Energy

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Over 2 percent of the US’s electricity generation now goes to bitcoin

Bitcoin, Cryptocurrency, Energy, mining, Science, Sustainability / /

Mining stakes —

US government tracking the energy implications of booming bitcoin mining in US.

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Digital generated image of golden helium balloon in shape of bitcoin sign inflated with air pump and moving up against purple background.

Enlarge / It takes a lot of energy to keep pumping out more bitcoins.

What exactly is bitcoin mining doing to the electric grid? In the last few years, the US has seen a boom in cryptocurrency mining, and the government is now trying to track exactly what that means for the consumption of electricity. While its analysis is preliminary, the Energy Information Agency (EIA) estimates that large-scale cryptocurrency operations are now consuming over 2 percent of the US’s electricity. That’s roughly the equivalent of having added an additional state to the grid over just the last three years.

Follow the megawatts

While there is some small-scale mining that goes on with personal computers and small rigs, most cryptocurrency mining has moved to large collections of specialized hardware. While this hardware can be pricy compared to personal computers, the main cost for these operations is electricity use, so the miners will tend to move to places with low electricity rates. The EIA report notes that, in the wake of a crackdown on cryptocurrency in China, a lot of that movement has involved relocation to the US, where keeping electricity prices low has generally been a policy priority.

One independent estimate made by the Cambridge Centre for Alternative Finance had the US as the home of just over 3 percent of the global bitcoin mining at the start of 2020. By the start of 2022, that figure was nearly 38 percent.

The Cambridge Center also estimates the global electricity use of all bitcoin mining, so it’s possible to multiply that by the US’s percentage and come up with an estimate for the amount of electricity that boom has consumed. Because of the uncertainties in these estimates, the number could be anywhere from 25 to 91 Terawatt-hours. Even the low end of that range would mean bitcoin mining is now using the equivalent of Utah’s electricity consumption (the high end is roughly Washington’s), which has significant implications for the electric grid as a whole.

So, the EIA decided it needed a better grip on what was going on. To get that, it went through trade publications, financial reports, news articles, and congressional investigation reports to identify as many bitcoin mining operations as it could. With 137 facilities identified, it then inquired about the power supply needed to operate them at full capacity, receiving answers for 101 of those facilities.

If running all-out, those 101 facilities would consume 2.3 percent of the US’s average power demand. That places them on the high side of the Cambridge Center estimates.

Finding power-ups

The mining operations fall in two major clusters: one in Texas, and one extending from western New York down the Appalachians to southern Georgia. While there are additional ones scattered throughout the US, these are the major sites.

The EIA has also found some instances where the operations moved in near underutilized power plants and sent generation soaring again. Tracking the history of five of these plants showed that generation had fallen steadily from 2015 to 2020, reaching a low where they collectively produced just half a Terawatt-hour. Miners moving in nearby tripled production in just a year and has seen it rise to over 2 Terawatt-hours in 2022.

Power plants near bitcoin mining operations have seen generation surge over the last two years.

Enlarge / Power plants near bitcoin mining operations have seen generation surge over the last two years.

These are almost certainly fossil fuel plants that might be reasonable candidates for retirement if it weren’t for their use to supply bitcoin miners. So, these miners are contributing to all of the health and climate problems associated with the continued use of fossil fuels.

The EIA also found a number of strategies that miners used to keep their power costs low. In one case, they moved into a former aluminum smelting facility in Texas to take advantage of its capacious connections to the grid. In another, they put a facility next to a nuclear plant in Pennsylvania and set up a direct connection to the plant. The EIA also found cases where miners moved near natural gas fields that produced waste methane that would otherwise have been burned off.

Since bitcoin mining is the antithesis of an essential activity, several mining operations have signed up for demand-response programs, where they agree to take their operations offline if electricity demand is likely to exceed generating capacity in return for compensation by the grid operator. It has been widely reported that one facility in Texas—the one at the former aluminum smelter site—earned over $30 million by shutting down during a heat wave in 2023.

To better understand the implications of this major new drain on the US electric grid, the EIA will be performing monthly analyses of bitcoin operations during the first half of 2024. But based on these initial numbers, it’s clear that the relocation of so many mining operations to the US will significantly hinder efforts to bring the US’s electric grid to carbon neutrality.

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40% of US electricity is now emissions-free

coal, Energy, hydroelectric, natural gas, nuclear power, renewable energy, Science, solar, Sustainability, Wind / /

Decarbonizing, but slowly —

Good news as natural gas, coal, and solar see the biggest changes.

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Image of electric power lines with a power plant cooling tower in the background.

Just before the holiday break, the US Energy Information Agency released data on the country’s electrical generation. Because of delays in reporting, the monthly data runs through October, so it doesn’t provide a complete picture of the changes we’ve seen in 2023. But some of the trends now seem locked in for the year: wind and solar are likely to be in a dead heat with coal, and all carbon-emissions-free sources combined will account for roughly 40 percent of US electricity production.

Tracking trends

Having data through October necessarily provides an incomplete picture of 2023. There are several factors that can cause the later months of the year to differ from the earlier ones. Some forms of generation are seasonal—notably solar, which has its highest production over the summer months. Weather can also play a role, as unusually high demand for heating in the winter months could potentially require that older fossil fuel plants be brought online. It also influences production from hydroelectric plants, creating lots of year-to-year variation.

Finally, everything’s taking place against a backdrop of booming construction of solar and natural gas. So, it’s entirely possible that we will have built enough new solar over the course of the year to offset the seasonal decline at the end of the year.

Let’s look at the year-to-date data to get a sense of the trends and where things stand. We’ll then check the monthly data for October to see if any of those trends show indications of reversing.

The most important takeaway is that energy use is largely flat. Overall electricity production year-to-date is down by just over one percent from 2022, though demand was higher this October compared to last year. This is in keeping with a general trend of flat-to-declining electricity use as greater efficiency is offsetting factors like population growth and expanding electrification.

That’s important because it means that any newly added capacity will displace the use of existing facilities. And, at the moment, that displacement is happening to coal.

Can’t hide the decline

At this point last year, coal had produced nearly 20 percent of the electricity in the US. This year, it’s down to 16.2 percent, and only accounts for 15.5 percent of October’s production. Wind and solar combined are presently at 16 percent of year-to-date production, meaning they’re likely to be in a dead heat with coal this year and easily surpass it next year.

Year-to-date, wind is largely unchanged since 2022, accounting for about 10 percent of total generation, and it’s up to over 11 percent in the October data, so that’s unlikely to change much by the end of the year. Solar has seen a significant change, going from five to six percent of the total electricity production (this figure includes both utility-scale generation and the EIA’s estimate of residential production). And it’s largely unchanged in October alone, suggesting that new construction is offsetting some of the seasonal decline.

Coal is being squeezed out by natural gas, with an assist from renewables.

Enlarge / Coal is being squeezed out by natural gas, with an assist from renewables.

Eric Bangeman/Ars Technica

Hydroelectric production has dropped by about six percent since last year, causing it to slip from 6.1 percent to 5.8 percent of the total production. Depending on the next couple of months, that may allow solar to pass hydro on the list of renewables.

Combined, the three major renewables account for about 22 percent of year-to-date electricity generation, up about 0.5 percent since last year. They’re up by even more in the October data, placing them well ahead of both nuclear and coal.

Nuclear itself is largely unchanged, allowing it to pass coal thanks to the latter’s decline. Its output has been boosted by a new, 1.1 Gigawatt reactor that come online this year (a second at the same site, Vogtle in Georgia, is set to start commercial production at any moment). But that’s likely to be the end of new nuclear capacity for this decade; the challenge will be keeping existing plants open despite their age and high costs.

If we combine nuclear and renewables under the umbrella of carbon-free generation, then that’s up by nearly 1 percent since 2022 and is likely to surpass 40 percent for the first time.

The only thing that’s keeping carbon-free power from growing faster is natural gas, which is the fastest-growing source of generation at the moment, going from 40 percent of the year-to-date total in 2022 to 43.3 percent this year. (It’s actually slightly below that level in the October data.) The explosive growth of natural gas in the US has been a big environmental win, since it creates the least particulate pollution of all the fossil fuels, as well as the lowest carbon emissions per unit of electricity. But its use is going to need to start dropping soon if the US is to meet its climate goals, so it will be critical to see whether its growth flat lines over the next few years.

Outside of natural gas, however, all the trends in US generation are good, especially considering that the rise of renewable production would have seemed like an impossibility a decade ago. Unfortunately, the pace is currently too slow for the US to have a net-zero electric grid by the end of the decade.

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Government makes an app to cut down government’s role in solar permitting

Energy, green, green energy, NREL, photovoltaics, renewable energy, Science, solar, Sustainability / /
Aerial view of houses with roof-top solar panels.

Enlarge / NREL has taken some of the hassle out of getting permits for projects like these.

Can government agencies develop software to help cut bureaucratic red tape through automation? The answer is “yes,” according to the promising results achieved by the National Renewable Energy Laboratory (NREL), which has saved thousands of hours of labor for local governments by creating a tool called SolarAPP+ (Solar Automated Permit Processing Plus) for residential solar permits.

“We estimate that automatic SolarAPP+ permitting saved around 9,900 hours of… staff time in 2022,” NREL staff wrote in the report, “SolarAPP+ Performance Review (2022 Data). “Based on median timelines, a typical SolarAPP+ project is permitted and inspected 13 business days sooner than traditional projects… SolarAPP+ has eliminated over 134,000 days in permitting-related delays.”

SolarAPP+ automates over 100 compliance checks in the permitting process that are usually the responsibility of city, county, or town employees, according to Jeff Cook, SolarAPP+ program lead at NREL and first author of the report. It can be more accurate, thorough, and efficient than a time-pressured local government employee would be.

Saving time and money

Sometimes, the cost of permitting can be higher than the cost of solar hardware, Cook said. It depends on the specifics of the project.

“We knew that residential rooftop solar volume was increasing across the country,” Cook said. “It took us… 20 years to get to a million PV installations. And I think we got to 2 million PV installations just a few years later. And so there’s a lot of solar volume out there. And the problem is that each one of those systems needs to be reviewed for code compliance. And so if you need a human to review that, you’ve got a million applications.”

“When regulations make it unnecessarily difficult for people to quickly install solar and storage systems, it hurts everyone,” said Senator Scott Wiener (D-Calif.) in a press statement. “It hurts those who want to install solar. And it hurts communities across California, which are being negatively impacted by climate change. We need to make it easier for people to use renewable energy—that’s just a no-brainer. Expediting solar permitting is something we can do to make this a reality.”

A coalition of stakeholders from the solar industry, the US Department of Energy, and the building code-development community requested that NREL develop the software, Cook said. The organizations represented included UL Solutions and the Interstate Renewable Energy Council. (UL Solutions is a company that addresses a broad range of safety issues; initially, it focused on fire and electrical safety.)

“What we identified is the community need for the software and we identified that there was a gap in the private sector,” Cook said. “There was no incentive to do it from any active members of the private sector, but a real potential opportunity or value to the public good if such a software existed and was publicly available and free for a local government to adopt.”

Cook estimates that hundreds of thousands of hours in plan review time would have been required to manually approve all of the residential solar permits in the United States in recent years. Approving a permit for a residential solar project can take local government staff 15 minutes to an hour, and around 30 percent of the applications are later revised.

A flood of applications

“It just inundates the staff with work that they have to do,” Cook said.

“We are seeing about 750 residential requests over the past 12 months, which is about double the number of applications we saw two years ago,” said Kate Gallego, mayor of Phoenix, at the SolarAPP+ Industry Roundtable. “When I ask people in industry what we can do to speed up deployment of solar, they ask, ‘Can you do permitting faster?’ We’re at about 30 days now. We want to get that permitted as fast as possible, but we don’t want to sacrifice safety, and we want to make sure we’re not just doing it quickly, but well. That’s why this partnership was very attractive to me.”

Up to five separate departments may review the permits—the ones that oversee structural, electrical, fire, planning, and zoning decisions, Cook said.

“There’s usually a queue,” Cook said. “Just because it takes the jurisdiction only 15 minutes to review doesn’t mean that you send it to them today—they review it an hour later and get back to you. The average is, across the country, a seven-day turnaround, but it can be 30 days plus. It really varies across the country depending on how much volume of solar is in that space.”

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