Bitcoin remains a popular trading tool. But to trade the crypto currency requires a large electricity supply. Research shows that in the United States alone, this is more than 2% of total supply according to the Energy Information Agency (EIA). That is comparable to adding an additional state to the grid in three years.
The ‘mining’ of Bitcoins is a lucrative but competitive industry. Companies want to get additional power production up and running quickly and set up in old power plants. However, the drive for more because of this has quite an impact on the environment.
The reason for the increase in demand has to do with stricter rules around mining in China, forcing specialised companies to move their operations to the US.
At the start of 2020, about 3% of global Bitcoin mining took place in the US, the Cambridge Centre for Alternative Finance calculated. By 2022, that figure had risen to nearly 38%.
The Cambridge Centre also makes calculations around energy consumption. Because one often has to guess at the figures, the conjectures vary widely. They range from 25-91 terawatt hours of consumption.
The EIA wanted to sharpen these figures. It identified 137 mining facilities and analyzed their power needs. That resulted in the figure of 2.3% network-wide consumption, which is on the higher side of the Cambridge Centre figures. Although further research needs to be done.
Crypto mining and increased carbon emissions
Mining companies are increasingly relying on old power plants to meet the huge need for electricity generation. Production from those power plants had declined between 2015 and 2020, but then nearly tripled in one year.
The list includes a number of power plants that would normally have ceased production in due course, news site knows Ars Technica. Because these now remain open to supply Bitcoin mining, that process irrevocably contributes to increased emissions and fossil fuel use, it concludes.
Although it must be said that some mining companies are also joining agreements to cease operations when there is an over-utilisation of the grid. They do get compensated for that: one company in Texas received $30 million because it was not operational during a heatwave, and people needed electricity for their air conditioners.
Bitcoin mining has a serious impact on the United States’ goals of making the electricity grid climate-neutral.
EIA promises to report on a monthly basis to better assess the actual impact.
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