US lawmakers probe into crypto mining companies’ energy use

Photo by MARK FELIX/AFP /AFP via Getty Images

Democratic lawmakers want to know how much electricity the companies use in order to assess how that will affect nearby residents and the environment. The members of Congress sent letters to the companies asking about the energy and environmental impact of their operations.

Mining operations raise concerns about their impacts on the environment and consumer electricity costs because of their high energy usage and carbon emissions. The letters were signed by several senators. Representatives were also signed on.

The congress people asked the companies how much electricity they use, where it comes from, and how they plan to grow in the US. The House Energy and Commerce Committee held an oversight hearing last week on the impact of cryptocurrencies on energy. Experts and lawmakers debated whether cryptocurrencies could play a role in promoting renewable energy or derail US climate goals.

Huge amounts of energy are wasted when mining certain cryptocurrencies. If it were a country, it would use more electricity than the country of Ukraine in a single year. If fossil fuels are used to generate electricity, it comes with a lot of pollution.

The proof of work process used to keep the ledger secure is the reason why it uses so much electricity. It requires miners to use specialized computing equipment to solve puzzles in order to verify transactions. New coins are given to the miners.

The proof of work system, which is energy inefficient in order to discourage people from tampering with the ledger, is what worries policymakers and environmental experts. Proof of work requires a fraction of the energy used by different processes.

Natural gas and coal plants in the US have been revived by hunger for energy. One of the companies that received a letter yesterday, Stronghold Digital Mining, bought two Pennsylvania power plants that burn coal waste exclusively to mine Bitcoins. The company says on its website that burning coal waste is helping to clean up areas that have been ravaged by its presence. According to E&E News, the EPA has recently cracked down on power plants that want to burn coal waste.

Coal waste aside, industry advocates argue that cryptocurrencies that use proof of work can clean up their act with renewable energy. Since battery technology isn't advanced enough to store renewable energy when there is more solar and wind power than the grid can handle, they argue that mining operations can make use of excess energy so that it doesn't go to waste.

The argument is mostly theoretical. The companies might be running on clean or dirty energy if the answers to the questions in the letter are any indication. There is some skepticism that miners would be willing to modify their hours in order to use more renewable energy. The machines run all the time to maximize profits, not just during daytime when solar power is available.

If mining companies aren't using excess renewable electricity but instead competing with other customers to fuel their operations, that could drive up utility bills for households and other businesses. In Plattsburgh, New York, Congress members point out as an example of that. Residential utility bills went up by up to $300 in the last year.

The companies were asked to respond to the letter by February 10th. Riot Blockchain, Bitdeer, Bitfury Group, Bit Digital, and Marathon Digital received letters.

We look forward to having a productive dialogue about the many benefits that we and the rest of our industry have for the United States, according to an email from the director of corporate communications for Marathon Digital.

Riot Blockchain is proud to do business in America, and we look forward to thoroughly reviewing and responding to the requested information in the letter we received from the Senate, said Trystine Payfer in an email.

The other companies didn't respond to the request for comment.

The global center for cryptocurrencies mining has moved from China to the US over the past couple years as China cracked down on the practice. More than a third of all mining happens in the US, and that is expected to grow.