Congress plans to clean up cryptocurrency mining in the United States

On Thursday, members of Congress debated how to make cryptocurrencies greener as energy-intensive bitcoin mining booms in the United States. One of the biggest questions was whether to use renewable energy to power the energy-intensive mining at the heart of Bitcoin’s blockchain, or turn to other blockchains that don’t need as much. energy first.

The debate took place during an oversight audience on the “energy impacts of cryptocurrency” held by the House Energy & Commerce Committee. The United States became the de facto epicenter of bitcoin mining last year, after China cracked down on mining within its borders, in part because of the amount of energy used by bitcoin. This transition could have big implications for the already strained power grid in the United States, as well as the ability of the Biden administration to meet its ambitious climate change goals.

“The presence of cryptocurrency in everyday life will likely continue to grow,” Representative Diana Degette (D-CO) said in her opening comments during the hearing. “As the industry moves forward, it is crucial that cryptocurrency networks identify ways to reduce the need for constant high-volume power consumption and minimize environmental effects.”

The bitcoin network gobbles up more electricity than the countries of Ukraine or Norway consume in a year. If bitcoin was a country, it would be 27 electricity-hungry country in the world. This also makes bitcoin the dirtiest cryptocurrency, as bitcoin mining is often fueled by fossil fuels.

Part of the reason for Bitcoin’s outsized power consumption is that it is by far the largest cryptonet. But bitcoin also needs more electricity than some other cryptocurrencies because it uses a process called “proof of stake” which works as a kind of security system to keep its transaction ledger, the blockchain, secure and accurate. . Miners verify transactions by racing to solve complex puzzles using specialized computers. They receive bitcoins as a reward. Meanwhile, all that computing power is burning through electricity.

When bitcoin mining was concentrated in China, miners tended to use clean hydropower during the rainy season and coal when that resource ran out. In the United States, what the energy mix for cryptocurrency mining looks like is still taking shape. But there are worrying signs. The miners have already prolong life aging power plants that burn coal, the dirtiest fossil fuel.

“Given our current climate goals, examples like this are deeply concerning. Our goal now must be to globally reduce carbon emissions and increase the share of green power on the grid,” said Rep. Degette.

Industry experts who testified at today’s hearing argued that there is an opportunity for crypto mining to embrace renewable energy and, in doing so, help the clean energy to thrive in the United States. A challenge with solar and wind is that they are intermittent power sources – depending on the weather, sometimes there is not enough and sometimes there is too much. Miners can use excess renewable energy that could otherwise be wasted because there is not enough battery storage for renewable energy on the grid yet, proponents argued.

“Computing is a better battery,” John Belizaire, founder and CEO of Soluna Computing, said during the hearing. His company develops data centers for cryptocurrency mining.

Other experts are skeptical that renewables will be a silver bullet to bitcoin’s energy woes. To reduce greenhouse gas emissions, electricity from renewables will eventually need to power everything from vehicles to home heating. Bitcoin mining would therefore be in competition with these needs. And when demand for electricity exceeds supply, it can lead to power outages – or the burning of more fossil fuels to supplement clean energy sources.

There is another solution that some experts see. Instead of using proof of work, some cryptocurrencies use different methods to maintain the accuracy of their blockchains. The most popular alternative is called proof of stake, which does not require huge amounts of computing power because there are no puzzles to solve. The Ethereum network, the largest after bitcoin, plans to eventually move from proof-of-work to proof-of-stake.

Bitcoin has no such plans. The network is not expected to come to a consensus on this change, especially since miners have already invested in the machines they use to solve puzzles. For now, it seems that as long as bitcoin is the biggest player in the game, cryptocurrencies will continue to consume more and more energy.

“The bitcoin community deserves our deepest gratitude for bringing blockchains to the world, but we have much more energy-efficient alternatives than proof-of-stake for the sake of the environment and our energy infrastructure in the United States. United,” Ari Juels, a professor at Cornell University, and co-author of a paper that coined the term “proof of work” in 1999, said in his testimony. “I believe we need to embrace these new options.”

It remains unclear how members of Congress plan to follow up on the hearing; DeGette concluded by saying that discussion of cryptocurrency power consumption is going to be “a growing issue” for the committee. At this point, “we don’t have any answers,” she said.

Whatever happens next, the stakes are high for the planet. The United States is the second largest climate polluter after China. The Biden administration has set a goal of eliminating nearly all greenhouse gas pollution over the next few decades, and that will be difficult to achieve with or without bitcoin mining playing a role.