The Energy Information Agency estimates that large-scale cryptocurrency operations consume over 2% of the United States’ electricity, equivalent to adding another state to the country’s power grid. This energy consumption is driven by the significant electricity costs associated with cryptocurrency mining, leading miners to seek locations with cheaper energy rates. In response to China’s crackdown on the digital asset space, a substantial amount of crypto mining has shifted to the U.S., where lower energy prices have traditionally been a policy priority.
According to the Cambridge Centre for Alternative Finance, the U.S. was home to 38% of bitcoin mining at the beginning of 2020, a significant increase from just over 3% two years earlier. The center’s research indicates that bitcoin mining now uses electricity equivalent to the consumption of Utah, or even the entire state of Washington at the higher end. This substantial energy consumption led the White House to propose the Digital Asset Mining Energy (DAME) excise tax, which would levy a tax on crypto mining companies equal to 30% of the cost of the electricity they use.
The White House Council of Economic Advisors argues that crypto mining does not generate the same local and national economic benefits associated with other energy-intensive industries, leading to environmental pollution, higher energy prices, and increased greenhouse gas emissions without commensurate benefits. In response, the Chamber of Digital Commerce has called for collaboration between lawmakers and the industry to reduce energy consumption while allowing the crypto mining sector to continue growing.