The New Gold Rush: How Bitcoin Mining is Shaping the Energy Sector

Jan 21

Enormous data center dedicated to crypto mining
**Photo credit:** *Detection Technologies*

The discovery of gold in the west coast in 1848 immediately set off a “rush to the mines.”[1] By the spring of 1849, the largest gold rush in American history was underway. Within the subsequent decade, California’s gold production equaled US$550 million, accounting for 1.8 percent of America’s GDP alone.[2] Now, two centuries after the original gold rush, a new frenzy has taken hold. This time, gold diggers, are not panning in rivers but powering up massive data centers and chasing an elusive treasure of the digital age: Bitcoin, the so-called digital gold.

The world is entering a new electricity supercycle with the surge in electricity demand driven by crypto mining. The United States (U.S.)’ power demand in 2024 was estimated to rise to 4,099 billion kilowatt-hours (kWh) and is projected to reach a 4,128 billion kWh demand in 2025.[3] However, the 2024 Energy Information Administration (EIA) Report indicates that electricity demand associated with U.S. cryptocurrency mining operations has grown rapidly over the last several years and estimates that its annual electricity use makes up 0.6 percent to 2.3 percent of all electricity consumption in the U.S.[4]

Mining a single Bitcoin occurs through the use of data centers, which are also used for other cryptocurrencies such as Ethereum and other Layer 1 and Layer 2 digital assets. Mining a single Bitcoin alone consumes around 6.4 million kWh of electricity.[5] Data centers are one of the most energy-intensive building types, consuming 10 to 50 times more the energy per floor space compared to a typical commercial office building.[6] Data from S&P Global projects reveals that electricity demand from U.S. data centers is expected to reach 280 billion kWh (280 TWh) in 2025 and double by 2028.[7] If the numbers from these reports are accurate, data centers account for 6.8 percent of all electricity demand in the United States.

Two decades ago, nobody would have believed that data centers would become so ubiquitous and account for such a large amount of domestic energy. However, the surge in Bitcoin demand coupled with increased competition is resulting in an alarming rise in energy consumption. The Bitcoin mechanism, set up by Satoshi Nakamoto, allows 656,250 Bitcoins to be mined over the four years following the last halving in 2024.[8] This means that the supply of Bitcoins is capped, unlike the continuously inflated U.S. dollar. This scarcity drives both consumers, and more importantly competitors, to mine Bitcoin as fast as possible. With limited availability, energy consumption—due to Bitcoin mining alone—will reach 4,200 billion kWh in the next four years and consume more electricity than the total U.S. domestic energy demand did in 2024.

Nations and private entities are competing to develop robust grid infrastructures to accommodate the rising wave of energy needs. The IEA estimated that global investment in grid infrastructure reached nearly US$400 billion in 2024, up from US$300 billion in 2020, and predicts that annual spending will rise to around US$600 billion by 2030.[9] However, much of the U.S. electric grid was built in the 1960s and 1970s, which adds complexity during the bullish period driven by private equity and the most powerful politician on earth.[10] If President Trump does not rescind the Executive Order 14141 issued by Former President Biden on January 14, 2025, on advancing AI infrastructure, the Department of Defense (DoD) and the Department of Energy (DoE) will select sites from existing federal lands for private-sector development of large-scale AI data centers and clean power facilities.[11]

While the excessive demand on the grid is concerning, it is important to understand the consequences of intense competition in cryptocurrency mining, particularly surrounding Bitcoin. Bitcoin mining is a process where computers solve complex problems to validate transactions and earn new Bitcoins as rewards. However, no matter how much competition or technological advancements improve mining efficiency or computing power, the total number of Bitcoins available remains fixed at 21 million due to Bitcoin’s design.[12] The change occurs in the amount of electricity used: as more miners compete and the price of Bitcoin rises, data centers will be continuously improved to increase mining efficiency, driving up energy demand to unprecedented levels.

On the other hand, political factors and market dynamics are also fueling the growing demand. During President Donald Trump’s campaign, he promulgated himself as a pro-crypto politician, promising to launch a strategic national crypto stockpile if elected to a second term.[13] After officially securing the spot as the 47th President of the United States, President Trump pledged to terminate the Chair of the Securities and Exchange Commission (SEC), Gary Gensler, and replace him with Paul Atkins, who is a supporter of cryptocurrency.[14] Currently, BlackRock, an investment firm with the largest asset under management (AuM)[15] and led by Larry Fink, has already stockpiled more than half a million Bitcoins, accounting for 2.7 percent of the total Bitcoin volume.[16] However, the crypto space is not only restrained in the national or sub-national level but also intersects with the great power competitions.

The discussion at hand is not about whether Bitcoin is a ponzi scheme or can become a global currency. The global competition between nations catapulted the race to a new height. The U.S. government currently owns 207,189 Bitcoins, which is roughly 13,189 more than the Chinese government’s current possession.[17] However, Chinese entities are on the move to bridge this gap. Recently, Chinese Bitcoin mining company BIT announced its purchase of a US$14 million facility in Ethiopia.[18] Other competitors, such as Russia, are attempting to utilize Bitcoin to hedge the sanction imposed by the EU and the U.S.[19] Furthermore, Argentina, as the leading Latin American country in cryptocurrency adoption with over US$91 billion in crypto value, is enforcing stringent regulations to promote transparency and prevent financial crimes.[20]

Competitions cause a large demand in crypto mining, and these crypto mining data centers would only increase energy consumption. The reality is that this additional electricity use has drawn attention away from the entire energy supply chain including utility companies, grid planners, tech companies, and mining and drilling companies. The demand from electricity infrastructure and the construction of data centers has pressured the market to find a new path and explore alternative ways to improve energy efficiency and tackle the intermittency of renewable energy.

As Billy Joel famously put it, “We didn’t start the fire. It was always burning, since the world’s been turning.” But now, the fire of energy demand is blazing bright and is forcing innovation in the face of a rapidly transforming energy landscape.

Will grid infrastructure be able to meet the immense demand from crypto mining and supply to power-hungry data centers? The answers to these questions could ultimately determine whether the crypto mining industry represents a fleeting gold rush or a transformative force reshaping the future of energy, technology, and our financial system.

[1] https://www.parks.ca.gov/?page_id=1081

[2] https://eh.net/encyclopedia/california-gold-rush/#:~:text=From%201792%20until%201847%20cumulative,about%201.8%25%20of%20American%20GDP.

[3] https://www.reuters.com/business/energy/us-power-use-reach-record-highs-2024-2025-eia-2024-03-12/#:~:text=EIA%20projected%20power%20demand%20will,4%2C003%20billion%20kWh%20in%202018.

[4] https://www.eia.gov/todayinenergy/detail.php?id=61364

[5] https://nftevening.com/bitcoin-mining-cost/

[6] https://www.energy.gov/eere/buildings/data-centers-and-servers#:~:text=Data%20centers%20are%20one%20of%20the%20most,energy%20use%20is%20expected%20to%20grow%20too

[7] https://pages.marketintelligence.spglobal.com/rs/565-BDO-100/images/2024-US-Datacenter-Energy-executive-summary.pdf?version=0

[8] https://www.ig.com/en/bitcoin-btc/bitcoin-halving

[9] https://www.economist.com/business/2025/01/05/a-new-electricity-supercycle-is-under-way

[10] https://www.energy.gov/gdo/articles/what-does-it-take-modernize-us-electric-grid#:~:text=Much%20of%20the%20U.S.%20electric,growing%20building%20and%20transportation%20electrification.

[11] https://www.federalregister.gov/documents/2025/01/17/2025-01395/advancing-united-states-leadership-in-artificial-intelligence-infrastructure

[12] https://www.blockchain-council.org/cryptocurrency/how-many-bitcoins-are-left/