Some have called it the future of finance, but cryptocurrency still relies on mining, much like gold. However, unlike gold, it’s not mined for in dark caverns; crypto mining takes place online. Similar to the gold rush of old, crypto mines are proliferating and using an extraordinary amount of electricity.
According to the U.S. Energy Information Administration, crypto miners worldwide used as much electricity as all of Australia in 2023, which prompted the U.S. government to collect data about the industry’s energy use in America.
“People have long been warning about the, you know, insane amount of energy that is required to mine Bitcoin,” said Ryan Brown, a crypto correspondent for CNBC.
Cryptocurrency relies on miners to search the internet to find and record crypto transactions by solving complex puzzles. Each puzzle that is solved adds a block to the blockchain.
“If person A is sending bitcoin to person B, that transaction needs to be verified by miners,” Brown said. “Once verified, each part of the blockchain needs to be updated with that transaction. Miners are then rewarded in bitcoin.”
And with cryptocurrency’s popularity on the rise, many miners see a lucrative opportunity. The Cambridge Bitcoin Electricity Consumption Index said that the share of Bitcoin mining in the U.S. from January 2020 to January 2022 jumped from 3.4% to 37.8%.
Concerns about crypto mining energy consumption have been growing for years. According to a New York Times analysis from September, bitcoin mining uses seven times the amount of electricity that all of Google uses in one year.
In the U.S. alone, crypto mining accounts for up to 2.3% of the entire country’s electricity demand. The same as the entire state of Utah or West Virginia.
In an emergency request in January, the U.S. Energy Information Administration received authorization from the White House’s Office of Management and Budget to collect energy use data from commercial crypto mining operations in the U.S.
“We intend to continue to analyze and write about the energy implications of cryptocurrency mining activities in the United States,” said EIA Administrator Joe DeCarolis. “We will specifically focus on how the energy demand for cryptocurrency mining is evolving, identify geographic areas of high growth, and quantify the sources of electricity used to meet cryptocurrency mining demand.”
