Policymakers across North America are concerned about what the energy consumption of crypto, artificial intelligence and other data centers could mean for affordability for regular customers, but crypto investment firm Paradigm argues the government should exclude bitcoin mining operations.
Bitcoin mining requires a huge amount of electricity. But the business model only works when that energy is particularly cheap – for example when it is provided by off-peak renewable sources – and can be returned at times when the public needs it most, according to a report produced by Paradigm, which has mining company Genesis Digital Assets in its investment portfolio.
The report, seen by CoinDesk, disputes widely shared claims about Bitcoin mining’s energy consumption and waste issues by citing data that the sector actually uses about 0.23% of the world’s energy and emits about 0.08% of carbon. And miners must operate at a “breakeven price” per megawatt hour of electricity to make a profit.
“This means that, by its very nature, Bitcoin mining counterbalances most of the community’s average energy consumption, bringing balance to the grid – not strain,” according to the report authored by Justin Slaughter, vice president of regulatory affairs at Paradigm, and Veronica Irwin. “In a nutshell, it’s about balancing our energetic force.”
Federal and state policy efforts are beginning to mount to seek to restrict data centers and digital mining operations, which could arguably fit the definition of “data center” in U.S. law. On Thursday, U.S. Senators Richard Blumenthal, Democrat of Connecticut, and Josh Hawley, Republican of Missouri, introduced a bill aimed at preventing data centers from increasing electricity costs for consumers, although the legislation does not explicitly mention bitcoin or crypto. New York state lawmakers have also called for a moratorium on data centers.
“Artificial intelligence (AI) and cryptomining are fueling a growing demand for energy 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 announced in October that it planned to halt new cryptocurrency mining operations on its energy network.
The Paradigm report counters: “Bitcoin miners who use energy that would otherwise be wasted, or who participate in state-run programs to give energy regulatory agencies more control over the network, should be rewarded for their good behavior. »
