US House Hearing Addressed The Energy Impact Of Crypto Mining

Unregulated cryptocurrency mining consumes more energy than 159 states in 2019, but there are signs that the option of extracting crypto coins with clean energy is emerging.

A US House Committee hearing on Blockchain technology recently took place, discussing environmental impacts arising out of crypto mining. 

Gregory Zerzan, shareholder at business law firm Jordan Ramis along with John Belizaire, founder and CEO of Soluna Computing and Steve Wright, recently retired former general manager of Chelan County in Washington presented testimonies for mining activities using renewable energies only. All three witnesses pointed towards the rising demand for clean energy in the mining sector, to achieve both environmental and human security goals.

“Research suggests that cryptocurrency mining is consuming 0.2 percent of the world’s electricity production – more than 159 countries.” 

The power-eating and environmental impacts of crypto mining began erupting in parts of the US last year. In October, several New York City-based businesspersons reached out to governor Kathy Hochul requesting her to deny permits regarding the conversion of the city’s old fossil fuel plants into crypto mining centres. “Proof-of-Work cryptocurrency mining use enormous amounts of energy to power the computers needed to conduct business — should this activity expand in New York, it could drastically undermine New York’s climate goals established by the Paris Agreement and Executive Order 13769, as well as the de Blasio administration’s OneNYC environmental agenda.”

The National Association of Regulatory Utility Commissioners (NARUC) along with major cities like San Francisco has also taken note of it. The NARUC even cited a study saying that Bitcoin mines use as much electricity as 1 million U.S. homes and found that if Bitcoin mining continues to grow at its current rate, there may not be enough energy sources available to power future expansion efforts.

“Governmental regulatory bodies have pointed out that cryptocurrrency mining uses an estimated 0.2% of the world’s electricity – more than 159 countries.” 

However, last year in November during an interview for Gizmodo, Bitcoin’s chief scientist estimated that the entire network used roughly 2.55 gigawatts of electricity, nearly equivalent to Serbia at the time. Since then over 300 megawatts have been added to power mining facilities worldwide, 10 times more than last year.

“Industry experts say that cryptocurrrency mining uses about 2.55 Gigawatts of electricity worldwide – which is equivalent to Serbia.”

Multiple crypto miners are now applying for clean energy permits with public utility commissions across America, in order to move their facilities away from fossil fuelled power plants and tap into wind or solar-based sources instead. Numerical data detailing this trend is yet unavailable as individual cases vary depending on local environmental conditions and cost benefits attributable to it.

“Industry experts say that cryptocurrrency mining uses about 2.55 Gigawatts of electricity worldwide – which is equivalent to Serbia.”

Some cities like Chelan County in Washington, where local electric utilities were reportedly “struggling to keep up with the power demands from cryptocurrency companies”, have also initiated a moratorium on new crypto mining operations until 2019. In other areas, however, it’s too early for conclusions as there are no regulations mandating the dispersal of clean energy by crypto miners. 

“Local electrical companies have been struggling to provide enough energy due to increased demand from cryptocurrencies.” 

In fact, some economic analysts opine that large-scale adoption of renewable energy could be a threat for traditional utility stocks.

“Many analysts believe that the large-scale adoption of renewable energy could be a threat to traditional utility stocks.” 

The market capitalisation in electric power generation in America is estimated at $945 billion and in 2017, increased by 5 percent. Electricity utilities in many states are well known to be part of powerful lobbying groups working behind the scenes resulting in similar legal procedures to ban crypto mining altogether. 

“Electric power generation in America is worth an estimated $945 billion and has seen increases of up to five percent over the last year.” “Some state legislators, such as Nevada’s Paul Anderson, have advocated for legislation that would apply stricter regulations on cryptocurrency miners. Anderson justified his actions by arguing that “it [crypto industry] has grown exponentially and it is taxing our resources tremendously”.” 

The US Congress has now stepped in to investigate the matter by calling upon representatives from across the mining sector. According to statements made during a hearing held today, several industry stakeholders have expressed their concerns over the detrimental effects of large-scale crypto mining on energy consumption.

“Several industry stakeholders have now addressed Congress regarding what they perceive as damaging effects of cryptocurrency mining on energy consumption.” 

The Energy & Commerce Committee’s Select Investigative Panel, chaired by Doris Matsui (D-CA), hosted an Interim Hearing titled “Bitcoin Technical Background & Data Analysis” where five experts were brought before policy makers. On behalf of Coin Center – a non-profit advocacy group and public policy organization – Peter Van Valkenburgh , Director of Research, testified on behalf of digital assets and blockchain technology. During his testimony, Van Valkenburg highlighted the need for one “uniform set of rules” for all crypto miners given that various communities currently apply different standards to their operations. He warned that new federal regulations would likely impact smaller mining facilities more severely than larger ones as they do not enjoy offsetting tax benefits and other cost concessions. 

“Coin Center – a non-profit advocacy group and public policy organization – called on Congress to provide “one uniform set of rules” for cryptocurrency (mining).”