Policymakers across North America are concerned about what the energy use of cryptocurrencies, artificial intelligence and other data centers could mean for affordability for regular customers, but cryptocurrency investment firm Paradigm argues that the government should sideline bitcoin mining operations.
Mining bitcoins requires a huge amount of electricity. But the business model only works when that energy is particularly cheap, such as when it is provided by renewable sources during off-peak hours, and can be returned at times when the public needs it most, according to a report by Paradigm, which has miner Genesis Digital Assets in its investment portfolio.
The report, seen by CoinDesk, challenges widely shared claims about bitcoin mining’s energy use and waste issues by citing data that the sector actually uses about 0.23% of global energy and emits about 0.08% of carbon. And miners have to operate under a “breakeven price” per megawatt hour of electricity in order to make a profit.
“This means that, by its very nature, Bitcoin mining offsets most of the average community’s energy consumption, bringing balance to the network, not strain,” according to the report compiled by Justin Slaughter, Paradigm’s vice president of regulatory affairs, and Veronica Irwin. “In a word, it is bringing balance to our energy force.”
Federal and state policy efforts are beginning to accumulate that would seek to restrict data centers and digital mining operations, which could possibly fit the definition of “data center” in US law. On Thursday, U.S. Sens. Richard Blumenthal, a Democrat from Connecticut, and Josh Hawley, a Republican from Missouri, introduced a bill to prevent data centers from raising electricity costs for consumers, although the legislative text does not explicitly mention bitcoin or crypto. New York state lawmakers have also been seeking a moratorium on data centers.
“Artificial intelligence (AI) and crypto mining are fueling growing energy demand driven by massive, energy-intensive data centers,” several Democratic U.S. senators wrote in a November letter to the head of the Federal Energy Regulatory Commission calling for “immediate action” to protect consumers.
In Canada, British Columbia said in October that it planned to stop new crypto mining operations from its energy network.
The Paradigm report responded: “Bitcoin miners who use energy that would otherwise be wasted, or who participate in state-run programs to give power control agencies more control over the network, should be rewarded for good behavior.”
