Essay by Eric Worrall
Will Cryptomining energy use be the wedge issue the Biden Administration uses to introduce energy regulation and carbon taxes?
Texas judge turns out the lights on federal survey of cryptominers’ energy consumption
Washington sees potential emergency as miners power up to chase new BTC high
Thomas Claburn
Wed 28 Feb 2024 // 00:31 UTCA Texas judge has granted a temporary restraining order that prevents the US federal government surveying domestic cryptocurrency miners about their energy consumption.
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EIA aimed to provide the US government with reliable data about the energy usage of cryptomining operations, given that energy availability is a national concern. The agency sought to survey 82 cryptocurrency mining facilities in the United States.
According to DeCarolis, the survey “will take each respondent 0.5 hours to complete the survey every month …” The financial incentive to fill in the form prior to the specified deadline was significant. Firms selected for the survey faced a civil penalty of up to $12,937 for failing to comply.
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Judge Alan Albright, US district judge for the Western District of Texas, found the plaintiffs’ arguments compelling enough to grant their TRO request, which requires the EIA to suspend its data collection until a preliminary injunction hearing, scheduled for Wednesday, February 28, can be held.
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“Upon inspection of the Survey itself, the Court finds the 30-minute estimated time of completion is extremely inaccurate, if not grossly misleading,” the judge wrote.
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Read more: https://www.theregister.com/2024/02/28/us_survey_cryptocurrency_power/?td=rt-3a
I’m deeply suspicious of this attempt to survey cryptomining energy use.
Even if you don’t like cryptomining, and frankly I personally believe cryptomining is a joke, nevertheless cryptomining is a legal use of energy which pays its way. As a large scale user of energy which can scale back on demand, cryptominers may even be doing some good, by helping power utilities maintain financial liquidity and cash flow – like having a large Alumina smelter on their grid.
But the Biden administration appears to be suggesting cryptomining’s use of energy is a problem.
From the EIA;
Tracking electricity consumption from U.S. cryptocurrency mining operations
Summary
Electricity demand associated with U.S. cryptocurrency mining operations in the United States has grown very rapidly over the last several years. Our preliminary estimates suggest that annual electricity use from cryptocurrency mining probably represents from 0.6% to 2.3% of U.S. electricity consumption.
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The increased demand associated with cryptocurrency mining can present challenges to the operation of electricity grids. After some early problems where electricity prices spiked due to a sudden surge in cryptocurrency mining, wholesale and retail markets have been able to make adjustments to handle the new load. Some grid operators have instituted programs that provide incentives for large electricity consumers to curtail their use during periods of peak demand. Cryptocurrency miners have become regular participants in these programs, known as demand-response, resulting in operations being cut back or shut down temporarily. In addition, cryptocurrency miners in areas with fluctuating power prices have reduced their electricity use in response to periods of high prices in wholesale power markets, given the sensitivity of their operational profitability to electricity prices.
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Read more: https://www.eia.gov/todayinenergy/detail.php?id=61364
The reasonable course of action if there is demand for more energy is to build more generators. But the Biden Administration doesn’t want more fossil fuel generators, they want the American People to embrace energy efficiency – doing more with less. The Biden Administration appears to see reducing energy use as a key pillar of their Net Zero agenda.
Cryptomining is an obvious target for such an agenda. They use a lot of electricity, the EIA estimates up to 2.3% of US electricity production. Forcing Cryptominers to shut down would in theory increase energy availability, without having to burn any additional coal or gas – which could allow the Biden administration to claim a significant emission reduction, without obvious large scale negative economic impacts.
China would also love it if Biden shut down US cryptomining. The Chinese Government is furious at rich Chinese using cryptomining to circumvent government restrictions by smuggling their money out of China. Smuggling cryptocurrency out of China utterly depends on cryptominers in the USA. Without a vibrant and highly liquid US cryptocurrency ecosystem, there would be no means available for rich Chinese cryptosmugglers to convert their crypto back into ordinary cash. But I’m sure helping Communists enforce their tyranny in Mainland China is not a priority for the Biden administration.
Of course, laws passed to regulate cryptomining energy use could potentially be applied to other industries, once they are on the statute books. We’ve all seen how regulatory overreach can be applied in ways lawmakers likely never intended, like the EPA’s attempts to abuse clean air laws to regulate CO2.
If we don’t defend cryptominers against unjust political overreach and harsh energy use regulation, I don’t think you have to be Einstein to figure out who the Biden Administration’s next target would be.
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