Biden Redoubles Effort To Crush Crypto With EIA’s Mining Survey
By James Broughel and John Berlau
The Biden administration has launched yet another attack against the cryptocurrency industry–an environmental impact “survey” to bolster a politically motivated attack on the crypto mining industry.
Specifically, the US Energy Information Administration (EIA — a statistical agency within the US Department of Energy, responsible for collecting, analyzing, and disseminating energy information — sought what it deemed to be an “emergency survey” of the cryptocurrency mining industry’s energy consumption. While the EIA’s initial justification for the survey was debunked and the emergency data collection process halted due to a lawsuit, the agency is moving forward with plans for a slower, more deliberate survey of the industry. The survey’s process, however, is still biased in that it is focused only on the costs of crypto mining, out of context of any benefits the sector provides or the costs imposed by other sectors’ electricity use. Thus, it is another weapon in the anti-crypto arsenal of the Biden administration.
Ever since President Biden took office, his administration has waged a whole-of-government war against cryptocurrency. The Securities and Exchange Commission attempted to shut down digital assets and exchanges for registration violations in a move that may exceed the SEC’s authority, even while the crypto entities in question have been widely utilized with no fraud alleged. Treasury Department officials helped write language inserted into the Bipartisan Infrastructure Law that defines cryptocurrency “brokerages” so broadly it may apply tax reporting mandates to individual crypto miners. And in his last two proposed presidential budgets, Biden included the Digital Asset Mining Energy (DAME) tax, which would impose a 30 percent levy on the cost of electricity used in crypto mining, supposedly to curb emissions.
Yet despite these destructive efforts, the price of Bitcoin and other cryptocurrencies has soared this year. Hence, the new initiative to target the industry.
The EIA’s ill-fated survey attempt was first announced in late January 2024, with the agency claiming that the rapid increase in cryptocurrency mining, following a steep price increase of Bitcoin, posed a potential threat to the electrical grid and could lead to higher energy prices for consumers. However, after facing a lawsuit from the crypto mining industry, which argued these claims were not substantiated by evidence, the EIA agreed to drop its emergency data collection request in early March.
The lawsuit against the EIA was filed by the Texas Blockchain Council and Riot Platforms, a Bitcoin mining company, in February. The plaintiffs argued that the EIA’s mandatory data collection request violated the Paperwork Reduction Act and the Administrative Procedure Act. They claimed that the EIA failed to provide sufficient justification for the emergency request and did not allow for public comment or properly consider the burden the survey would place on the industry.
The plaintiffs also alleged that the EIA’s survey was politically motivated and designed to paint the crypto mining industry in a negative light. They argued that the survey questions were overly broad and invasive, requiring companies to disclose sensitive proprietary information about their operations and energy consumption. They contended that complying with the survey would “take multiple employees many hours at each company every month,” which would be especially burdensome to small-scale crypto miners. Furthermore, they contended that the EIA’s claims about the potential threats to the electrical grid and energy prices were unsupported by evidence.
In response to the lawsuit, a federal judge granted a temporary restraining order, preventing the EIA from collecting data from crypto mining companies until the case could be heard in court. Faced with legal challenges and growing criticism, the EIA ultimately withdrew its emergency data collection request, agreeing to destroy the data it had collected thus far and pursue a more traditional survey process with a public comment period.
Despite the setback, the EIA has not abandoned its plans to survey the energy consumption of the crypto mining industry. The agency is still moving forward with a survey, albeit one that includes a 60-day public comment period. While this approach is less egregious than the emergency data collection attempt, it still raises concerns.
First and foremost, the survey appears to be biased against the crypto mining industry. The emergency survey singled out companies engaged with “proof of work” cryptocurrencies, which are known to use more energy. Regardless of the findings, then, it is likely that the energy consumption of crypto miners will be portrayed as excessive and harmful, even if that usage is comparable to or less than other industries. This bias undermines the EIA’s reputation as an independent and impartial source of energy data. Historically, the EIA has been viewed as an agency without a political agenda, but this survey suggests otherwise.
Second, the survey sets a troubling precedent for the government to single out and target specific industries. If the EIA is allowed to proceed with this survey, what would stop it from further discrimination against other disfavored sectors? Obvious examples include the artificial intelligence and cloud computing industries, both of which are sometimes criticized for their energy use. Making scapegoats of disfavored industries is not the role or responsibility of a supposedly independent data agency.
Third, by focusing solely on energy consumption, the EIA is ignoring the broader context and potential positive impacts of the crypto mining industry. The survey will be misleading if it fails to consider the benefits of cryptocurrencies and the innovative technologies they enable, such as blockchain.
The EIA’s stated justification for its survey may be strain on the power grid, but it is more likely that reducing emissions from crypto mining is its ultimate goal. Yet, as we note in a recent paper we co-authored for the Competitive Enterprise Institute, the crypto sector is shifting to renewable and low-emission energy sources, including nuclear and hydropower. A recent article on this site noted that crypto mining is also scooping up stranded and excess power from electricity grids, thereby utilizing energy that would otherwise be wasted.
All these energy innovations are happening without government intervention. Even so, it remains debatable whether the industry’s shift toward renewables is in the public interest. The spreading of myths about excessive and wasteful energy use by groups likeGreenpeace puts pressure on businesses to source electricity from “green” energy sources, regardless of whether the myths are true.
The survey itself can similarly be seen as a bullying tactic. The original survey included questions about energy suppliers, which is likely a veiled attempt to intimidate crypto miners into adopting energy sources politicians favor, even if there is no legal basis for such pressure. If Congress wants to adopt harmful policy and mandate the use of specific forms of energy, it should do so through legislation, not through a backdoor survey by a federal data agency.
The survey could well have a chilling effect on the growth and development of the crypto mining industry. It could also ruin the reputation of what has historically been a widely-respected, apolitical data analysis agency. For the sake of US innovation, not to mention its reputation as a no-nonsense number cruncher, EIA should reconsider its plans for this misguided survey.
About the authors:
- Dr. James Broughel is a Senior Fellow at the Competitive Enterprise Institute. Dr. Broughel is an accomplished economist whose expertise lies in regulatory institutions and the impact of regulations on economic growth.
- John Berlau is a senior fellow and Director of Finance Policy at the Competitive Enterprise Institute.
Source: This article was published by AIER