Cryptocurrency transactions are exacting a heavy toll on global energy resources, with estimates revealing that the electricity used in these transactions surpasses the annual consumption of entire countries like Argentina and Australia.
According to the White House Office of Science and Technology, global electricity usage for cryptocurrencies, such as Bitcoin, ranges from 120 to 240 billion kilowatt-hours per year, with the United States leading the pack.
The impact of cryptocurrency and mining on the power grid and energy consumption has been a topic of discussion among experts. However, this aspect has received relatively little attention until now.
Effects of Crypto Mining on the Power Grid
Dr. Le Xie, a professor in the Department of Electrical and Computer Engineering at Texas A&M University and associate director of the Texas A&M Energy Institute, is at the forefront of addressing this issue.
He spearheads efforts to comprehend how cryptocurrency mining affects the power grid and explores ways to leverage this knowledge for further research.
Despite technological advancements that allow users to achieve greater efficiency with less energy, cryptocurrency mining remains a demanding computational process. The hash rate, which measures the power consumed by the blockchain network, continues to escalate.
During the scorching summer heatwave of 2022 in Texas, Dr. Le Xie and his colleagues made a noteworthy discovery. They observed a substantial 18% decline in global cryptocurrency mining, coinciding with the strain on the Texas power grid.
Consequently, the Electric Reliability Council of Texas issued an appeal urging energy consumers to preserve electricity.
"There seems to be a very strong negative correlation between the mining demand and the systemwide total net demand," Xie said in a statement.
"When the grid is stressed, crypto miners are shutting down, which demonstrates a potential for demand flexibility."
Flexibility
During a heatwave, homeowners typically increase their power consumption for air conditioning, leading to a greater demand for electricity. In contrast, cryptocurrency mining has the potential to be flexible and reduce its demand during periods of peak energy usage, thus making a positive contribution to grid reliability.
The research provides essential data for the initial exploration of the carbon footprints of mining facilities and their impact on grid reliability and wholesale electricity prices.
"Increasing firm demand will invariably result in a decrease in grid reliability," Xie said. "However, with crypto mining modeled as a flexible load that can be turned off during the stressed moments, it can be a positive contributor to the grid reliability."
Although cryptocurrency has made significant strides, one thing remains evident: as this industry continues to evolve, the escalating energy demand becomes increasingly critical.
The study's findings were published in the IEEE Transactions on Energy Markets and Policy and Regulation and Advances in Applied Energy.
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