For a technology that few people actually understand, cryptocurrency uses a heck of a lot of electricity, and that energy demand is growing rapidly. According to a 2021 New York Times article, international power demand for Bitcoin—the largest cryptocurrency—already totals more than seven times what Google requires for its global operations. All this to support a market that was nothing more than an idea in 2009. Now states are beginning to recognize the problems that level of demand can cause for energy supplies and increasingly ambitious clean energy goals.

Why all this energy?

So, this article isn’t the place for a deep primer on what cryptocurrency is or how it works. However, at a high level, the extreme energy use is a result of the computing power necessary to validate a cryptocurrency transaction under the most common process.

“Mining” is the process used to register transactions with Bitcoin, along with a number of other options, and it’s done using specialized servers. While this is a really complicated process to explain and understand, the important issue is that it’s very energy-intensive, especially since most miners are running hundreds or thousands of servers—and a lot of cooling capacity—at a time.

Energy use is such an issue that mining companies now shop around for locations based on electricity rates. Initially, most landed in China. In late 2019, China was home to 75% of all Bitcoin mining, according to a recent University of Cambridge report. However, Chinese authorities have since begun cracking down on mining in an effort to maintain currency controls, and the nation’s share of global mining activity has fallen to 46%. Now, more companies are setting up shop in lower energy-cost United States. In a July letter to the U.S. Department of Energy (DOE) and the Environmental Protection Agency (EPA), a group of lawmakers led by Sen. Elizabeth Warren said the United States is now home to 38% of global Bitcoin mining, up from just 4% in 2019.

To the states

Texas is one state where cryptocurrency mining is quickly becoming a very big business. According to a recent statement from the state’s grid-oversight group, the Energy Reliability Council of Texas (ERCOT), reported by the Washington Post, more than “27 gigawatts of crypto load is working on interconnecting in the next four years.” That’s a huge load in a system already very stressed during extreme weather events.

State officials, though, are bullish on the industry’s growth there, providing generous tax and workforce-training incentives, despite ERCOT warnings that blackouts are becoming more likely during periods of severe weather.

However, not every state is as anxious to welcome cryptocurrency companies. In June, the Idaho Public Utilities Commission approved a new rate plan developed specifically for cryptocurrency mining operations by Idaho Power that would allow the utility to interrupt power to the facilities during peak summer hours up to 225 hours per year. The move was prompted by requests the utility received from potential cryptocurrency operators with almost 2,000 megawatts (MW) of potential new demand. Idaho Power’s highest peak load occurred in 2021 and totaled 3,751 MW, so these new customers would force the company to add new resources to meet the more than 50% of added demand should all those plans be realized.

New York is taking an even firmer stand. In late June, the state’s Department of Environmental Conservation refused to renew air permits for the Greenidge Generating Station, a gas-fired power plant that has been repurposed to mine Bitcoin. The former coal generating station had been refitted with a natural gas turbine to serve as a resource during peak demand periods.

Now the plant’s operators are using it to power their own mining operation around the clock, while still providing power to the grid during periods of peak demand. However, the state’s decision would force them to shut down their cryptocurrency business. Greenidge can continue its mining efforts while it appeals the state’s decision.

New York State legislators in June also passed a two-year moratorium on new permits for other cryptocurrency projects that run on fossil fuel-based electricity, allowing only those running on renewable energy. As of early August, this bill had not yet been signed by Gov. Kathy Hochul.

Cryptocurrency energy demand is also drawing attention from Congress. In a letter to the DOE and EPA, four senators and two representatives outlined results of an investigation that requested energy use data from seven large cryptocurrency mining companies. They got answers from six organizations whose energy use, in total, nearly equaled the capacity required to power all residences in Houston. The letter urged the agencies to require such companies to report their energy use and associated carbon emissions to inform possible future industry regulations.