White House Might Consider a Ban on “Crypto-Asset Mining”

On Thursday, the White House Office of Science and Technology Policy issued a warning that the usage of bitcoin mining equipment would make it more difficult for the nation to combat climate change. Additionally, it stated that in order to comprehend and address the issue, government agencies should “examine information from crypto miners and municipal utilities in a privacy-preserving manner.”

According to a report from the White House, crypto operations currently use more energy than all personal computers or all residential lighting combined. The findings are being criticized increasingly for how much electricity cryptocurrency mining companies use.

In order to create new currencies and validate transactions, cryptocurrency mining entails running banks of computers to tackle challenging arithmetic problems. The most widely used cryptocurrency, Bitcoin, is committed to this “proof of work” methodology, whereas Ether is switching to a different approach that could not use as much energy.

Cryptocurrency Miners should Reduce Gas Emissions

The study emphasizes the need for cryptocurrency miners to reduce greenhouse gas emissions. Additionally, it was mentioned that cryptocurrency miners might get support from organizations like the Department of Energy and the Environmental Protection Agency to put their efforts into practice.

According to the paper, although the calculations are tentative, U.S. crypto production accounts for 0.2% to 0.3% of domestic emissions and 0.4% to 0.8% of worldwide greenhouse gas emissions. Burning coal, natural gas, and other fossil fuels to produce energy for cryptocurrency mining is the main source of emissions that contribute to global warming.

According to the analysis, crypto mining generated between 110 and 170 million metric tons of carbon emissions this year, with between 25 and 50 million metric tons produced in the U.S. alone. By buying electricity from the power grid, building and decommissioning computer and mining infrastructure, or both, the process generates electricity.

“Electricity usage from digital assets is contributing to GHG emissions, additional pollution, noise, and other local impacts, depending on markets, policies, and local electricity sources,” the White House said in the report. “Depending on the energy intensity of the technology used, crypto-assets could hinder broader efforts to achieve net-zero carbon pollution consistent with U.S. climate commitments and goals,” it added.

The White House supports Increased Data Collection on Cryptocurrency Mining

The report’s recommendation is that more statistics and data be gathered by the government about the amount of energy used by the bitcoin mining sector. The paper also warned that the business, including Bitcoin mining, might be outlawed if the required outcomes from the adoption of green crypto mining are not seen.

“Should these steps fail to lessen consequences, the Administration should consider taking executive actions.”

The research noted that Congress may pursue legislation to restrict or outlaw the use of high energy intensity consensus techniques for crypto-asset mining. It also included information on the energy consumption of various crypto assets with 120 to 240 billion kilowatt-hours of electricity consumed as of August 2022.

Proof-of-work criticism

The report specifically criticizes the proof-of-work (PoW) consensus mechanism, which at present accounts for more than 60% of the market capitalization of all crypto assets.

It claims that “given the electricity usage estimates, most discussions about crypto-asset electricity usage have focused on PoW applications, particularly Bitcoin.”

It argues that responsible development of digital assets must incorporate methods to significantly lower its energy consumption and proposes that the “less energy-intensive consensus mechanism, called Proof of Stake (PoS), estimated to consume up to 0.28 billion kilowatt-hours per year in 2021, less than 0.001% of global electricity usage” may be a workable substitute.

The research stated that there have been “increasing requests for PoW blockchains to adopt less energy-intensive consensus procedures.” The pledge by Ethereum to release “Ethereum 2.0,” which employs a PoS consensus method, has received the most attention.

In the coming week, Ethereum, the second-largest blockchain by market capitalization, is anticipated to switch to PoS, which will increase its energy efficiency by 99.95%.

China bans Crypto because of the Large-Scale Mining Hazards

The White House mentioned China’s ban as a benefit to the environment while avoiding directly suggesting an outright ban on PoW mining in the US. It also mentioned the EU’s introduction of mandatory minimum sustainability standards for consensus mechanisms.

The report stated that one of the many reasons why China’s government decided to outlaw crypto-asset transactions in 2021 was because large-scale Bitcoin mining conflicts with the nation’s environmental objectives.

Despite this, the White House expressed support for looking into the possibility of crypto miners using power produced from methane vented and flared from landfills and oil and gas wells.

“Crypto Asset mining operations that capture vented methane to produce electricity can yield positive results for the climate by converting the potent methane to CO2 during combustion,” the report said.

The US government’s program aims to reduce carbon emissions brought on by cryptocurrency mining in order to combat climate change. Additionally, it is a component of the shared effort to protect the environment, human health, ecosystem, and infrastructure.

The executive order signed by President Joe Biden in March directing the government to assess the advantages and disadvantages of cryptocurrencies led to the creation of the report. By 2030, the president promised to cut American emissions from 2005 levels by at least half and to reach net-zero emissions by 2050.