Following China’s crackdown on crypto mining farms in 2021, the cryptocurrency mining industry has boomed across the ocean in the United States. According to the U.S. Energy Information Administration, the electricity energy consumption caused by crypto mining may currently account for 2.3% of the total in the United States.
Cryptocurrency mining is nothing new in the United States and has been developing for about 10 years, but since 2021, the size of the industry has expanded dramatically, with current estimates showing that cryptocurrency mining consumes 0.6% to 2.3% of the annual energy consumption in the United States.
The U.S. Energy Information Administration (EIA) on Thursday released an analysis of crypto mining activity across the country and its impact on the power grid. The EIA uses both "top-down" and "bottom-up" approaches to estimate: the "top-down" approach uses estimates of local and global mining activity from the Cambridge Center for Alternative Finance (CCAF); the "bottom-up" approach involves directly contacting known mining operators to obtain information on their energy use.
The range derived from the top-down approach is quite large because it is based on a number of assumptions. First, the method refers to data on total global electricity consumption from the Cambridge Bitcoin Electricity Consumption Index (CBECI). This method gives a range of estimates because electricity consumption is not consistent; it rises or falls based on local price fluctuations to maintain maximum profits, so total electricity consumption gives theoretical boundaries of upper and lower bounds. These boundaries are then combined with the U.S.’s current share of the crypto mining market, which CCAF puts at 38%. Combining these data points yields a range of 0.6% to 2.3%.
A bottom-up approach yielded similar figures. EIA used the data it holds to identify and contact 137 known mining operators across the United States, of which 101 responded to their inquiries. The maximum output figures provided by these responses totaled 10,275 megawatts (MW). Comparing that figure to the U.S.'s average annual electricity consumption of 450,000 megawatts comes out to about 2.3%, which is at the high end of the EIA's top-down measure.
If these numbers seem a bit esoteric to you, consider that even the lower end of the range of estimates is equivalent to adding another Utah or West Virginia to the grid. Cryptocurrency mining stands on its own in terms of energy consumption, and it has little to do with other industries.
Such huge consumption, and the rise to such levels in a relatively short period of time, is cause for concern among policymakers and grid managers. According to CCAF estimates, cryptocurrency mining in the United States accounted for approximately 3% of the global total in 2020, and this figure has now reached 38%. Further growth could begin to seriously impact efforts to keep energy prices low and decarbonize the grid, as well as the wider economic impact.