The White House today suggested that U.S. lawmakers and regulators could soon crack down on cryptocurrency miningmining because of its large carbon footprint.
In a Thursday report, mandated by President Biden in an executive order in March, the White House Office of Science and Technology Policy said crypto miners should reduce greenhouse gas emissions, with help from the Environmental Protection Agency (EPA), the Department of Energy (DOE), and other federal agencies.
It proposed that the government collect more data on power usage from the industry, advance energy efficiency standards—and it promoted the “use of environmentally responsible crypto-asset technologies.”
The Hard Truth About Bitcoin's Energy Consumption
Bitcoin recently broke $60,000 for the first time, cementing its perch as the “big dog” of cryptocurrencies. It has been embraced by groups as disparate as politicians, NFL stars, and Tesla CEO Elon Musk. And the fact that cryptocurrency is entirely digital makes it sound, in theory, as though it would be the greenest currency the world has ever seen. After all, unlike paper money, no trees have to be cut down to create Bitcoin. But people and press have become increasingly concerned about whe...
But the White House also went as far to say that if measures to make mining greener don’t work, energy-intensive crypto mining, namely BitcoinBitcoin, could be banned altogether.
“Should these measures prove ineffective at reducing impacts, the Administration should explore executive actions, and Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining,” the report said.
Mining cryptocurrencies like Bitcoin uses huge amounts of energy: in order to verify blocks of transactions to blockchains, a lot of computer power is needed—so mining is often done on an industrial scale.
And the U.S. is now a Bitcoin mining hotspot. After China cracked down on the industry, mining operations flocked to North America: today’s report added that the U.S. share of global mining from Bitcoin rose from 3.5% in 2020 to 38% now.
This could hinder U.S. “climate commitments and goals,” the report said.
In March, President Joe Biden signed an executive order that sought to establish a broad strategy for the U.S. government to regulate the crypto industry, including mining.
Today’s report also noted the difference between proof-of-work and proof-of-stake blockchains—and mentioned Ethereum’s long-awaited upgrade, known as “the merge.”
Next week, Ethereum, the second largest cryptocurrency by market cap, is expected to move over to proof of stake, which will make it 99% more energy efficient, according to the Ethereum Foundation.
“There have been growing calls for [proof-of-work] blockchains to adopt less energy-intensive consensus mechanisms,” it said. “The most prominent reaction has been Ethereum’s promised launch of ‘Ethereum 2.0,’ which uses a [proof-of-stake] consensus mechanism.”
Some experts—including prominent Bitcoiner and head of growth marketing at Kraken Dan Held—have said once Ethereum’s upgrade completes, Bitcoin’s high energy consumption will be in the spotlight more.
