Bitcoin miners win a legal bid to withhold their energy data

Update: An earlier version of this story, published at the close of business hours Texas time Friday, said the judge had not granted the restraining order. The order was granted later that night.

A U.S. federal judge granted on Friday night an eleventh-hour plea by bitcoin miners to prevent the Department of Energy from collecting details of their energy use, handing a victory to cryptocurrency advocates in the deepening political battle over the links between cryptocurrency and carbon emissions.

Friday was the original deadline for 82 bitcoin mining companies to hand over facility-level energy data, the first part of an effort to nail down just how much power bitcoin miners are using, and where they’re using it. The survey has put the Energy Information Administration — an independent, usually sleepy wing of DOE that tracks the country’s energy production and consumption — at the center of a political controversy. Sen. Elizabeth Warren (D-Mass.) and other Democrats have pushed DOE to step up its oversight of cryptocurrency mining, which they blame for pushing up power prices and CO2 emissions. Bitcoin lobbyists and their Republican allies in Congress argue the survey amounts to a selective, politically motivated witch hunt.

The results of the survey will be made public in the second half of this year, an EIA spokesperson said. That will offer valuable new insight into whether cryptocurrency — setting aside its monetary utility — is helping or hurting the clean-energy transition. But with more scrutiny comes the risk that bitcoin miners could face new regulations on their energy use, or lose access to lucrative power trading credits.

The survey is a put-up-or-shut-up moment for the bitcoin mining industry.

Bitcoin advocates have long disputed the claim that their immense power needs — an EIA report this month estimated that bitcoin mining was responsible for up to 2.3% of total U.S. electricity demand in 2023, equal to more than six million homes, and rising “very rapidly” — cause the electric grid to run more heavily on fossil fuels, and raise prices for other businesses and households. This question is tangled in the byzantine details of grid pricing and operation, and impossible to resolve without more data, researchers say.

At times when more demand comes onto the grid, gas-burning peaker plants often get fired up and raise the system’s carbon emissions. In many U.S. power markets, the price of power also tracks demand in real time. Bitcoin miners argue that they are highly sensitive to this price signal, and shut down their systems the minute prices rise enough to make mining uneconomic, thus saving emissions and drawing prices back down. Conversely, at times of lower demand, bitcoin mines can soak up excess power from wind and solar farms that would otherwise be wasted, improving the economics of renewable projects and therefore helping to decarbonize the grid.

Mining operations that are wired exclusively to purpose-built renewable energy systems and don’t draw from the grid shouldn’t pose a pricing or emissions problem, said Ian Bowen, an energy market analyst at the consulting firm ICF. But that doesn’t describe most mines. For the most part, at least in Texas, which is the world’s top bitcoin mining hub, the new demand has been mostly met by fossil fuels, he said. That’s especially likely to happen when new mines are built quickly and without much advance coordination with regulators, since bringing on more renewables requires expanding grid lines. Moreover, mining companies have overstated how much excess renewable power there actually is, he said: “That’s when you see this increase in emissions.”

The EIA survey, Bowen said, could make it easier for grid officials and power companies to plot out how to integrate bitcoin mining in a minimally disruptive way. It could also fuel efforts by Congressional Republicans to tear down Biden’s climate agenda; in a letter on Tuesday to the White House office that approved the survey, Rep. Tom Emmer, (R-Minn.), the majority whip, complained that EIA had been hijacked to “enforce the Biden administration’s regressive policy position against energy consumption.”

On Thursday, the TBC and Colorado mining company Riot Platforms jointly filed a complaint in a federal court in Texas seeking to push off the reporting deadline, on the grounds that the survey was rushed through on an “emergency” basis without a public comment period. The judge, Alan Albright, granted the request late Friday night, blocking the EIA from collecting survey data or requiring bitcoin companies to respond to it, at least until a more comprehensive injunction hearing scheduled for Feb. 28. The ruling also concludes that the plaintiffs are “likely to succeed in showing that the facts alleged by [the EIA] to support an emergency request fall far short of justifying such an action.”

Lee Bratcher, president of the Texas Blockchain Council, a lobbying group, told Semafor that while the group supports transparency and that its members already publish aggregate energy data, the level of granularity sought by the survey — including mine addresses and power bills, and on the types of computers miners are using — could also expose proprietary information and put a chilling effect on the industry: “Our main concern is [Warren] bullying our commercial partners into not doing business with us.”

In a statement to Semafor, Sen. Warren dismissed the notion that the survey is biased.

“Many Americans don’t realize that crypto miners are using more electricity than entire states,” she said. “All the EIA is asking for is basic information from crypto-mining facilities about their energy usage—as the government has done with other industries for decades—so the public, grid planners, and Congress can better understand how crypto-mining is affecting our energy system and our climate.”

Not every mining company is bothered by the survey. Ben Gagnon, chief mining officer at Bitfarms, a publicly-traded company with mining facilities in the U.S. and Canada that was not involved in the injunction request, said there’s nothing in the EIA request that the company doesn’t already voluntarily report to its shareholders.

“It’s not a huge deal for us,” he told Semafor. “It might be interesting to see for the first time what’s actually going on in the U.S. to a deeper extent.”

Isaac Holyoak, chief communications officer at Nevada-based mining company CleanSpark, said that he’s fine sharing more data with the EIA. But the agency is asking the wrong questions because it “let themselves get weaponized by politicians who are threatened by bitcoin.” The agency, for example, didn’t ask for data about how quickly and at what times mining facilities are willing and able to ramp up or down, which would give “a much more holistic picture of what we do.”

Chinese bitcoin mining companies are ramping up operations in Ethiopia, drawn by cheap hydro electricity and a permissive regulatory environment. Their goal is to compete more directly with Texas, after mining was banned in China and curtailed in Kazakhstan and Iran, formerly major mining hubs that ultimately soured on the industry because of its ravenous energy appetite. Half of Ethiopia’s population lacks access to electricity. But mining is a tempting way to draw in foreign investment.