Between April and August, the US’ share of global computing power devoted to mining bitcoin more than doubled, from 17% to 35%, as miners looked to relocate from China after the government there began cracking down on cryptocurrency.
China’s share, in the same period, fell from 46% to near-zero, according to the Cambridge Centre for Alternative Finance (CCAF), which compiled the data. The US became the world’s leading bitcoin miner in this four-month period, followed by Kazakhstan and Russia. In the US, miners find a transparent regulatory environment, as well as states like Texas eager to welcome the crypto industry; even if the power isn’t as cheap as in Kazakhstan, the skyrocketing prices of bitcoin make it easy for miners to pay the electricity bill at the end of the month.
This means that, in tandem, the consumption of electricity by American bitcoin miners has approximately doubled as well. CCAF calculated the global bitcoin network used nearly 8 terawatt hours of power in September 2021—a rate of use that translates, for US bitcoin miners alone, to around 35 terawatt hours a year, or roughly three times the annual electricity use of Sri Lanka.
Should the US regulate bitcoin mining emissions?
Using a back-of-envelope calculation set out by the Dutch economist Alex de Vries in the journal Joule, the world’s bitcoin miners will emit around 50 million metric tons of carbon dioxide in 2021. If the US’ share of those emissions is roughly the same as its share of power consumption by bitcoin farms, then US miners alone will emit nearly 18 million metric tons of carbon dioxide this year—the equivalent of adding 3.7 million cars to US roads.
This surge in emissions, coming as it does in the lead-up to the COP26 climate summit in Glasgow, presents a worrying prospect to those in the US trying to shrink the country’s carbon footprint. New York’s legislators, for instance, are mulling over a bill that can stop new or refurbished fossil fuel-powered plants from feeding electricity to cryptocurrency mining facilities. One company, in upstate New York, had to find ways to offset emissions from its bitcoin farms after protests from NGOs and citizens.
As the value of bitcoin climbs, miners of the currency will have more incentive to expand their operations—more incentive, in other words, to build their own captive power plants, or to draw power from the waste gas in fracking fields, or to go nuclear. De Vries, the Dutch economist, has suggested the annual electricity consumption of the bitcoin network could top 200 terawatt hours a year, producing more carbon emissions than the city of London. Forcing crypto miners to rely on renewables to mint their coins might, on the other hand, have the beneficial effect of redirecting the industry’s investments into public goods like solar or wind energy farms. But regulators will have to act fast, before the boom in US bitcoin mining throws millions more tons of carbon dioxide into the atmosphere.