US Senate Panel Examines How Crypto Mining Increases Energy Consumption

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WASHINGTON So-called digital asset mining, or cryptocurrency, consumes as much electricity as some entire nations, and U.S. senators explored the issue on Tuesday in what they said was their first-ever hearing focused on the energy implications of digital currency.

Crypto mining in Nebraska and Pennsylvania was discussed in particular by panel members of the Senate Environment and Public Works Committee.

Touting his legislative proposal to improve transparency in crypto mining, Democratic Senator Ed Markey of Massachusetts likened it to being more like digital coal than digital gold and implored the bitcoin industry being the most popular currency for working smarter, not harder improving energy efficiency as the world grapples with the effects of climate change.

Bitcoin mining in the United States uses as much energy as it needs to light every home in our country, and that demand on our network is only going to increase, Markey said in his opening remarks.

The Markeys bill, introduced on Monday, would require operators of cryptocurrency assets to report emissions to the Environmental Protection Agency, and mandate the agency to conduct a required energy consumption study by thousands of rugged special-purpose computers to add new transactions to decentralized digital. ledger, he said. The text of the bill has not yet been published.

The hearing before the Senate Air Quality, Climate, and Nuclear Security Subcommittee featured testimony from Rob Altenburg of PennFuture, a Pennsylvania-based clean energy advocacy organization; Courtney Dentlinger, executive of the Nebraska Public Power District, a utility; and Anna R. Kelles, Member of the New York State Assembly.

The subcommittee’s top Republican, Sen. Pete Ricketts of Nebraska, pushed back on environmental concerns.

Reminding fellow members that CNBC ranked his state #1 last year for cultivating a crypto economy, Ricketts said he was particularly interested in this topic as to whether this industry could drive greater economic development.

Crypto-asset mining is not the only industry dependent on big data server banks, Ricketts later continued. Finance, technology, government, academia and many others use significant amounts of electricity to meet their computing needs. We should provide the tools for open competition in a free market and not allow politicians or bureaucrats in Washington DC to pick winners and losers.

Cheap Electricity in Nebraska

Nebraska and Pennsylvania are home to crypto mining operations.

Cheap electricity in Nebraska, powered 100% by a utility, makes the state an attractive option for crypto data centers, where acres of blazingly fast computers locked in what look like shipping containers Metal Expedition attempt to guess long combinations of numbers to verify a new transaction, some at speeds of up to trillions of guesses per second.

An 11-acre crypto-mining site in Kearney, Nebraska, consumes 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 for the state, Dentlinger told Nebraska Public Power District lawmakers, giving the example that just one of Nebraska’s crypto-mining facilities generated $1.8 million. in state sales taxes and $3.8 million in local taxes over a 12-month period. .

Dentlinger also argued that one customer’s constant demand for electricity benefits the entire customer base.

In our predominantly non-metropolitan and rural service area, business diversification and economic growth are essential as these areas continue to experience declining populations, 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 appear in Pennsylvania

PennFutures Altenburg argued that there’s a different story in Pennsylvania, one where regulators can’t keep tabs on crypto operations popping up across the state.

Last year, a site inspection by the Pennsylvania Department of Environmental Protection found that a Clearfield County company had plugged into a natural gas well site without applying for a permit. The company, Big Dog Energy, operated 30 natural gas generators to power its crypto operation. The EPA took the initiative to investigate.

Altenburg told lawmakers it was 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, burns coal waste to fuel crypto operations. The company that claims it is an environmentally beneficial bitcoin miner for finding use for a source of environmental hazard from the state’s ubiquitous coal waste piles and converts it into electricity at two sites, 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 a problematic fuel, to say the least. As the name suggests, it has a low energy value compared to regular coal, so power plants have to burn even more of it to produce the same amount of electricity. In the process, they emit more ozone precursors, fine particles, acid gases, heavy metals, and this is the second most carbon-intensive generation, after residual fuel oil,” Altenburg said.

Why Crypto Mining Requires Energy

Cryptocurrency mining involves the use of robust computing power to add to digital ledger technology, such as blockchain.

The decentralized digital financial transaction ledger is a ledger or database where users, or miners, on a common network can agree on inputs, sometimes called blocks, through a consent mechanism.

Power consumption varies depending on the consent mechanism used. For example, Bitcoin is based on a proof-of-work mechanism, which in part provides ledger security by requiring miners to have access to special computers and massive amounts of power.

Another popular cryptocurrency, Ethereum, recently switched to a proof-of-stake mechanism, which consumes a fraction of the energy as of 2021 it accounted for 0.001% of global energy consumption as it relies on miners to risk a stake in their crypto-assets as a way to enforce the integrity of the ledger.

Energy consumption in the United States for crypto

A 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 around the world use 120 billion to 140 billion kilowatt hours per year, roughly more than the total energy consumption of countries like Argentina or Australia, according to the report.

According to the OSTP.

President Joe Biden commissioned the interagency report in a far-reaching March 2022 executive order on ensuring responsible development of digital assets, which included exploring the energy implications and possible barriers to achieving the climate goals of administration.

These goals include reducing greenhouse gas emissions by 50% by 2030, achieving a carbon-free electricity grid by 2035, and achieving net-zero emissions by mid-century. .

The Markeys bill was referred to the Senate Environment and Public Works Committee.

The senses. Jeff Merkley, a Democrat from Oregon, and Bernie Sanders, an Independent from Vermont, signed on as co-sponsors.

Markey likened reducing the energy consumption of cryptocurrency mining to updating energy standards for appliances or saving fuel for vehicles.

We are not looking to end refrigeration or automotive technology. What we’re saying is we should be more efficient, we should be more aware of the emissions in our atmosphere that are preventable, Markey said. So, on the one hand, this (cryptocurrency) is a very innovative sector, economically, and they see themselves as innovators. But all we ask of them is to look at innovation globally.

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