The biggest cryptominers in the United States use as much electricity as Houston.
The results of an investigation by Congress show how the increase in activity has made people's electricity bills go up and made it harder to fight global warming.
Seven of the biggest Bitcoin mining companies in the United States are set up to use almost as much electricity as all the homes in Houston, according to data released Friday as part of an investigation by congressional Democrats who say miners should be required to report how much energy they use.
After China cracked down on cryptocurrency mining last year, a lot of people who make and track virtual currencies with powerful computers that use a lot of energy moved to the US. Democrats, led by Senator Elizabeth Warren, are also asking companies to report how much carbon dioxide they put into the air. Carbon dioxide is the main greenhouse gas that causes climate change.
In a letter to the heads of the Environmental Protection Agency and the Department of Energy, Sen. Elizabeth Warren and five other members of Congress said, "This limited data alone shows that cryptominers use a lot of energy and are responsible for a large and quickly growing amount of carbon emissions." "But there isn't much known about how widespread cryptomining is," they wrote.
The letter pointed out that research has shown that the rise in cryptomining is also driving up energy costs for local residents and small businesses and putting more pressure on the power grid in states like Texas.
Since they were first introduced more than a decade ago, cryptocurrencies like Bitcoin have grown by leaps and bounds. In recent years, people have become worried about cryptomining, the process of making a virtual coin. This process uses a lot of energy because it is a complicated guessing game that uses powerful computers that need a lot of power. Bitcoin mining uses more electricity than a lot of countries around the world.
A group of Democrats in Congress began looking into how the largest cryptomining companies in the country use energy earlier this year. They asked seven cryptomining companies for information about how they work, and based their findings, which were released on Friday, on what the companies told them.
That data showed that the seven companies had set up to use up to 1,045 megawatts of power, which is enough to power all the homes in Houston, the fourth-largest city in the United States with 2.3 million people. The companies also said that they plan to increase their capacity at an amazing rate.
Marathon Digital Holdings, one of the largest cryptomining companies in the United States, told the investigation that it ran almost 33,000 "mining rigs," which are highly specialized computers that use a lot of power, as of February. This is up from just over 2,000 at the beginning of 2021. It said it wants to get that number up to 199,000 rigs by the beginning of next year. This would be an increase of almost 100 times in just two years.
The company runs a cryptomining center in Montana that gets its power from the Hardin Generating Station, which makes electricity by burning coal, which is the dirtiest fuel. But in April, Marathon said that it would move these operations to "new locations with more sustainable sources of power" and that the company was working toward becoming carbon neutral. It didn't give any more information.
Because they use a lot of electricity, cryptomining companies are often close to power sources.
Greenidge Generation Holdings runs a Bitcoin mining center in upstate New York that is powered by a natural gas plant. The company said it planned to increase its mining capacity by ten times by 2025 in several places, including South Carolina and Texas. But New York didn't renew the facility's permit to pollute the air last month, saying that Greenidge's cryptomining operations were a threat to the state's plans to limit greenhouse gas emissions to fight climate change. Greenidge said it could keep running with its current permit while it fought the state's decision.
Overall, the seven biggest cryptomining companies planned to increase their total mining capacity by at least 2,399 megawatts in the next few years. This is an increase of nearly 230% from where they are now and is enough power to run 1.9 million homes.
Some cryptomining companies say they only use energy that comes from natural sources. In response to the Senators' request for information, Riot Blockchain told them about its Coinmint mining facility in Massena, New York, which uses almost only hydroelectricity. The letter said that the much bigger Whinstone facility gets its power from the Texas grid, which gets more than 60% of its power from coal or natural gas.
In a statement, Jason Les, the CEO of the company, said that renewable energy in Texas was still going strong. And cryptominers could shut down when there was a lot of demand, which took pressure off the grid.
The rising cost of electricity has also been blamed on the growing demand for cryptomining. Researchers at the University of California, Berkeley, did a study and found that the power needs of cryptominers in upstate New York had raised annual electric bills by about $165 million for small businesses and $79 million for individual households. For the average household, this meant an extra $71 a year, or a 6 percent increase.
It wasn't clear how the recent drop in the price of cryptocurrencies would affect plans to grow. And the big picture of how much energy cryptominers use outside of the seven companies wasn't clear either.
Sen. Warren said in her letter that, because of these worries, the E.P.A. and D.O.E. should work together to make rules that would require cryptominers to report how much energy they use and how much pollution they make. That would let the federal government keep an eye on energy use and trends in order to start regulating an industry that is mostly unregulated.
Bloomberg Law said last month that the White House is also looking at policy suggestions to reduce the amount of energy and pollution caused by cryptocurrency mining.
China's crackdown on cryptocurrencies last year shook up the crypto world and caused a lot of miners to leave. Researchers at Cambridge have put together data that shows that the United States is now the biggest place in the world for mining Bitcoin. It makes up about 37% of the world's hashrate, which is a measure of the computing power used for mining.