Energy and Network Requirements for Commercial Cryptocurrency Mining

Cryptocurrency mining has grown rapidly in recent years and is becoming an area of increasing interest and concern for energy systems and policy makers worldwide. Some countries have banned cryptocurrency mining due to the concerns over its energy consumption and some regulators have suggested that to achieve the Paris climate goal, Bitcoin would need to be banned so that wind power will not be used to power new mines. This contrasts to Australia’s current position that encourages cryptocurrency mining by providing a reduced tax rate to miners where the energy used for mining is sourced from renewable sources.

CutlerMerz was engaged by a Network Service Provider to provide advice on the commercial viability of cryptocurrency mining including new entrant considerations, commercial characteristics of mining operations, the impact of energy price on mining facilities and how new mining facilities impact on the planning assumptions, capacity and energy requirements for a network operator.

We presented our findings and advice to AEMO and other NSPs for consideration in their future planning arrangements, as well as to support their engagement with policy makers on the future requirements for the energy system.