Court suspends EIA-862 survey of crypto mining energy use

The U.S. Energy Information Administration's efforts to require cryptocurrency miners to report on their electricity use have been suspended by the U.S. District Court for the Western District of Texas, following a complaint by Texas crypto miners alleging that EIA exceeded its regulatory authority in requiring the report. 

Earlier this year, EIA announced a new, mandatory survey of crypto miners. The Form EIA-862 report would cover topics like the nature and scale of equipment installed, electricity consumption, and sources of power. EIA developed the survey and announced it as a new requirement, after requesting and receiving approval from the U.S. Office of Management and Budget for an "emergency data collection request". Emergency requests generally skip procedural steps including publication of a 60-day notice in the Federal Register and public comment. 

But a trade group and a crypto miner sued to block EIA from implementing the EIA-862 survey requirement. They argued that EIA and OMB committed procedural violations in approving the survey, including that EIA failed to establish a bona fide emergency, and that OMB authorized the emergency data collection for 189 days (longer than the 180-day maximum under the Paperwork Reduction Act). 

On February 23, a judge from the federal District Court issued a 14-day temporary restraining order enjoining EIA from implementing the survey requirement, based on a finding that the plaintiffs were "likely to succeed on the merits". The order scheduled a preliminary injunction hearing for February 27.

Regardless of the outcome of the judicial challenge to EIA's Form EIA-862 survey requirement, policymakers will likely continue to be interested in understanding energy consumption requirements for blockchain, crypto, hyper-scaling facilities, and even other data center activities.

Will ISO-NE capacity market shift from forward to prompt/seasonal?

The operator of New England's transmission grid and wholesale electricity markets has proposed major reforms to its market for capacity. For 18 years, ISO New England has administered a "Forward Capacity Market", featuring annual auctions to procure commitments from energy resources, for a capacity commitment period three years in the future. ISO-NE has now proposed to shift to a "prompt/seasonal" model. If adopted, the reforms will change important elements of New England's electric market systems.

According to ISO-NE, its Forward Capacity Market "ensures that the New England power system will have sufficient resources to meet the future demand for electricity." The grid operator adopted a capacity market 18 years ago, to provide a revenue stream to support the development and sustained availability of enough power plants (and eventually other resources like storage and demand response). Under the present construct, ISO-NE holds annual Forward Capacity Auctions (FCA), in which resources compete to obtain a capacity supply obligation (a commitment to supply capacity) in exchange for a capacity payment determined by the auction price.

But now the grid operator has proposed to shift away from a forward market design, to a "prompt/seasonal" design:

“Prompt” means the capacity auction would take place much closer to the delivery period. As a result, the auctions would be based on more accurate information about the expected demand for electricity and resources’ ability to meet that demand during the most stressed system conditions. A prompt auction would better accommodate the development timelines of diverse resources, and reduce risk of resources securing capacity supply obligations but being unable to deliver.

The “seasonal” element involves procuring capacity in a way that better addresses the distinct reliability challenges of winter and summer, as well as variations in resource performance from season to season. Winter risks are expected to increase as weather becomes more extreme and unpredictable, and as public policies guide the region toward wider adoption of weather-dependent clean energy resources and the electrification of heating and transportation.

According to ISO-NE's proposal, the reforms would take effect beginning with the 2028/2029 capacity commitment period. Absent reform, that period would be the subject of the 19th Forward Capacity Auction (FCA 19). FCA 19 was originally scheduled for 2025, but the auction timeline was extended by the Federal Energy Regulatory Commission at ISO-NE's request to allow time for a separate, lesser reform to how it accredits capacity to resources. The grid operator says it will pursue a further FERC approval to delay the auction until 2028, so it can develop rules for the prompt/seasonal market, and hold the first prompt capacity auction in early 2028.

EIA Form EIA-862 cryptocurrency mining electricity use survey

A federal agency will start requiring commercial cryptocurrency miners to report on their electricity consumption. The U.S. Energy Information Administration has obtained an emergency clearance allowing it to begin collecting data on a monthly basis from February through July 2024. EIA's new Form EIA-862, the "Cryptocurrency Mining Facilities Report", is mandatory for all commercial cryptocurrency mining facilities in the U.S. Failure to file could result in criminal and civil fines and penalties that could exceed $10,000 per violation per day.

According to EIA, electricity demand from cryptocurrency mining operations in the United States has grown rapidly in recent years. While EIA doesn't have the full data it would need to evaluate crypto's share of domestic power use, EIA's "preliminary estimates suggest that annual electricity use from cryptocurrency mining probably represents from 0.6% to 2.3% of U.S. electricity consumption." 

EIA says the growth of crypto load "has drawn the attention of policymakers and grid planners concerned about its effects on cost, reliability, and emissions." EIA continues, "As cryptocurrency mining has increased in the United States, concerns have grown about the energy-intensive nature of the business and its effects on the U.S. electric power industry. Concerns expressed to EIA include strains to the electricity grid during periods of peak demand, the potential for higher electricity prices, as well as effects on energy-related carbon dioxide (CO2) emissions." For example, several U.S. Senators and Representatives sent letters to U.S. Environmental Protection Agency Administrator Michael Regan and Secretary of Energy Jennifer Granholm in July 2022 and February 2023, asking the EPA and Energy Department to "require reporting of energy use and emissions from cryptominers."

To model crypto mining's effects on the grid, EIA performed two kinds of analysis: a "top-down approach" based on the Cambridge Bitcoin Electricity Consumption Index (CBECI), and a "bottom-up approach" based on identifying specific U.S. cryptocurrency mining operations and estimating their existing electric demands. Under the top-down approach, EIA estimates electricity usage from Bitcoin mining based in the United States to range from 25 TWh to 91 TWh, amounting to 0.6% to 2.3% of the nation's 2023 electricity demand in 2023 -- comparable to three million to six million homes, or at least as much annual electricity usage as entire states like Utah or West Virginia. 

Under the bottom-up approach, EIA tried to "identify as many U.S. cryptocurrency mining facilities as possible". EIA ultimately identified a total of 137 facilities, of which EIA has location and capacity data for 52 facilities. These sites are located in 21 states, with most in Texas, Georgia, and New York. "Of the 137 facilities identified, we have identified maximum electricity use at 101 of those facilities, which we estimate to be 10,275 MW. This amount compares with an average annual power demand of about 450,000 MW in the United States, representing a share of 2.3%."

EIA notes that its surveys of power plants have revealed that some have been used for cryptocurrency mining. Considering "a group of five small U.S. power plants in Montana, New York, and Pennsylvania where cryptocurrency mining has occurred", EIA notes that these plants' generation "rose sharply beginning in 2021 when cryptocurrency miners established operations. ...  Prior to the installation of the cryptocurrency mining equipment, output from the five plants had been much lower. The previous underutilization of these power plants has attracted cryptocurrency miners to these facilities given prospects of dedicated electricity at low rates."

Going forward, EIA "will be conducting a mandatory survey focused on systematically evaluating the electricity consumption associated with cryptocurrency mining activity, which is required to better inform planning decisions and educate the public." The survey instrument is Form EIA-862, which collects data on the energy usage, and related characteristics, of commercial cryptocurrency mining facilities in the U.S. 

Form EIA-862 asks questions about cryptocurrency validation using a proof-of-stake consensus mechanism as well as cryptocurrency mining using a proof-of-work consensus mechanism. For each reportable facility, Form EIA-862 solicits information including total electricity consumption, the percentage of electricity used for cryptocurrency mining, details on the facility's cryptocurrency mining equipment, and copies of the facility's electricity bills. EIA says it will use data gathered during the survey to inform its approach going forward.

EIA has published its forms of several letters associated with the EIA-862 survey, including a Welcome letter informing entities of the need to respond and a Reminder letter. EIA also released a form of Escalation letter, which reminds respondents that the report is mandatory under federal law, that failure to comply may result in criminal fines, civil penalties, and other sanctions, that making false, fictitious or fraudulent statements is a criminal offense, and that any failure to report "may result in a civil penalty of not more than $10,633 each day for each violation".