The White House Wants Crypto Mining Companies To Share How Much Energy They Use With Regulatorsbit2main
The White House announced on Thursday that crypto mining operations in the U.S. are on track to consume as much energy as all of the nation’s home computers, necessitating formalized measures for curbing the industry’s power demands. A new report issued by the White House Office of Science and Technology Policy (OSTP) addressed environmental concerns that industrial-scale crypto miners could strain local and federal energy grids, and undermine global climate change efforts.
As a result of its findings, the department recommended that mining operations should be regularly assessed for risk in accordance with federal energy standards, and that these companies should additionally make their data available to regulators. Miners are unlikely to be happy with the latter suggestion, as some companies have sought to redact information about power purchase agreements and energy usage, even when doing business with public utilities.
Most notably, the report challenged the refrain that mining will promote the development of more renewable energy sources. This belief has spurred the mantra that “bitcoin is a battery,” which encompasses a range of opinions, including the notion that crypto mining can distribute energy throughout the grid.
The industry has claimed to support the power grid in Texas, for instance, which has leveraged its profound energy supply to become the nation’s “bitcoin capital.” (In July, bitcoin miner Riot Blockchain earned $9.5 million in energy credits for reducing its electricity usage during periods of peak demand.) Crypto companies have assured lawmakers that by purchasing large amounts of power, or planting themselves near wind and solar sites, they can spur the construction of new renewables. But according to OSTP, this strategy may actually reduce the motivation for storing and transporting clean power to local communities, implying that such measures are for the sole benefit of the miners.
The report comes as a result of a March executive order in which President Biden directed OSTP and other agencies to examine the likelihood that crypto mining could “impede or advance efforts to tackle climate change at home and abroad.” In response to Biden’s order, OSTP asked crypto stakeholders to provide their input on how the sector can avoid or mitigate climate harms.
Numerous blockchain projects, trade associations, and industry lobbyists weighed in, with a crypto lobbying group called the Blockchain Association urging the White House against “prematurely judging” the pros and cons of mining protocols criticized for their expansive energy footprints. Other respondents, such as an alliance of environmental groups that included Earthjustice, warned against the ways that crypto miners are aggressively integrating with local grids.
OSTP noted that global energy demands for crypto mining hover between 120 and 140 kilowatt-hours per year, rivaling those of some individual countries, such as Denmark and Chile. The US will soon host one-third of all crypto mining operations globally, and the report says that miners currently consume up to 1.7% of the nation’s total power usage — equivalent to all of the residential lighting in the country, with emissions similar to those produced by diesel-powered railroads.
The report also notes that crypto mining is impacting local communities, including through air and noise pollution. Indeed, communities living near mining facilities have complained about excessive noise, comparing its sounds to those of a jet or waterfall. Crypto projects have also resurrected polluting facilities, such as a coal plant in southern Montana that was brought back to life two years ago by bitcoin miner Marathon.
It’s unclear whether OSTP’s recommendations — such as increased data transparency and participation in regular reviews — will become a reality. But the crypto community has long anticipated increased regulation, specifically around controversial protocols such as “proof of work” (PoW) mining, which necessitate immense computing power to generate currencies like bitcoin. OSTP suggested migrating away from PoW, theorizing that adopting other protocols could reduce the industry overall power demands to less than 1% of current levels. (One of the largest crypto networks, Ethereum, is days away from abandoning PoW in favor of “proof of stake” mining, which it has claimed will reduce its energy usage by 99.95%.)
The department deferred to agencies like the Department of Energy and Environmental Protection Agency to explore crypto’s potential benefits. For example, it imagined that blockchain technologies could be applied to processes like climate monitoring, though this utility is still mostly speculative.
Over the past year, Congress has also organized several hearings on crypto’s energy usage, calling on executives of companies like Bitfury to testify about the climate implications of their product. Agencies have similarly set their sights on the industry, such as the Department of Justice, which established a crypto task force last October.