Cryptocurrency Mining Pose Emerging Challenges to U.S ?
The National Bureau of Economic Research published a paper “BITCOIN MINING MEETS WALL STREET” Nber pdf pointing out that ownership of a crypto mining company might provide a useful channel for risk management in the electric power industry. The adoption of electric vehicles and rise of cryptocurrency mining pose emerging challenges to U.S. power reliability in upcoming years.
The NBER is a private, non-profit research organization with an aim is to promote a greater understanding of how the
economy works. It disseminates economic research among public policymakers, business professionals, and the academic community. NBER’s research papers are produced quickly and released as “working papers.” They function as talking points among economists interested in new developments within their field.
Crypto mining is a process used to create new coins and validate transactions via a powerful computer system, or “mining rig,” dedicated to solving algorithmic puzzles. According to the University of Cambridge, the total annual power consumption of Bitcoin, the most widespread cryptocurrency, is currently 145 TWh, which is approximately 0.32% of total global energy consumption.
Just half a decade ago, crypto’s impact on the world’s energy grid was negligible. But in the past five years, Bitcoin’s energy consumption has grown from 11.8 to 120.5 TWh per year; the equivalent of adding 2,400 wind turbines to the grid every year. For context, the United States has installed an average of around 3,000 wind turbines a year, according to the USGS. And this could continue to rise rapidly: NYDIG, a Bitcoin financial services company, estimates that electricity consumption from Bitcoin mining could grow to 706 TWh by 2027..
The rise of the crypto economy and proof-of-work mining activities undoubtedly hold major implications for global energy systems. Handled with the right regulatory and commercial approach, crypto mining can lead to positive opportunities for governments and utilities, including an indirect acceleration of renewable energy growth. An in-depth understanding of the industry’s mechanics is vital and must be connected to national energy strategies.