Did Crypto Electricity Release 6,000,000 Tons of Methane?

The United States is seeing unprecedented increases in electricity demand and methane emissions, driven by the growing crypto and artificial intelligence (AI) sectors.

Energy expert Timothy Fox estimates that data centers critical to powering these industries will consume 25 to 95 terawatt hours by 2023 alone.

Crypto 5% share of methane emissions

Rising energy consumption is pushing annual consumption and peak demand forecasts to their highest levels in more than a decade, raising serious environmental concerns. Exacerbating this problem is the increase in methane emissions, a powerful greenhouse gas.

According to the International Energy Agency, the amount of methane released into the atmosphere by 2023 was more than 120 million metric tons, a figure the agency called unacceptably high. The United States is the largest national contributor to methane emissions from oil and gas operations.

A comprehensive study published in Nature found that oil and gas operations in six states, including Texas, California and Colorado, could emit about 6.2 million tons of methane. The study analyzed more than 1 million measurements of atmospheric methane emissions.

Read more: How Much Electricity Does Bitcoin Mining Use?

Some of the largest cryptocurrency mining operations are heavily concentrated in Texas. Attracted by crypto's minimal regulation and low energy costs, Bitcoin miners like Riot Platforms and Argo Blockchain have set up shop in Texas. Moreover, Riot recently invested $333 million in a 1 gigawatt bitcoin mine in Corsicana, Texas.

In addition to carbon emissions, the growing infrastructure has increased domestic electricity prices, putting additional financial strain on residents. Residents will have to fork out about $250 million a year in higher electricity bills.

Why the transition to renewables is tricky.

However, addressing these challenges requires a delicate balance between promoting technological innovation and ensuring environmental sustainability. Timothy Fox describes Cleveland Energy's dilemma of maintaining grid stability while embracing the transition to renewable energy.

“Today's big questions are how do we transition to intermittent and clean resources without jeopardizing reliability… You need to keep conventional power plants online to meet growing demand. It's hard to keep it green while it's growing,” Fox said.

However, 2024 could be a watershed year for environmental liability regarding methane emissions. Economist Tim Gould has suggested that new satellites will soon be deployed to improve monitoring of methane emissions. Notably, MethaneSAT, which is backed by Alphabet Inc's Google and the Environmental Defense Fund and other initiatives, also promises improved detail.

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Meanwhile, the US Treasury Department has proposed a crypto mining tax on electricity consumption. Starting in 2025, the proposal suggests a phased implementation of a tax of up to 30% over three years. Ultimately, the tax aims to reduce environmental impact and require more transparency from these companies' energy consumption reporting.

BeinCrypto has reached out to Riot Blockchain for comment on its future energy plans, but did not hear back at press time.