EIA prepares for second attempt to survey bitcoin miners about electricity consumption

Dive Brief:

• The U.S. Energy Information Administration wants to survey cryptocurrency miners about their energy use and plans to publish a notice in the Federal Register this quarter to take comment on the proposed data collection.
• EIA began collecting data on crypto energy use in February under an emergency authorization from the Office of Management and Budget. The Texas Blockchain Council sued EIA for advancing the survey without a full review and, the group said, because some questions targeted proprietary data. EIA subsequently withdrew the survey and agreed to destroy any data it had collected.
• EIA’s preliminary estimates suggest that electricity used for cryptocurrency mining likely represents between 0.6% and 2.3% of total U.S. electricity consumption, Steve Harvey, senior advisor to the EIA administrator, said Wednesday in a discussion with the crypto industry. “That’s a significant piece, and suggests understanding it could be important as we go forward,” he said.

Dive Insight:

Wednesday’s discussion was billed as a “listening session” and a chance for EIA to take comment on what kinds of data it might collect from the crypto industry. Stakeholders offered up recommendations as well as thoughts on the first attempt at data collection.

There is some worry in the crypto space that data EIA collects might be “weaponized,” said Tom Mapes, founder and president of the Digital Energy Council. The industry was concerned about the way in which the February survey was rolled out and appreciates the “more transparent process,” he said.

Related articles

No, Russia did not just lift its ban on domestic crypto use

30 July 2024

New US Bitcoin Mining Hardware Creates $20B Opportunity, Could Disrupt China’s Mining Dominance: Bernstein – Canaan (NASDAQ:CAN)

30 July 2024

Miners are “wary of the motivation behind the EIA data collection efforts,” said Margot Paez, a doctoral student at the Georgia Institute of Technology, where her research focuses on bitcoin’s energy use and environmental impact. She is also a research fellow at the Bitcoin Policy Institute.

“I believe we need a proper study, but I also think the EIA is the wrong organization,” Paez said. “The only way to get industry buy-in is to hand [the survey] over to effective third parties. Hence, I suggest that the EIA supports a university-led initiative that our research lab at Georgia Tech would direct.”

There has been growing concern over the energy consumption of cryptocurrency, particularly bitcoin and its “proof of work” method of validating transactions, which requires large amounts of electricity. Detractors say mining threatens grid stability, while the industry focuses on crypto’s potential to spur clean energy development and the flexible nature of mining loads which can be used for demand response.

ADVERTISEMENT

“I do think that the bitcoin mining industry will be open to sharing information with the EIA or with a university-led study,” said Texas Blockchain Council founder and president Lee Bratcher. “The more information that’s shared, the more even our detractors will realize that this industry holds tremendous benefit, not only for incentivizing renewable generation but also as a capacitor for grid stabilization and frequency balancing across the country.”

The “full story” of crypto mining includes a discussion of the “energy infrastructure opportunities that this industry brings,” said Mapes, “particularly the flexibility around demand response.”

Experts say providing services back to the electric grid can generate anywhere from 2% to 10% of a bitcoin mine’s revenue.

“Unlike traditional data centers, bitcoin has well defined constraints on demand,” Paez said. “What is lacking is an understanding of how the protocol governs energy consumption. You must understand how the difficulty adjustment works, and that there is a separate market for computational power … that makes reducing electricity costs the main way that miners can compete.”

Total U.S. data center electricity demand could double by 2030 to consume 9% of U.S. electricity generation, the Electric Power Research Institute found in a May study. The increase is being driven by AI applications, which can require 10 times the electricity of traditional internet searches.

Surveying data centers in general, as opposed to crypto-specific data centers, “would have been a better approach,” Bratcher said. “And distinguishing between flexible data centers and non-flexible data centers would be a good way to get at understanding the difference between bitcoin mining data centers, AI cloud computing data centers, etc. … There are a fair amount of differences, but from an EIA perspective, it did seem strange to us that bitcoin mining was singled out.”