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The Energy Information Administration reported that large-scale cryptocurrency mining now accounts for about 2% of all electricity use in the United States, according to PYMNTS. That’s roughly the same amount of electricity an additional U.S. state would consume.
What’s happening?
Cryptocurrency activity in the U.S. has surged in the last five years, with operations consuming enormous amounts of energy. PYMNTS noted that research from the Cambridge Centre for Alternative Finance estimates that U.S. bitcoin mining uses as much electricity as the state of Utah — and possibly even Washington state.
In response, the White House proposed a Digital Asset Mining Energy tax, which would charge crypto mining firms 30% of the cost of the electricity they use. As PYMNTS reported, the White House Council of Economic Advisers wrote that “crypto mining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity.”
Much of the industry relocated to the U.S. after China made bitcoin mining illegal, shifting operations to regions with cheaper and more accessible electricity. An Ars Technica report also points to data from Cambridge showing the U.S. share of global bitcoin mining jumped from 3% to 38% in only two years.
Why is cryptocurrency mining important?
Crypto mining requires so much electricity because it relies on a global network of computers that are constantly racing to process transactions. Mathematician Jean-Paul Delahaye explained in a post for the Polytechnique Insights that the system is a nonstop computational contest — known as “proof of work” — with an extraordinarily high energy expenditure.
When the electricity comes from dirty energy sources, these operations contribute to the release of heat-trapping pollution and worsen air quality.
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At the same time, crypto’s decentralized design allows people to send money without banks, extra fees, or long processing delays — part of why the technology has grown so quickly.
What’s being done about cryptocurrency mining?
With the cryptocurrency market now valued at over $3 trillion, the sector has the potential to drive a broader shift toward clean, renewable energy sources such as wind and solar.
Some companies are already changing how they operate. A bitcoin firm in Texas purchased a wind farm to power its mining operations and lower electricity costs. Another major network, Ethereum, cut its energy consumption by nearly 100% after switching to a more efficient system known as “proof of stake” that doesn’t rely on heavy computational work.
It can also be useful to consider other countries’ mining bans and their purpose, as well as incentives that encourage energy transitions and help limit intensive energy use.
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