The Energy Information Administration (EIA), in its mandatory emergency survey on electricity consumption data, is the latest step in a political campaign against cryptocurrency, bitcoin mining and U.S. led innovation. This should be a cause for concern to all industries who rely on data centres as part of their operation.


Lee Bratcher serves as a member of the board and is president of the Texas Blockchain Council. Perianne Boring, founder and CEO of Chamber of Digital Commerce is a member of the Texas Blockchain Council.

This action is an abuse of authority to further the Biden administration’s public goal to “limit or eliminate” U.S. bitcoin miners, while claiming ignorance of their unique flexibility and use of renewable resources. This is an abuse in authority to advance the goal of the Biden administration to “limit or eliminate” U.S. Bitcoin miners.

Opinion

The survey requests information that is beyond what the EIA typically asks. Since decades, the EIA is a non-partisan information gathering agency within the Department of Energy. If this survey had been consistent with other surveys, then there would have been no reason for alarm.

This survey, however, is aimed at bitcoin miners. It asks for personal information like the name of the company that the miner signed power purchase agreements with. It’s not a logical step to worry about the Biden Administration putting pressure on energy providers to stop doing business with bitcoin miner.

Bitcoin miners are the most responsive and flexible electrical loads in America, thanks to their ability to quickly adjust their data center’s power consumption according to grid conditions. They are well-known for their grid stabilizing benefits.

The EIA cites these capabilities as a justification of this misguided action. If this justification – that data centers could overload the grid – is to be believed, then other industries such as social media and financial institutions should be aware of this new tactic.

Prices are the best indicator of grid stress in ERCOT (which operates Texas’s electric grid) and other independent system operators across the nation. Prices are more accurate than other proxy measures such as the physical responsive capacity (PRC). To prevent price swings and create more challenging grid situations, it is best to have a stable price. This is what has happened in the past (see graph below for Winter Storm Elliot last year).

Bitcoin miners are among the most efficient consumers of electricity. It is not that bitcoin miner will use electricity in a selfless way. Rather, they are sensitive to power prices and are therefore economically motivated to reduce their consumption if power prices exceed their breakeven point (currently, breakeven ranges from $100 to $200 per megawatt/hour for most miners, with exceptions for those with hosting contracts with uptime requirements).

This means that mining operations will operate when prices fall below their break-even point and shut down when they rise above it.

Bitcoin mining is one of the more transparent industries (e.g. EIA Websites, Hashrate Indexes, Cambridge University, Texas A&M and ERCOT Data). Each data center must undergo a complex development process, including extensive investment, procurement, and administrative processes, before it can start operating. This factual information contradicts the alleged justification of this “emergency mandate”.

The administration is feigning a state of emergency in order to score political points. This is an attack on legitimate American businesses. The White House is clear in their desire “to limit or eradicate” bitcoin mining operations within the United States. The Bitcoin network will not be affected by any potential bans. However, the administration wants to make it difficult for bitcoin miners to operate in the United States. This is deeply worrying.

Any industry that uses energy in the United States should be concerned. A government can take down an entire industry on a whim if it wants to score political points by creating a crisis.

We believe that EIA exceeded its authority when it issued this emergency mandate. We strongly urge the Biden Administration to reconsider its course of action. The industry will continue to use all available legal resources until that time.