Congress weighs in on cleaning up cryptocurrency mining in the US
On Thursday, members of Congress debated how to make cryptocurrencies greener as energy-intensive bitcoin mining booms in the US. One of the biggest questions was whether to use renewable energy sources to power the energy-guzzling mining at the heart of bitcoin’s blockchain, or move to other blockchains that don’t require as much energy in the first place.
The debate took place during an oversight to belong on the “energy effects of cryptocurrency” held by the House Energy & Commerce Committee. The US became the de facto epicenter for bitcoin mining last year, after China curtailed mining within its borders — in part because of the amount of energy bitcoin uses. That transition could have major implications for the already congested US electrical grid, as well as the ability of the Biden administration to meet its ambitious climate change goals.
“The presence of crypto in everyday life is likely to continue to expand,” Representative Diana Degette (D-CO) said in her opening remarks at the hearing. “As the industry moves forward, it is critical for cryptocurrency networks to identify ways to reduce the need for consistently high power consumption and minimize environmental impacts.”
The bitcoin network consumes more electricity than the countries of Ukraine or Norway consume in a year. If Bitcoin Were A Country, It Would Be The 27th most electricity-hungry nation in the world. That also makes bitcoin the most polluting cryptocurrency, as bitcoin mining is often powered by fossil energy.
Part of the reason for bitcoin’s excessive power consumption is that it is by far the largest crypto network. But bitcoin also requires more electricity than some other cryptocurrencies because it uses a process called “proof of stake” that acts like a security system of sorts to keep the ledger of transactions, the blockchain, safe and accurate. Miners verify transactions by racing to solve complex puzzles using specialized computers. They get bitcoins as a reward. Meanwhile, all that computing power burns through electricity.
When bitcoin mining was concentrated in China, miners tended to use clean hydropower during the wet season and coal when that resource dried up. In the US, the energy mix for crypto mining is still taking shape. But there are some worrying signs. Miners already have extended the lives of aging power plants burning coal, the dirtiest fossil fuel.
“Given our current climate goals, examples like these are very worrying. Our focus should now be on reducing CO2 emissions in general and increasing the share of green energy on the grid,” said representative Degette.
Industry experts who gave their testimony at today’s hearing argued that crypto mining offers an opportunity to embrace renewable energy and thus help clean energy thrive in the US. One challenge with sun and wind is that they are intermittent sources of energy – depending on the weather, sometimes there isn’t enough and sometimes too much. Miners can use excess renewable energy that would otherwise go to waste because there isn’t yet enough battery storage for renewable energy on the grid, proponents claimed.
“Computers are a better battery,” said John Belizaire, founder and chief executive officer of Soluna Computing, during the hearing. His company develops data centers for cryptocurrency mining.
Other experts are skeptical that renewables will be a panacea for bitcoin’s energy problems. To reduce greenhouse gas emissions, electricity from renewable energy sources will eventually need to power everything from vehicles to heating homes. So bitcoin mining would compete with those needs. And when power demand exceeds supply, it can lead to power outages — or the burning of more fossil fuels to complement clean energy sources.
There is another solution that some experts see. Rather than using proof-of-work, some cryptocurrencies use different methods to keep their blockchains accurate. The most popular alternative is proof of stake, which doesn’t require huge amounts of computing power because there are no puzzles to solve. The Ethereum network, the largest after bitcoin, has plans to eventually move from proof of work to proof of stake.
Bitcoin has no such plans. There is no expectation that the network will ever reach a consensus on making that switch, especially since miners have already invested in the machines they use to crack puzzles. For now, it seems that as long as bitcoin is the biggest player in the game, cryptocurrencies will continue to eat up more and more energy.
“The bitcoin community deserves our deep gratitude for bringing blockchains to the world, but we have many more energy-efficient alternatives than proof of commitment for the sake of the environment and our energy infrastructure in the United States,” Ari Juels, a professor at Cornell University, and a co-author of a paper that coined the term “proof of work” in 1999, said in his testimony. “I believe we should embrace these newer options.”
It’s still not clear how congressmen plan to follow up on the hearing; DeGette concluded by saying that the discussion about cryptocurrency energy consumption will be “a growing problem” for the committee. At the moment “we have no answers,” she said.
Whatever happens, the stakes are huge for the planet. The US is the second largest climate polluter after China. The Biden administration has set a goal of eliminating nearly all greenhouse gas pollution in the coming decades, and that will be difficult to achieve, with or without bitcoin mining involved.