Crypto

As DOE Preps for Take Two of Crypto Mining Survey, Industry Weighs in on Fairness

DOE resumes crypto mining survey after lawsuit; Bitcoin mining difficulty drops 7.8%, TeraWulf expands AI hosting.

By Athena Xu

7/10, 16:36 EDT
Bitcoin / U.S. dollar
Bitcoin / US Dollar
Marathon Digital Holdings, Inc.
Riot Blockchain, Inc
TeraWulf Inc.
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Key Takeaway

  • The DOE is preparing a second attempt at surveying crypto miners' energy usage, seeking industry input before proposing new rules.
  • The initial mandatory survey faced backlash and legal action from the Texas Blockchain Council and Riot Platforms, leading to its suspension.
  • EIA's revised proposal will include a 60-day comment period and may consider including traditional data centers in the survey.

DOE's Renewed Effort on Crypto Mining Survey

The U.S. Department of Energy (DOE) is making a second attempt to survey crypto mining companies about their energy usage, following a previous effort that was halted by a lawsuit. The Energy Information Administration (EIA), a federal agency within the DOE, hosted a public webinar to gather input from crypto industry participants on how the survey should be structured. This initiative comes after the EIA's initial proposal in January, which mandated nearly 500 commercial crypto miners to provide detailed energy usage data under threat of civil and criminal penalties. The proposal faced backlash, with critics like Marty Bent of Cathedra Bitcoin labeling it "Orwellian" and expressing concerns about creating a "hyper-detailed registry of mining operations."

The Texas Blockchain Council (TBC) and Riot Platforms filed a lawsuit against the DOE, EIA, and other federal entities, accusing them of violating the Administrative Procedure Act (APA). The EIA subsequently suspended the survey in February. During the recent webinar, industry voices like Lee Bratcher of TBC and Jayson Browner of Marathon Digital Holdings suggested that the survey should also include traditional data centers to ensure fairness. Stephen Harvey of the EIA indicated that this suggestion is "clearly on the table" and that a preliminary proposal will be published in the Federal Register this quarter, followed by a 60-day comment period and a subsequent 30-day review process.

Bitcoin Mining Difficulty Drops

Bitcoin miners are experiencing a significant shift as the network's mining difficulty dropped by 7.8% over the weekend, from 83.6 terahash per second (TH/s) to 79.50 TH/s. This marks one of the largest difficulty drops since the collapse of crypto exchange FTX in 2022. According to CryptoQuant, the network hashrate has seen a comparable 7.8% drawdown, impacting miners' profitability. Daily revenues for miners have plummeted from $78 million pre-halving to $26 million currently. CryptoQuant's head of research, Julio Moreno, noted that "mining difficulty has been declining since early May following lower network hashrate as some miners turned off their equipment in response to lower profitability."

This downward adjustment in mining difficulty could benefit smaller miners and those who had previously shut down due to high operational costs. The lower competition may provide some relief to miners already facing a profit squeeze due to the recent halving event. However, the market remains volatile, with Bitcoin prices briefly dropping to $53,500 last week due to selling pressure from defunct Mt. Gox and a German government entity.

TeraWulf's Strategic Shift to AI Hosting

Bitcoin miner TeraWulf Inc. is expanding its energy infrastructure to capitalize on the growing demand for high-performance computing, particularly for generative AI technology. The company announced that it has repaid a $77.5 million term loan, providing greater financial flexibility. TeraWulf plans to increase its operational infrastructure capacity from 210-megawatt to 295-megawatt this year, with the potential to add another 300-megawatt in the near term. The firm is working on a high-performance computer project at its Lake Mariner facility in New York, aimed at powering the graphics processing units essential for AI applications.

TeraWulf's shares have more than doubled this year, driven by the company's strategic pivot to AI hosting. This move has helped TeraWulf and Core Scientific outperform other miners, whose stocks have been weighed down by concerns over thinning profits. Despite this, TeraWulf shares fell 8.4% to around $5 on Tuesday, reflecting the broader market's volatility.

Street Views

  • Marty Bent, Cathedra Bitcoin (Bearish on DOE's survey):

    "The mandatory survey is Orwellian... it could be used to create a hyper-detailed registry of mining operations in the U.S."

  • Margot Paez, Bitcoin Policy Institute (Neutral on EIA's motives):

    "A survey needed to be conducted, but the industry was wary of the EIA’s motives and suggested that an outside institution be selected to run the survey."

  • Lee Bratcher, Texas Blockchain Council (Cautiously Optimistic on including traditional data centers):

    "The EIA should also include traditional data centers in its survey, and not just limit the request for information to crypto-focused data centers."

  • Jayson Browner, Marathon Digital Holdings (Cautiously Optimistic on inclusive surveys):

    "The industry would be skeptical of the survey if traditional data centers were cut out of the request."

Management Quotes

  • Stephen Harvey, Official with EIA:

    "At this point we’re considering everything. Including traditional data centers in the survey is clearly on the table."