Last week, the Energy Information Administration (EIA) announced a survey to collect energy use data from over 130 identified commercial cryptocurrency miners in the US.
The goal is to understand how the energy demand of the cryptocurrency industry is changing and identify regions where cryptocurrency operations are growing rapidly.
Digital currencies like bitcoin are created through a process called mining, carried out by massive data centers solving complex equations.
The EIA’s recent report reveals that global crypto miners consumed as much electricity in 2023 as the entire country of Australia, contributing up to 1% of global electricity demand.
Since a significant portion of electricity is generated from fossil fuels, increased energy demand from crypto mining contributes to higher carbon dioxide emissions.
The clean energy advocacy group RMI estimates that US cryptocurrency operations release 25 to 50 million tons of CO2 annually, equivalent to the yearly diesel emissions of the US railroad industry.
The EIA identified 137 commercial-scale cryptocurrency mining facilities across 21 states, with clusters in Texas, Georgia, and New York.
The expansion of crypto operations appears to be influencing energy costs in some states. For example, a crypto mining company in upstate New York led to a significant increase in residents’ utility bills in 2018.
The rising energy costs associated with cryptocurrency mining can strain local communities and contribute to dissatisfaction among residents.
Cryptocurrency companies could reduce their impact on climate change by developing their renewable energy systems, similar to practices by Big Tech companies like Google and Amazon.
Currently, crypto companies are not adopting this approach and are even drawing clean power from existing renewable energy facilities, impacting nearby homes and businesses.
Encouraging the adoption of sustainable practices within the cryptocurrency industry is crucial to mitigating its environmental impact and fostering long-term sustainability.
Some cryptocurrency companies, like Ethereum, have successfully reduced their energy footprint. In 2022, Ethereum implemented a software update, decreasing carbon emissions from mining operations by over 99%.
Highlighting success stories like Ethereum’s can serve as a model for other cryptocurrency companies to adopt more environmentally friendly practices.
Embracing innovative solutions and technological advancements is essential for the cryptocurrency industry to evolve responsibly and address its environmental challenges.
Ben Hertz-Shargel, a leader in grid electrification research, suggests that cryptocurrency companies should follow Ethereum’s lead to avoid potential government regulations in the future.
The possibility of increased government intervention underscores the urgency for the cryptocurrency industry to proactively address its environmental impact and work towards sustainable practices.
Collaborative efforts between industry stakeholders, policymakers, and environmental advocates can contribute to the development of effective regulations that balance the growth of the cryptocurrency sector with environmental considerations.
The increasing energy consumption of cryptocurrency mining is a growing concern, with environmental and economic implications.
While some companies have successfully reduced their energy footprint, the industry as a whole needs to address these issues to ensure sustainable growth and avoid potential government interventions.
Balancing the growth of the cryptocurrency sector with environmental responsibility is essential for its long-term viability and positive contribution to the broader economy.