How much energy does cryptocurrency mining consume in the U.S.?
A recent analysis by the Energy Information Agency (EIA) estimates that large-scale cryptocurrency operations consume more than 2% of the country’s electricity.
And as Ars Technica noted in a report on Friday (Feb. 2), that’s around the equivalent of adding another state to the country’s power grid.
While there is some smaller-scale mining happening on home computers, most crypto mining happens on a large scale, with the bulk of the cost of these operations going to electricity, the report said. That’s led miners to move to places where electricity rates are cheaper.
According to the EIA, a lot of crypto mining has moved to the U.S. — where lower energy prices have typically been a policy priority — following China’s crackdown on the digital asset space.
Meanwhile, the Ars Technica report also cites an independent estimate by the Cambridge Centre for Alternative Finance which found that the U.S. was home to 38% of bitcoin mining at the start of 2020, up from a little more than 3% two years earlier.
The Cambridge Center’s research calculated that bitcoin mining now uses the equivalent of Utah’s electricity consumption. That’s a more conservative estimate. On the high end, the figure might be the equivalent to all the electricity used in the state of Washington.
It’s information like this that last year led the White House to propose the Digital Asset Mining Energy (DAME) excise tax, which would levy a tax on crypto mining companies equal to 30% of the cost of the electricity they use.
“Currently, crypto mining firms do not have to pay for the full cost they impose on others, in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate,” the White House Council of Economic Advisors (CEA) wrote on its blog.
The CEA argues that — as opposed to other energy-intensive industries — “crypto mining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity.”
In response, the Chamber of Digital Commerce called on lawmakers to focus less on penalizing crypto miners and more on collaborating with the industry on ways to reduce energy consumption while allowing the sector to grow.