While policymakers across North America are concerned about how energy use in cryptocurrencies, artificial intelligence and other data centers will affect affordability for retail customers, cryptocurrency investment firm Paradigm argues that governments should exclude Bitcoin mining operations.
Bitcoin mining requires a huge amount of electricity. But the report, written by Paradigm, which has miner Genesis Digital Assets in its investment portfolio, says this business model only works when the energy is particularly cheap (such as when it is provided by off-peak renewable energy sources) and can give energy back to the population when they need it most.
The report, seen by CoinDesk, challenges widely shared claims about Bitcoin mining’s energy use and waste issues by citing data that shows the sector actually uses about 0.23% of the world’s energy and emits about 0.08% of carbon. And miners must operate at a “break-even price” per megawatt-hour of electricity to make a profit.
“This means that Bitcoin mining, by its very nature, offsets a large portion of the average community’s energy consumption, creating equilibrium rather than strain on the power grid,” said the report, compiled by Paradigm’s vice presidents of regulatory affairs Justin Slaughter and Veronica Irwin. “In short, it brings balance to our energy forces.”
Federal and state policy efforts to limit data centers and digital mining operations are beginning to mount, and these likely fall under the definition of “data center” under U.S. law. On Thursday, U.S. Sens. Richard Blumenthal (D-Connecticut) and Josh Hawley (R-Missouri) introduced a bill that would prevent data centers from jacking up consumers’ electricity bills, but the bill does not explicitly mention bitcoin or virtual currencies. The New York State Legislature has similarly called for a temporary moratorium on data centers.
“Artificial intelligence (AI) and cryptomining are accelerating the growing demand for energy from large, energy-intensive data centers,” several Democratic senators wrote in a November letter to the chairman of the Federal Energy Regulatory Commission, calling for “immediate action” to protect consumers.
In Canada, British Columbia announced in October that it plans to shut down new cryptocurrency mining operations from its energy grid.
“Bitcoin miners who use energy that would otherwise be wasted or participate in state-sponsored programs that give energy regulators more control over the power grid should be rewarded for their good deeds,” the Paradigm report argued.