Since the rapid influx of large-scale cryptocurrency mining operations to the United States following China’s prohibition on such facilities, Sierra Club has been monitoring both the carbon and cost impacts of these operations on the power grid with growing alarm. Cryptocurrency mining facilities can consume as much electricity as a mid-sized town: the largest facility in the U.S., located in Rockdale, Texas, and operated by Riot Platforms, consumes more power in a year than 200,000 homes. On January 26, the U.S. Energy Information Administration (EIA) received approval from the Office of Management and Budget (OMB) to collect basic information about the location and energy usage of cryptocurrency mining facilities to gain information needed to prevent outages or spiking electricity prices during periods of extreme weather next winter. Although EIA has authority to collect this information already, OMB’s emergency approval was required to expedite this process, which normally takes several months.
A week after this approval, Riot Platforms and Texas Bitcoin Council filed a lawsuit in the Western District of Texas challenging EIA’s emergency determination, and the court granted a temporary restraining order preventing the EIA from collecting information. The court then set a hearing on a preliminary injunction, which would prevent EIA from collecting information until a final decision on the merits of the challenge. The government had yet to file any substantive briefing defending the collection of information. To ensure the Court understood the stakes, Sierra Club attorneys worked in the few days before the scheduled hearing to prepare an amicus brief with more than 40 pages of detailed, technical information describing the magnitude of cryptocurrency mining operations, the threat they pose to grid reliability, the impact they have on residential customers’ electrical bills, and the tens of millions of dollars in free electricity that Riot Platforms, in particular, has obtained through the use of electricity hedging.
Sierra Club’s brief detailed the devastating consequences of Texas’ power grid failures during deadly Winter Storm Uri and explained that the rapid growth of proof-of-work cryptocurrency mining increases the risk of blackouts. Not only do these facilities add hundreds of megawatts of load (demand) to the grid in a matter of months, but they also move from place to place quickly, making it difficult for grid operators to adapt to these sudden new loads. This strategy places a heavy burden on other customers, who end up paying increased bills when mining facilities that require significant utility system upgrades shut down abruptly. Cryptominers leverage their disproportionate impact on the grid by switching from cryptominers to energy resellers when prices reach a certain point, thus profiting from programs designed to keep the lights on and creating uncertainty for grid operators at exactly the most challenging times for the grid. According to an SEC filing, Riot Platforms made $71.3 million from reselling electricity in 2023 alone.
Sierra Club Environmental Law Program’s ability to rapidly respond to this suit was the product of almost two years of careful monitoring and research into the industry. Since September 2022 when ELP staff authored The Energy Bomb, a whitepaper on crypto impacts, Sierra Club has engaged in public service commission dockets involving cryptocurrency-specific rates in Kentucky and Arkansas, as well as tracking cryptocurrency developments throughout the U.S. more broadly. Sierra Club attorneys Megan Wachspress, Kate Huddleston, Sanjay Narayan, and Casey Roberts represented the Club in filing the amicus brief. Jeremy Fisher (Principal Advisor, Climate and Energy) and Cyrus Reed (Legislative and Texas Conservation Director, Lone Star Chapter) also provided essential behind-the-scenes contributions as subject matter experts on cryptocurrency and the Texas grid.
While the EIA ultimately agreed to halt emergency collection of data and proceed through the usual process, this result only underscores the need to better inform grid operators and the public about the specific risks these operations pose to reliable and affordable electricity. By demanding to use a city’s worth of electricity and suing to delay disclosing who is using this electricity and where, cryptocurrency miners have only confirmed what Sierra Club researchers have increasingly suspected: Cryptocurrency mining is a threat not just to decarbonization goals, but the grid as a whole. Our amicus brief puts forth a compelling set of arguments around the threat of large-scale crypto mining and need for data collection that will continue to be useful in Sierra Club’s campaign and legal work on these issues.