KARAH RUCKER
Digital cryptocurrency, often referred to as the future of finance, relies on a process called mining to function, similar to how gold is mined. However, unlike gold mining which takes place in dark caverns, cryptocurrency mining takes place online.
The popularity of cryptocurrency has led to a rise in the number of crypto-mines, which consume an extraordinary amount of electricity. According to the U.S. Energy Information Administration, in 2023, crypto miners around the world used as much electricity as the entire country of Australia. This has prompted the U.S. government to collect data on the industry’s energy use within America.
RYAN BROWN – CNBC CRYPT CORRESPONDENT: “People have long been warning about the excessive amount of energy required to mine Bitcoin.”
KARAH RUCKER
Cryptocurrency relies on miners to solve highly complex puzzles in order to find and record transactions on the internet. Each puzzle that is solved adds a block to the blockchain, which is essentially a digital ledger.
RYAN BROWN – CNBC CRYPT CORRESPONDENT: “If person A is sending Bitcoin to person B, that transaction needs to be verified by miners. Once verified, the blockchain needs to be updated with that transaction. Miners are then rewarded in Bitcoin.”
KARAH RUCKER
With the increasing popularity of cryptocurrency, many miners see it as a lucrative opportunity. According to the Cambridge Bitcoin Electricity Consumption Index, the share of Bitcoin mining in the U.S. jumped from 3.4% in January 2020 to 37.8% in January 2022.
Concerns about the energy consumption of crypto-mining have been growing for years. The New York Times reported that Bitcoin mining uses seven times the amount of electricity that 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, which is equivalent to the entire state of Utah or West Virginia.
In response to these concerns, the White House has authorized an emergency data request, allowing the U.S. Energy Information Administration to collect information on the energy use of certain crypto miners.
Joe DeCarolis, EIA Administrator: “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.”
