Folks, these rolling blackouts warnings are real, but no one is mentioning a major cause.
Two days ago, Fox Business warned Texans that future heatwaves might further strain an already weak power grid and “rolling blackouts could be on the way.” South Dakota State University offered the same foreboding message, which the state’s utility company softened to “this means our customers may experience controlled outages.” A bland way of saying they might shut off your AC in the middle of a scorching summer.
But in all these mentions and memos and reports, I haven’t seen one source offer a major reason behind our dramatically increased energy needs: Bitcoin mining, or general cryptocurrency mining.
Here’s a shoot-from-the-hip definition for those unfamiliar with cryptocurrency mining. Tech people, unclench your buttocks, I’m making it as simple as possible.
Basically, computers are giving a very difficult puzzle to solve, and if they solve it, they receive a cryptocurrency token or, in the case of Bitcoin, 6.25 tokens (bitcoins). Although volatile, the value of a single token, Bitcoin for example, rose to a high of $61,000 in October 2021, to $32,000 on June 1st, 2022.
That’s a loaded BMW for one Bitcoin a year ago, and a Nissan Maxima today. A significant value. In fact, the total value of today’s cryptocurrencies (as of May 2022) is $1.75 trillion.
Bitcoin miners have computers chugging away at these puzzles (called “blocks”) night and day. The more computers you have, the more Bitcoins you can mine. Today, warehouses of computers are chipping away at these puzzles. Problem is, computers use a lot of energy while mining. How much? That’s difficult to say, but we can come up with an approximation.
Cryptocurrency markets are essentially unregulated. They were designed that way, created in 2009 just after 2008’s Great Recession and the subsequent bailouts. It was currency free of country, of laws, and of politics. Currency in its purest form: just zeros and ones. That’s a beautiful thought. Turns out cryptocurrency is just as volatile and political as any money. As Pete Townsend once wrote, “Meet the new boss/same as the old boss.”
Okay, rough numbers.
Midcontinent Independent System Operator (MISO) analyzes the energy needs of the central United States, covering 15 states, including 11 in the Midwest: Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Montana, North Dakota, South Dakota, and Wisconsin. On April 28th, MISO warned “The summer peak forecast is 124 GW with 119 GW of projected regularly available generation within MISO.”
It’s important to note these are projected needs and projected outputs, but with MISO’s estimate we can safely say that during this summer’s peak usage, the Midwest might be hit with a 5 gigawatt (GW) shortage, i.e. rolling blackouts.
Now, for energy use, we can turn to the marvelously comprehensive site Cambridge Bitcoin Electricity Consumption Index, provided by the University of Cambridge. According to this fantastic resource, Bitcoin consumes 14.70 GW (average) of the world’s electricity, and the United States mines 37.84% of the world’s Bitcoin. So…5.56 GW.
Now that’s the entire United States, not just the northern and central United States. 5.56 GW distributed over the entire United States power grid seems workable. But that 5.56 GW is ONLY Bitcoin, and Bitcoin, as of December 2021, is only 40% of the cryptocurrency market. Today, Bitcoin has many competitors: Ether, Binance Coin, Dogecoin, Shiba Inu…
Now more math. If Bitcoin uses 5.56 GW, and that’s only 40% of cryptocurrency’s electrical consumption in the United States, then you’re lookin at 13.9 GW.
A 13.9 Gigawatt shortage. There are your rolling blackouts.
I expect a deluge of comments about these rough numbers. They might be fine for a regional site, sure, but are certainly not precise enough to influence policy. I agree. But the numbers are enough to get a conversation started.
With the rolling blackouts a possibility during the approaching summer, our electrical needs will weigh heavily on our minds, and we’ll be looking for something or someone to blame. Cryptocurrency should be one.
Coal plants closed for a reason. Renewable energy is growing for a reason (if you still think it’s a conspiracy, I’ve got a bridge I can sell you), but Bitcoin mining is just zeros and ones.
Of all the variables we could trim in the approaching summer, Bitcoin is by far the most expendable and easiest to curtail. Just flip a switch.