfield County company had connected a natural gas well site without applying for a permit. The company, Big Dog Energy, ran 30 natural gas generators to power its crypto operation. The EPA took the lead in the investigation.
Altenburg told lawmakers that it is “impossible to know which or how many of Pennsylvania’s thousands of fracked gas wells are being used in this way.”
Another company, Stronghold Digital Mining, burning waste coal to run crypto operations. The company — which claims it’s an “environmentally beneficial” Bitcoin miner for finding a use for an environmental hazard — sources from the ubiquitous piles of waste coal around the state and converts it into electricity at two locations, one in Venango County between Pittsburgh and Erie, and the other in Carbon County northwest of Allentown, according to the company’s website.
“Coal waste is, to put it mildly, a problematic fuel. As the name suggests, it has a low energy value compared to ordinary coal, so plants have to burn even more to generate the same amount of electricity. In the process, they release more ozone precursors, fine particles, acid gases, heavy metals, and it’s the second most carbon-intensive generation, next to residual fuel oil, Altenburg said.
Why crypto mining requires energy
Cryptocurrency mining involves the use of robust computing power to add digital ledger technology, such as “blockchain”.
The decentralized digital financial record of transactions is a ledger or database where users, or “miners” on a common network can agree on entries, sometimes called “blocks,” through a “consent mechanism.”
Energy use varies depending on which consent mechanism is used. For example, Bitcoin is based on a “proof of work” mechanism, which partially ensures the security of the ledger by requiring miners to have access to special computers and significant amounts of energy.
Another popular cryptocurrency, Ethereum, recently changed to a “proof of stake” mechanism, which consumes a fraction of the energy – as of 2021 it accounted for 0.001% of global energy use – because it relies on miners risking a share of crypto assets as a way to enforce integrity. of the accounting book.
US power consumption for crypto
One September 2022 report from the White House Office of Science and Technology Policy warned that cryptocurrency mining uses a significant amount of energy that has only increased over the past five years.
Crypto-assets worldwide use 120 to 140 billion kilowatt-hours per year — or roughly more than the total energy consumption of countries like Argentina or Australia, the report found.
The US accounts for a third of the world’s crypto-active operations, and consumes about 0.9% to 1.7% of the country’s electricity consumption, which is roughly equal to the energy used to power all home computers or all residential lighting in the US, according to OSTP.
President Joe Biden ordered the interagency report in a comprehensive March 2022 verdict on “Ensuring Responsible Development of Digital Assets,” which included exploring energy implications and possible obstacles to meeting the administration’s climate goals.
These goals include reducing greenhouse gas emissions by 50% by 2030, achieving a carbon-free electricity grid by 2035 and reaching net zero emissions by mid-century.
Markey’s bill has been referred to the Senate Environment and Public Works Committee.
Sens. Jeff Merkley, a Democrat from Oregon, and Bernie Sanders, an independent from Vermont, have signed on as co-sponsors.
Markey compared reducing the energy use of cryptocurrency mining to updating energy standards for appliances or fuel economy for vehicles.
“WWe don’t want to end refrigeration or car technology. “What we’re saying is we should be more efficient, we should be more aware of the emissions into our atmosphere that can be avoided,” Markey said. “So on the one hand this (cryptocurrency) is a very innovative sector, financially, and they consider themselves innovators. But all we’re asking them to do is look across the board at innovation.”
