The Biden administration has implemented new regulations mandating large cryptocurrency miners to disclose their energy consumption. 

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Targeting 137 Crypto Miners

One hundred thirty-seven mining operations in the US are responsible for over 2 percent of the nation's total electricity usage. This move comes amidst concerns regarding the potential strain on the nation's electricity grids and the acceleration of climate change attributed to the cryptocurrency industry. 

Engadget reported that EIA has specifically targeted 137 "identified commercial cryptocurrency miners" operating in the US, collectively accounting for approximately 2.3 percent of the country's energy consumption. 

This translates to an annual consumption of 90 terawatt-hours, surpassing the energy usage of countries like Finland, Belgium, and Chile within the same timeframe. Remarkably, the energy consumed by global crypto miners in 2023 equaled the entire energy consumption of Australia.

Data collection for the new regulations commenced this week, to understand the industry's escalating demands and identify regions with significant cryptocurrency activity. 

This information will inform future policy adjustments. Notably, the EIA's findings reveal that nearly 38 percent of all bitcoin mining occurs in the US, a substantial increase from 3.4 percent in 2020.

Increasing Consumption

EIA highlighted concerns over the increasing energy consumption associated with cryptocurrency mining operations in the US, as stated in its release. This stems from the energy-intensive nature of the business and its potential impact on the electric power industry.

Large-scale cryptocurrency mining operations have the potential to strain the electricity grid during peak periods, leading to higher energy prices for consumers and exacerbating energy-related carbon dioxide emissions. 

Given that a significant portion of global electricity generation relies on fossil fuels, the process of generating electricity contributes to carbon dioxide emissions.

Clean energy advocacy group RMI has estimated that cryptocurrency mines in the US release between 25 to 50 million tons of CO2 into the atmosphere annually. This emission level is comparable to the yearly diesel emissions from the US railroad industry.

Across 21 states in the United States, major mining operations are distributed, with significant concentrations notably in Texas, Georgia, and New York. However, this clustering poses a particular risk for Texans, given the already fragile state of the energy grid. 

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Ben Hertz-Shargel, head of energy research consultancy firm Wood Mackenzie, emphasized to Ars Technica that cryptocurrency mining operations not only strain the state's energy grid further but also contribute to rising consumer prices.

In Texas, energy costs are directly linked to real-time demand. As a result, Hertz-Shargel estimates that residents of the state experienced a 4.7 percent increase in their monthly utility bills due to cryptocurrency mining activities. 

Furthermore, he noted a trend where mining operations often establish themselves near existing renewable energy facilities, diverting clean power away from nearby residences and businesses.

Amidst these challenges, RMI reported that there are bright spots within the crypto industry. In 2022, Ethereum announced a software update aimed at making ether mining more environmentally friendly. 

The Ethereum Foundation asserts that this update has reduced the carbon emissions associated with ether mining by over 99 percent. Nonetheless, it's worth noting that ether represents only 17 percent of the global cryptocurrency market share.

Related Article: Can Cryptocurrencies Survive Without Regulations?