White House eyes power reliability standards, energy efficiency rules for Bitcoin, other crypto mining

Table of Contents

Dive Brief:

  • The U.S. government should take steps to ensure crypto mining operations do not reduce electric system reliability or drive up costs on the nation’s power grid, according to a report published Thursday by the White House Office of Science and Technology Policy, or OSTP. Those efforts would fall jointly to the U.S. Department of Energy, Federal Energy Regulatory Commission and the North American Electric Reliability Corp., and could include development of new reliability standards, OSTP said.
  • The United States hosts about a third of the world’s crypto-asset operations, and they consume about 0.9% to 1.7% of the country’s electricity, according to the report. 
  • The report also recommends DOE develop energy efficiency standards for crypto mining equipment and collect additional data from crypto miners and electric utilities, including mining energy usage and fuel mix and participation rates in demand response programs.

Dive Insight:

Additional scrutiny and oversight may be inevitable for Bitcoin and other crypto operations, say some industry insiders.

The crypto sector needs “more regulatory clarity to continue to grow and expand,” Digital Power Optimization CEO Andrew Webber said in an email. His company works with miners to help manage their energy use, and said the sector “cannot exist outside the purview of the law and regulations if supporters and participants truly want to see global adoption and day-to-day integration.”

Conservation advocates say lawmakers and President Joe Biden must act quickly on the report’s recommendations.

“We urge Congress and the administration to move swiftly to improve monitoring and reporting on greenhouse gas emissions and electricity use, and to set energy efficiency standards that all digital assets must meet,” Environmental Working Group Senior Vice President for Government Affairs Scott Faber said in a statement.

Biden in March directed OSTP to assess the climate and energy impacts of crypto mining in the United States. The report concluded crypto-asset activity is estimated to result in approximately 25-50 million metric tons of carbon dioxide emissions per year, “similar to emissions from diesel fuel used in railroads in the United States.”

“At a time when greenhouse gas emissions are increasing, our electric grid is strained, and climate-change-induced extreme weather events are ever present, no industry should be making these existential challenges even greater,” Faber said.

The U.S. hosts about 38% of the global Bitcoin activity, according to the report. That is a rapid rise from about 3.5% in 2020, after China banned Bitcoin in 2021.

Bitcoin accounted for 60-77% of total global crypto-asset electricity usage as of August, according to the OSTP report. Ethereum was estimated to account for 20% to 39%, though the network is preparing to transition to a less-energy intensive consensus mechanism.

“I think it’s right that people be worried about this,” Webber said of Bitcoin’s energy use. But he added that the energy is “greener than most people think. There have been a number of reports and studies showing it’s much greener than most of the grid and many other high-energy-consumption industries.”

Webber also noted Bitcoin mining “makes for an outstanding demand response mechanism,” and that its energy consumption is inherent in keeping the network secure.

The White House report recommends the U.S. Energy Information Administration and other federal agencies consider collecting data on demand response participation in the crypto industry along with mining energy usage and fuel mix, power purchase agreements and any environmental justice implications.

The report also considers the potential for new grid reliability standards.

The report calls on DOE, NERC and FERC to “conduct reliability assessments of current and projected crypto-asset mining operations on electricity system reliability and adequacy,” and if risks are found, then to “consider developing, updating, and enforcing reliability standards and emergency operations procedures to ensure system reliability and adequacy under the growth of crypto-asset mining.”

The Biden administration should also consider working with lawmakers to enable DOE to develop and update “energy conservation standards for crypto-asset mining equipment, blockchains, and other operations,” the report recommended.

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