Just how much electricity does cryptocurrency mining use? It could be over 2% of all electricity in the United States, according to a preliminary estimate released by the Energy Information Administration. More specifically, “annual electricity use from cryptocurrency mining probably represents from 0.6% to 2.3% of U.S. electricity consumption.”
Using data from the Cambridge Centre for Alternative Finance on Bitcoin, specifically, the EIA estimated that, at least as of January 2022, almost 38% of all Bitcoin mining was occurring in the U.S., which let it produce a range of estimates for Bitcoin mining’s electricity usage, ranging from 25 terawatt-hours to 91 terawatt-hours — about the same amount of electricity consumed by around 3 million to around 6 million homes — or roughly the electricity consumption of Utah or West Virginia. That wide range is due to the imprecise nature of the measurements, which are based on how active a crypocurrency mining operation would be based on the price of Bitcoin and other factors. Global electricity consumption based on these estimates, the EIA said, was “about the same as total electricity consumption in Greece or Australia.”
So why is Bitcoin so power hungry?
In some deep sense, Bitcoin is electricity. The cryptocurrency is “mined” — i.e. new Bitcoins are generated — through what’s called a proof of work system, essentially a way of proving that a computer (or, in reality, lots of computers) have done a lot of computation. This computational work maintains the system as a whole, and thus the new Bitcoins are a reward for doing this decentralized maintenance. (Lots of other cryptocurrencies also use a proof of work system the mint new coins, the notable exception being Ethereum, which last year switched to what’s called a “proof of stake” system that uses less energy. This, Ethereum leadership said, makes the blockchain “green.”)
All that computation is incredibly energy intensive, which is why we see crypto miners glom onto sources of cheap energy. Sometimes the cheapest energy they can use is not using energy at all — Bitcoin mines in Texas are part of a demand management program run by the state’s electricity market, ERCOT, where they can collect hefty payments for not operating when electricity demand is high.
This energy consumption is a frequent point of criticism for advocates, activists, and lawmakers who are skeptical of cryptocurrency and earlier this week, the EIA said it would start collecting its own data on cryptocurrency mining.
So far, the EIA has found 137 cryptocurrency mining facilities, with several of the largest ones located in Texas. But this was just done by scanning publicly available data. The EIA said earlier this week that it will be conducting a “mandatory survey” to better understand crypto’s energy demands.
