According to a White House report released yesterday, Climate and energy implications of crypto-assets in the United States, Bitcoin (BTC) would have too high a carbon cost.
The document explains that the use of digital assets based on blockchain technology is growing. However, according to the report, some crypto-asset technologies currently require a considerable amount of electricity for asset generation.
As a result, it recommends that miners be encouraged to use greener energy sources or face a possible ban.
As a reminder, the process of mining is to perform and verify transactions of bitcoins (BTC), ethers (ETH) and other decentralized digital assets.
Cryptocurrency mining requires large amounts of energy, and the cryptocurrency industry has seen a 20-fold increase in electricity demand over the past five years.
Mines, or mining farms, can consist of thousands of servers stacked in warehouses. They deploy raw computing power to solve a series of complex mathematical problems. As a result, it consumes more electricity each year than many countries, including Pakistan and Finland, according to Cambridge Bitcoin’s electricity consumption index.
Its overall annual consumption is roughly equal to that of all the lights and TVs in the United States combined, the index estimates.
The study, published last year, found that mining in the New York area has driven up monthly electricity bills. For example, those bills increased by about $8 for households and $12 for small businesses. According to the study, the increase in local government tax revenues associated with the mining development offset less than 15 percent of the increased costs to residents.
Bitcoin miners must mitigate the impacts
At the time, President Joe Biden called for a report on cryptocurrencies, with a view to regulating them more broadly. It was the White House Office of Science and Technology Policy that looked into the subject, and it has just published the report.
The report focuses on the ecological costs of cryptocurrencies, and proof of work in particular. The report points out that the Bitcoin and Ethereum (ETH) networks together account for 60% of cryptocurrency capitalization. In total, the mining of this type of cryptos would represent 0.3% of greenhouse gas emissions.
Hence the report’s recommendations: the cryptocurrency sector must reduce its impact, and players must be encouraged to use “greener” consensus methods.
The report makes several suggestions for action, including better oversight of cryptocurrency miners to “mitigate the impacts” of their activity. With possible real-world consequences: the White House report considers an outright ban on mining if its ecological consequences are not reduced:
“If these measures were not effective in reducing impacts, the Administration should explore executive orders, and Congress could consider legislation, to limit or eliminate the use of these electricity-intensive consensus mechanisms for crypto mining.”