Cryptocurrency miners must report their energy usage

Recently, several cryptocurrency mining companies sued the US Energy Information Administration (EIA) rather than respond to a survey about their energy consumption. After several cases in which energy-intensive proof-of-work cryptocurrency mining threatened to destabilize the network and lead to price increases, the EIA, an agency of the Department of Energy, released a preliminary survey of electricity consumption for US crypto -currency mining companies started. February 2024. That initial survey was halted by the industry lawsuit, but the EIA will now continue a public comment process on reporting requirements for cryptocurrency miners, the first step toward establishing permanent requirements that miners report their energy usage data.

Every other major energy consuming industry reports this type of data to the EIA, so that the EIA can produce studies and reports to help utilities, grid operators and regulators with their energy planning. As the EIA acknowledged, there is a compelling need for the cryptocurrency industry to account for its growing energy needs, which have threatened to overwhelm current systems to ensure reliable electricity service and increase electricity prices in states where they have significant operations.

Earthjustice and partners urged the EIA in 2022 to collect such data because the lack of transparency and regulation of these highly polluting and energy-intensive operations means that the public and regulators do not understand the true impact of their operations on the grid and local communities cannot fully understand.

Cryptocurrency operations are large and difficult to track

Cryptocurrency mining is an extremely energy-intensive process that threatens the US’s ability to maintain the stability of our grid and electricity rates, as well as our ability to reduce our dependence on climate-warming fossil fuels. In its February 2024 analysis, EIA estimated that cryptocurrency mining in the US could represent up to 2.3% of total US electricity demand.

Although cryptocurrency mining operations have become increasingly specialized, concentrated, price-sensitive, and capital-intensive—and thus identifiable as a distinct class of business and energy users—it is difficult or impossible to obtain information about the scale, location, or fuel source of many cryptocurrency mining operations. in the United States.

Cryptocurrency mining is largely invisible to US regulators with little to no reporting requirements at the state or federal level. Currently, the primary sources for publicly available information on cryptocurrency energy consumption and environmental impacts are local journalists, company press releases, and Securities and Exchange Commission (SEC) filings for publicly traded cryptocurrency mining companies. Among the few companies that file reports with the SEC, many do not disclose the locations or fuel sources associated with the miners listed in their financial reports, or when they do – provide only partial, selective or misleading information, such as to describe their energy supply as “beneficial for the environment”, “reliable, renewable” or as “high emission-free content”.

The EIA has the legal authority to collect energy use data from cryptocurrency miners, as it does from manufacturing and other industries, to provide reports to inform energy planning decisions throughout the country. The signup burdens are minimal.

Regulators and the public have a right to know this information because — as EIA noted — during times of peak demand such as cold snaps or heat waves, the energy demands of cryptocurrency miners can affect network operations and cause outages and outages. It is not only appropriate for EIA to collect information about such a large consumer of electricity, but such collection is necessary for utilities and the public to have the information they need to understand the network, climate, price and local appropriately assess implications of the cryptocurrency mining industry in addition to individual operations.

If EIA does not collect and publicly release this data, existing impacts on the network and taxpayers will only worsen

Cryptocurrency mining threatens the grid

Take it from the grid operators themselves: last summer, the Texas state grid operator, ERCOT, warned that cryptocurrency miners “exhibited inconsistent behavior during resource scarcity events” that brought the grid dangerously close to failure. ERCOT noted that a lack of transparency and coordination about cryptocurrency miners’ energy use during both Winter Storms Uri and Elliot, and during heat waves, affected ERCOT’s ability to adequately predict energy demand and response. ERCOT expressly noted that crypto miners “showed inconsistent behavior during resource scarcity events” and if crypto miners “had not voluntarily curtailed on June 20, 2023, ERCOT would have been forced into emergency operations.”

The Tennessee Valley Authority (TVA), which covers large areas in seven states, has had to make significant adjustments to accommodate the growth of cryptomining and its impact on electricity service and rates.

Last year in Kentucky, the Public Service Commission denied a proposed discounted electricity rate contract for a cryptomining facility out of concern that it could not be relied upon to curtail its load if needed during peak energy periods and that its demands on the grid would raise costs for the entire utility ‘s customers.

A government report on Winter Storm Elliott found that one of the main factors leading to deadly blackouts during the storm was the failure of utilities to reliably forecast demand. ERCOT noted that a lack of transparency and coordination regarding cryptocurrency miners’ energy consumption during both Winter Storm Uri and Elliot affected ERCOT’s ability to adequately predict energy demand and response. ERCOT predicts that cryptocurrency mining will consume 37 GW by 2028.

Utility and network operators must have reliable, up-to-date information about cryptocurrency mining operations to maintain the stability of the network, especially when energy generation can be scarce. Indeed, EIA has determined that there is an urgent need for this information, requesting emergency review and referring to national grid monitor NERC’s 2023 Long-Term Reliability Assessment which warned that cryptocurrency mining has a significant effect on the grid.

Cryptocurrency mining threatens taxpayers

As cryptocurrency mining operations expand in the US, electricity prices are rising for other ratepayers. We’ve documented examples of this in Washington, New York, Kentucky and more.

In Texas, Bitcoin mining has already increased electricity costs for non-mining Texans by US$1.8 billion a year, or 4.7%, according to conservative estimates from consulting firm Wood Mackenzie.

Similarly, a BloombergNEF report, ERCOT Market Outlook: Everything Depends on Bitcoin, found that energy prices in Texas will rise for consumers if Bitcoin mining continues its rapid expansion. Models show that peak energy prices increase by 30% in one scenario in which the amount of cryptomin peak load roughly triples, and by about 80% in a scenario in which the amount of cryptomin peak load increases roughly sixfold. The report says: “ERCOT power prices will be a function of new bitcoin mining facilities.”

Taxpayers should not be left on the hook for the massive energy consumption of cryptocurrency mining. The EIA must collect this information to give grid operators, electric service providers and the public full access to information about the size, location and characteristics of cryptocurrency mining operations in the US.

The public deserves to understand the pollution impacts of cryptocurrency mining

In addition to impacting network stability and electricity rates for customers, cryptocurrency mining keeps coal and gas plants online, causing local air and water pollution and long-term climate damage. Due to the lack of transparency surrounding information about cryptocurrency mining operations and how they obtain power, it is impossible to precisely evaluate the emission intensity of cryptocurrency mining operations in the US. , and it is appropriate for them to also collect emission-related information from cryptocurrency mining operations. Earthjustice encouraged the EIA to collect the data, both by expanding its Manufacturing Energy Consumption Survey (MECS) to include crypto mining, and by ensuring that its surveys of electricity generators include information on direct service or behind-the-meter electricity diversion to crypto -capture currency miners.

In addition to air and water pollution, cryptocurrency mining operations create significant noise pollution in local communities, leading to health impacts as reported in Arkansas and Texas. The public deserves information about these operations that affect their everyday lives.

The EIA should continue its efforts to publicly collect and publish this information so that host communities can accurately understand how their local environment may be affected by cryptocurrency mining operations and so that the climate risks of this industry can be accurately assessed.

EIA should finalize requirements for companies to report this data

EIA must move quickly to collect and analyze this data as soon as possible. EIA has announced that it will now seek public comment on data collection. This can happen quite quickly in a few months, but only if the agency prioritizes it. Cryptocurrency mining operations cannot be allowed to continue to hide their energy consumption. Cryptocurrency miners’ inconsistent behavior during times of peak energy demand brought the network dangerously close to failure in Texas, forcing near blackouts.

The EIA should move forward to require this reporting as quickly as possible, to protect public health and safety. Utilities and anyone who depends on reliable, affordable electricity should support the EIA’s effort to bring some transparency to this industry.