U.S. President Joe Biden signed an executive order, and the White House’s Office of Science and Technology completed a Report that calls for policy on Bitcoin and other cryptocurrencies and demands “urgent” action for addressing environmental concerns. One of the concerns outlined in the Report includes possibly eliminating high energy intensity proof of work consensus for crypto mining.
White House Considers Banning Proof of Work
Bitcoin Magazine (@BitcoinMagazine) reported in a tweet on September 8 that the “White House says U.S. Congress may consider legislation to BAN Proof of Work #Bitcoin mining.” The White House reviewed the nation’s climate and energy implications of crypto assets. It determined that the country should “[m]inimize GHG emissions, environmental justice impacts, and other local impacts from crypto assets.”
Multiple federal agencies should develop practical environmental standards for “low energy intensities, low water usage, low noise generation, clean energy usage by operators,” and so on. Specifically, the tweet highlights and emphasizes the following from the Report:
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 Executive Order’s announcement and its proposed effects on the crypto industry have been “criticized for biases” and regarded as very unpopular. Further, the White House Office of Science and Technology released a Report claiming that Bitcoin mining is destructive and harmful to the environment.
The Executive Order and Report: Overview
Electricity usage from digital assets is contributing to [greenhouse gas emissions], additional pollution, noise, and other local impacts depending on markets, policies, and local electricity sources.
The first part of the Report discusses that Congress must seek to influence U.S. climate goals and help the environment, and if it fails to do, proof of work mining may need to be banned. At this point, mining affects electrical grids and requires an exponential amount of energy costs and consumption.
The Office of Science and Technology claims that Bitcoin mining facilities enable “added stress on the power grid that leads to blackouts, fire hazards, and equipment deterioration.” These costs increase will have to be passed on to local consumers. Bitcoin miners, in particular, will inhibit the nation’s efforts to achieve net-zero carbon pollution and its climate objectives.
Lastly, the Report also makes an interesting point that some crypto mining—such as proof of work mining that “installs equipment to use vented methane to generate electricity for operations” is better and may help the nation achieve these climate objectives.
Details of Order and Report
Many regulatory agencies were given three months to one year to respond to information such as how Bitcoin and other cryptos operate within the nation and how they should be regulated. Further, another issue to be addressed is how companies can prevent the illegal use of cryptocurrencies.
Specifically, the Order directs the Department of the Treasury, the Financial Stability Oversight Council, Securities and Exchange Commission, Federal Trade Commission, Commodity Futures Trading Commission, federal banking agencies, and the Consumer Financial Protection Bureau to create policies for Bitcoin and crypto to protect the public against “systemic financial risks” and fight “illicit use of digital assets.”
Items such as the connection between distributed ledger technology and economic and energy transitions are urged to be discussed and reported upon within 180 days. The Order references and prioritizes analyzing energy usage—including whether there are any mitigating measures.
As a notable crypto advocate, Senator Cynthia Lummis (@SenLummis) released a statement on Twitter stating the following:
[W] while I agree with the President’s desire to combat money laundering and defend America’s national security, I think his executive Order misses the fact that the overwhelming majority of digital asset users are law-abiding and trying to make our financial system better.
The White House’s Executive Order and Report by the Office of Science and Technology are sparking controversy because it urges Congress to ban proof of work consensus for crypto mining. As stated in the Report, the reasons are clear: crypto mining contributes to high energy costs and interferes with the nation’s climate objectives.