Cryptocurrencies, like Bitcoin and Ethereum, have no intrinsic value. They exist only as numbers in a blockchain, and they’re worth whatever the wildly swinging market says they are worth at a given moment. But even if crypto has no real-world value, it absolutely has a real-world cost. Because calculating the numbers required to crypto transactions involves solving mathematical equations that are purposely difficult to execute. Completing those calculations requires more and more dedicated computing hardware over time—and more and more energy.
As a new report from the Energy Information Administration warns, “mining” for cryptocurrency now consumes up to 2.3% of electricity produced in the U.S. What’s more, that power includes some of the dirtiest electricity in the nation. It’s also directly affecting the cost of electricity for consumers while putting money in the pockets of the companies mining for “digital gold.”
According to the EIA, the 2022 amount of electricity consumed by cryptocurrencies was “similar to all home computers or residential lighting in the United States.” Now crypto is consuming still more, and the new report notes there have been incidents in which “electricity prices spiked due to a sudden surge in cryptocurrency mining.”
As The Texas Tribune reported in January, one Bitcoin mining company made millions by taking advantage of Texas’ managed energy market during last summer’s heat waves. As Texans were suffering through record-breaking heat and being asked to cut back on their use of electricity, crypto mining company Riot Platforms sold off $32 million in power credits it had purchased when the market was low.
But consumers aren’t able to play this game. Instead, they pay inflated rates for the electricity that companies are selling back to the grid at a profit. In the case of cryptocurrency miners, companies can take a big payday precisely because the miners are such large consumers of power. “I think that the rewards for their behavior are so lucrative and unfair,” said Mandy DeRoche, deputy managing attorney at Earthjustice, a nonprofit environmental group. “It’s like we’re bending over backwards to give money to the (crypto) miner for putting the strain on the grid and the system in the first place.”
But dipping into people’s pockets for a discount may be one of these crypto mining companies’ more benign activities. Across the country, crypto mining has bolstered failing coal and gas power plants and kept them running. According to Sierra, the magazine of the Sierra Club, some of these plants are using waste coal left over from previous mining specifically because it contains high levels of sulfur, mercury, lead, and other pollutants. Now it’s being burned for Bitcoin.
During the Trump administration, EPA restrictions were relaxed, allowing miners to use tremendous amounts of power with very little oversight because their power stays “behind the meter” rather than being sent out to consumers. Because they are not regulated as power producers, most crypto mining companies can avoid reporting their emissions under the Clean Air Act.
Cryptocurrency is imaginary. But the consequences of producing crypto are real. They affect real consumers’ pocketbooks and, thanks to lax regulation, they affect the whole world by turning out more greenhouse gasses as well as other pollutants.
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