Author: Daniel Kuhn; Compiler: Deng Tong, Golden Finance
The U.S. Department of Energy (DOE) is conducting a more in-depth investigation into Bitcoin (BTC) mining. Does this cause alarm?
More specifically, the Energy Information Administration (EIA), the statistical agency under the DOE, will conduct a survey over the next six months to review miners' electricity use in the United States. The move comes after It came after Zhou issued an "urgent data collection request."
Given the wording of the “emergency” order and the current administration’s critical stance on cryptocurrencies, many are concerned that the information collected will be used to develop policies that could have a harmful impact on the mining industry. In its public filing, the Energy Information Administration (EIA) cited the “public harm” that could arise from cryptocurrency mining as the reason for collecting the data.
“EIA is a policy-neutral agency that does not formulate policy, implement policy, or comment on policy.” EIA spokesperson Morgan Butterfield said in an email response to CoinDesk, “The results of the data we collect will help shape our path forward over the next six months on issues that will be reviewed regularly over the next three years.”
Policy neutrality, however, does not necessarily mean that the investigation will not influence policy. There’s good reason to believe thatsimply by conducting this survey, the Energy Information Administration (EIA) is exploring the larger purpose of Bitcoin and whether it is beneficial to society, and may already have answers.
For example, justification for the emergency order was approved by the Office of Management and Budget, citing the recent surge in cryptocurrency prices, which saw Bitcoin rise by more than 50% in a matter of months. %, which the EIA said would "incentivize more crypto mining activity, which in turn increases electricity consumption."
"Given the emerging and rapidly changing nature of this issue, and because we cannot To quantitatively assess the potential for public harm, EIA felt it was necessary to obtain reliable data to gain insight into this developing issue," it said. Butterfield said 82 companies operating about 150 facilities were selected to represent the “cryptocurrency company space” across the country.
The agency pointed to the severe cold weather Plattsburg suffered in 2018 to justify the risk cryptocurrencies pose to the public. "The combined impact of increased cryptocurrency mining and strained power systems is increasing uncertainty in electricity markets, which could lead to spikes in demand that could impact system operations and consumer prices," the report reads.
Since then, New York state has adopted a two-year moratorium on the opening of new crypto mining facilities unless they are powered entirely by renewable energy. Texas is also trying to slow down the development of the mining industry. Cryptocurrency miners in Texas work directly with the state-owned grid operator and are paid when power goes out during peak demand or moments of network stress.
The public version of the investigation shows that the EIA is asking mining companies fairly routine questions, including the number and types of chips they run, the facility’s power usage and how much power is used directly for mining.
The agency said in a statement: “We will pay particular attention to how the energy needs of cryptocurrency mining evolve, identify high-growth geographic areas, and quantify the electricity used to meet cryptocurrency mining needs. Source." Reports are due on the last Friday of the month through the end of July and may be updated thereafter.
Also, there is an argument that having such advanced statistics would benefit the country and industry because it has more detailed information.
Currently, the best data we have on the mining footprint comes from the Cambridge Bitcoin Power Consumption Index, which gives a hypothetical lower bound on the daily energy consumption of the Bitcoin network by extrapolating from current computing power. and upper bound estimates.
But you must ask, why conduct an investigation now? Why is the recent rise in Bitcoin prices a cause of emergencies but not others? Notably, theBiden administration has prioritized reducing the nation’s carbon footprint. Cryptocurrency critic Sen. Elizabeth Warren (D-Mass.) is asking federal regulators to make cryptocurrency miners disclose their emissions and energy use.
Bitcoin mining may become a hot topic of media debate before the halving event. It’s unclear how the halving will impact the mining industry, other than making less efficient mining equipment unavailable in the short term. Some expect cryptocurrency’s carbon footprint to increase in the coming years, while others believe it will shrink.
Additionally, there has been some public reflection on Bitcoin's environmental costs in recent months, especially after the second-largest network, Ethereum, reduced its energy consumption by 99% through an upgrade. While some groups, such as Greenpeace, are pushing Bitcoin to move away from energy-intensive mining, some are starting to see the industry as a boon to environmentalism.
For example,Cambridge recently downgraded its estimate of Bitcoin’s annual energy use, and institutions such as MIT and KPMG have also released reports arguing that the network could help “balance” the grid, subsidize Renewable energy development and contribute to green economy.
Mining is an energy-intensive industry — the cryptographic algorithm Bitcoin runs on, Proof-of-Work (POW), was designed by computer scientists to inhibit mining on the network by increasing interaction costs. Spam, Sybil attacks, and denial-of-service (DoS) attacks pass through servers, often in the form of computer processing time spent solving mathematical puzzles.
Some observers opposed to the mining process often describe Bitcoin mining as a "waste" of energy, but this is not the case - the energy is purposefully used as a token or a proof form. The problems that Bitcoin miners are competing to “solve” don’t make sense because they don’t add to the body of human knowledge or contribute to something productive like Folding@home, but they do have value – securing the network.
This is the tricky part: valuing Bitcoin. How much is Bitcoin worth? The standard reaction is to look at how the market values itwhich is around $42,000 at the time of writing. But most of the real debate surrounding Bitcoin’s massive energy footprint has nothing to do with Bitcoin’s price. Instead, they center on the costs and benefits of Bitcoin.
I wish I could say that the EIA investigation will help us better understand these costs and benefits. However, the survey authors appear to have answered their own question of whether Bitcoin poses a risk to the public and are looking for data to support this conclusion.