Mining cryptocurrency consumes power as traditional data centers

New York City: A White House research warns that cryptocurrency mining uses up to 0.9% of the world’s power and critiques Bitcoin and Ethereum’s proof-of-work algorithms.

The Office of Science and Technology Policy (OSTP) study calls for greater research into the energy effect of mining cryptocurrencies like bitcoin and if blockchain may be used for beneficial environmental activity.

Crypto mining requires 120 to 240 billion kWh of energy each year, or 0.4% to 0.9% of the world’s power and more than Argentina or Australia. This amount is similar to normal, non-crypto data use of 200 to 250 billion kWh per year, according to OSTP.

The US has the greatest crypto-mining, housing over one-third of the world’s crypto activities, and spends between 0.9% and 1.7% of its power on the activity – nearly comparable to all the home computers or household lights.

This generates 25 to 50 Megatons of CO2 per year, or 0.4 to 0.8% of the country’s total GHG emissions, equivalent to train diesel emissions.

The paper states that bitcoin mining creates enormous quantities of electronic waste since ASICs are fast obsolete and can’t be recycled.

Bitcoin and Ethereum spent 100 times as much carbon as Visa, Mastercard, and American Express combined, while performing a miniscule fraction of their transactions.

Crypto assets’ value fluctuates rapidly, making the industry volatile. The US’s stake of the Bitcoin industry rose from 3.5% in 2020 to 38% presently, according to the research.

Annualized crypto-asset power use surged 67% between July 2021 and January 2022, then declined 17% by August 2022. China outlawed cryptocurrency mining at this time, shifting its distribution.

The paper believes crypto’s fast development might affect customers and the electrical system. Texas has become a centre for crypto-mining, which utilizes 3% of peak energy consumption and is forecast to use 25GW of additional capacity in the next decade, stressing its already shaky system.

The paper highlights that crypto mining may harm equality, communities, and the environment. It proposes limiting cryptocurrency operations that raise greenhouse gas emissions, increase power costs for other customers, or make networks less stable.

It also indicates crypto mining might employ excess or “curtailed” renewable power, created when demand is low. Crypto mining could be limited to facilities that generate at least as much energy as they use, giving the surplus to the grid.

The paper addresses crypto mining at oil wells, where the rig is fueled by burning flaring methane gas, transforming a powerful GHG into a less potent one (CO2) (CO2). “Mining activities that replace current methane flares would not likely influence CO2 emissions, as this methane would be flared and converted to CO2,” it says.

Mining activities may minimize “wasted” methane, but it “may also be collected using current vapor capture systems at oil and gas wells.”

The paper notes that Bitcoin and Ethereum, which require “proof of work” validation, consume the most crypto energy. PoS, as in Ethereum 2.0, would cut energy use to less than 1% of current levels. The disadvantage here is that PoS systems need “validators” to make a significant initial investment, skewing the activity towards the rich.