The US Department of Energy (DOE) is taking a closer look at bitcoin mining, creating new bitcoins by solving complex mathematical problems. Some people are worried that the government might use the data it collects to impose harsh regulations on the industry. The DOE says it is only trying to understand the impact of Bitcoin mining on the country’s electricity supply and demand.
The Energy Information Administration (EIA), a statistics agency under the DOE, will survey the electricity use of some US-based Bitcoin miners over the next six months, starting next week. The EIA calls this an “emergency collection of data request”.
Why Is the EIA Interested in Bitcoin Mining?
The EIA says it wants to collect data on bitcoin mining because of the recent surge in the price of bitcoin, which has increased the incentive for more people to mine it. Bitcoin mining consumes a lot of electricity, which could affect the stability and affordability of the power grid.
They cite an example of a cold snap that hit Plattsburg, New York, in 2018, where bitcoin miners used up so much electricity that the city had to buy more expensive power from other sources. This resulted in higher bills for the residents and businesses. They say that Bitcoin mining risks “public harm” because it could contribute to climate change by using fossil fuels to generate electricity. The EIA must create “credible data” to provide insight into this “unfolding issue”.
The EIA has selected 82 companies, operating about 150 facilities, to represent the “universe of cryptocurrency companies” in the US. The companies will have to report how much electricity they use, what kind of equipment they have, and how much of their power goes to mining.
How Will the Data Be Used?
The EIA says it is a “policy-neutral agency” that does not make, implement, enforce, or comment on policy. The EIA’s spokesperson, Morgan Butterfield, told CoinDesk that the data they collect will help them plan for a regular three-year clearance in the next six months.
However, being policy-neutral does not mean the data will not influence policy. Some think the EIA already has a negative view of Bitcoin mining and its social value. They fear that the data will be used to justify restrictive measures against the industry.
Some states have already taken steps to limit Bitcoin mining. New York State has passed a law that bans new Bitcoin mining facilities unless they use 100% renewable energy. Texas, a popular destination for bitcoin miners after China banned them, has tried to slow down the industry. Bitcoin miners in Texas must work with the state-owned grid operator and agree to shut down their machines when the grid is stressed.
On the other hand, some people argue that having more accurate and detailed data on Bitcoin mining will benefit the country and the industry. They say the data will show the precise picture of bitcoin mining’s energy use and market effects instead of relying on estimates and assumptions.
Currently, the best source of data on Bitcoin mining’s energy use is the Cambridge Bitcoin Electricity Consumption Index, which gives a range of possible values based on the current computing power of the Bitcoin network. The EIA’s data will be more specific and reliable, coming directly from the Bitcoin miners.
The EIA is a government agency that wants to know more about how much energy is used by people who make new bitcoins. They ask the companies that do this, like what kind of computers they use and how much electricity they need. They say this will help them understand how the energy demand changes and where it comes from. They want the companies to send them monthly reports until July, possibly longer.
Some think this is good for the country and the industry because it will give more accurate information than now. The current data is based on guesses and calculations from daily bitcoins.
Why the EIA is doing this now?
Why did they not care before when the price of Bitcoin was high? Maybe it is because the new president wants to reduce greenhouse gas emissions. And one senator who does not like Bitcoin asked the government to make the companies report how much they pollute.
Bitcoin mining is when people use energy to solve math problems and get rewarded with new bitcoins. This happens every 10 minutes, but the reward gets smaller every four years. This is called the halvening. We do not know how this will affect the mining industry. Maybe they will use more energy or less energy in the future.
Some people are also worried about how much energy Bitcoin mining uses. They say it is terrible for the environment and should be stopped. But another network, Ethereum, found a way to use much less energy by changing how they make new coins. And some experts say that bitcoin mining can actually help the environment by using renewable energy sources and balancing the power grid.
Mining is a complicated process that uses a lot of energy on purpose. It is a way to protect the network from attacks and spam. The math problems miners solve do not have any meaning, but they prove that they did some work. The value of Bitcoin is not based on how much energy it uses but on how much people are willing to pay for it. Right now, one bitcoin is worth about $42,000. But the real debate is not about the price but the costs and benefits of Bitcoin.
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