The United States government has halted its efforts to monitor crypto mining operations due to concerns about increasing energy consumption, following a lawsuit by a sector accused of exacerbating the climate crisis by environmental organizations. A Texas federal judge has ordered a temporary injunction to stop the imposition of new regulations aimed at evaluating the energy use of cryptocurrency miners. According to the judge, if these restrictions were made mandatory, the crypto sector would be severely harmed.
An emergency initiative was launched last month by the U.S. Energy Department to assess how much energy mining activities used. These activities make use of a significant amount of processing power to solve intricate mathematical puzzles, making it easier to facilitate the addition of new tokens to a blockchain — a digital database that facilitates the mining of cryptocurrencies such as Bitcoin.
As a result of the widespread use of cryptos and the mining that goes along with that, the United States is seeing an increase in the amount of electricity consumed by data centers. Struggling coal plants have been revived to support these mining operations in some instances.
While the federal government seeks better insight into the energy usage of major mining facilities, it is estimated that 2.3% of the nation’s total electricity last year was attributed to only 137 mining sites. Around 1% of the world’s electricity is thought to be used by cryptocurrency miners worldwide, which is equal to Australia’s energy consumption.
Environmental activists warn that this heightened demand for electricity exacerbates the climate crisis. In the United States, where nearly 40% of Bitcoins are mined, mining operations release up to 50 million tons of carbon dioxide annually.
Certain electrical grids have also been pressured by the rise in cryptocurrency mining. For instance, Texas authorities had to pay Riot Blockchain Inc. (NASDAQ: RIOT) more than $31 million in energy credits last year in exchange for the company’s voluntary reduction of its electricity use during a heatwave that raised public demand for power.
Earthjustice’s deputy managing attorney, Mandy DeRoche, raised worries that the significant energy usage of crypto mining jeopardizes consumer safety, grid stability and efforts to combat climate change. She noted that the lack of transparency in the industry has allowed it to operate without accountability.
However, the sector claims that the Biden administration is unfairly targeting it and that it has been successful in blocking regulations that it views as onerous.
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