The US government is launching a survey to track the power consumption of cryptocurrency mining operations, amid growing concerns over their environmental impact.
The US Energy Information Administration (EIA) said on Wednesday that it will start collecting data from selected bitcoin miners next week, as part of an emergency request authorized by the Office of Management and Budget on Jan. 26.
The survey will aim to measure how much electricity is used by the miners, who create new digital coins by solving complex mathematical problems. The EIA will also try to identify the regions and sources of power that are most affected by the mining activity.
The move comes as the global cryptocurrency market faces increasing scrutiny for its carbon footprint, which some experts estimate is larger than that of some countries. According to the Rocky Mountain Institute, a Colorado-based non-profit group focused on clean energy, bitcoin alone consumes about 127 terawatt-hours (TWh) of electricity per year, more than Norway.
The EIA said it has received requests from various sectors to quantify the energy use of cryptocurrency mining, and hopes to have more information to share in a few months.
“We do think it is a significant source of demand which is worthy of our efforts to quantify it,” the EIA’s Glenn McGrath told Reuters. “However, until we are able to substantiate the activity with better data, we, too, have more questions than answers.”
A Growing Industry
Cryptocurrency mining has become a lucrative industry, as the prices of digital coins such as bitcoin and ethereum have soared in recent years. Bitcoin, the most popular and valuable cryptocurrency, hit a record high of over $69,000 in November 2023, before dropping to around $40,000 in January 2024.
The mining process involves using specialized computers to verify transactions and add them to a public ledger, known as the blockchain.
Some miners have sought to reduce their environmental impact by using renewable energy sources, such as solar, wind, or hydro power. Others have relocated to regions with cheaper and cleaner electricity, such as Iceland, Canada, or China. However, these options are not always available or feasible for all miners, especially in the US, where the electricity grid is largely powered by fossil fuels.
A Potential Solution
The EIA’s survey could help the US government and the cryptocurrency industry to find ways to make the mining operations more energy-efficient and less harmful to the climate.Â
Some experts have suggested that the cryptocurrency market could adopt a different system of creating and verifying coins, known as proof-of-stake, which does not rely on intensive computing power and electricity. However, this would require a major overhaul of the existing protocols and consensus mechanisms, which could face resistance from some miners and users.
The EIA’s survey is not the first attempt by the US government to regulate the cryptocurrency industry. In December 2023, the US Treasury Department proposed a rule that would require financial institutions and intermediaries to report transactions involving cryptocurrencies worth more than $10,000 to the Internal Revenue Service.Â
The EIA’s survey could be a step towards finding a balance between the innovation and the regulation of the cryptocurrency industry, which could benefit both the economy and the environment.
Despite the challenges and uncertainties, the cryptocurrency industry continues to grow and evolve, attracting more investors, users, and enthusiasts. According to a report by Statista, a German online portal for statistics, the number of cryptocurrency users worldwide reached 221 million in 2023, up from 101 million in 2020.
The EIA’s survey could help the cryptocurrency industry to achieve its full potential, while also addressing its environmental impact. By collecting and analyzing the data on the energy use of cryptocurrency mining, the EIA could help the industry to become more sustainable and responsible, and to contribute to the global efforts to combat climate change
Source: ReutersÂ
