White House Criticizes Proof-of-work Crypto Mining

The Biden administration is urging crypto miners to explore greener alternatives

article-image

White House. Source: Shutterstock

share

key takeaways

  • White House researchers believe global electricity usage of cryptoasset mining has exceeded the annual electricity usage of Argentina and Australia
  • Responsible development of digital assets must consider the environment, a government report emphasized

The White House has released a report urging the Environmental Protection Agency (EPA) and the Department of Energy (DOE) to take measurable actions to control energy usage in proof-of-work crypto mining.

This release is among the first responses to US President Joe Biden’s executive order on cryptocurrencies. It emphasizes that cryptoasset technologies use a significant amount of electricity, contributing greatly to “[greenhouse gas] emissions, additional pollution, noise and other local impacts.” 

According to the authors, the estimated global electricity usage of cryptoasset mining as of August 2022 exceeds the annual electricity usage of countries including Argentina and Australia, sitting roughly between 120 billion and 240 billion kilowatt-hours per year. 

High energy consumption will likely lead to disastrous consequences for daily Americans, the White House says, not only exacerbating “climate-driven weather extremes,” but also threatening the stability of electricity grids as it could “push up power prices for local consumers.”

Specifically, the report criticizes the proof-of-work (PoW) consensus mechanism — which currently represents more than 60% of the total cryptoasset market capitalization, stating that “given the electricity usage estimates, most discussions about crypto-asset electricity usage has focused on PoW applications, particularly Bitcoin.”

It reasons that responsible development of digital assets must include solutions to drastically reduce its energy consumption and suggests 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,” could be a viable alternative.  

“There have been growing calls for PoW blockchains to adopt less energy-intensive consensus mechanisms,” the report said. “The most prominent reaction has been Ethereum’s promised launch of “Ethereum 2.0,” which uses a PoS consensus mechanism.”

Ethereum, the second largest blockchain by market capitalization, is expected to move to PoS in the next week, making it 99.95% more energy efficient.

While the White House didn’t directly propose an outright ban on PoW mining in the US, it did reference China’s ban as a boon to the environment and flagged the EU’s introduction of mandatory minimum sustainability standards for consensus mechanisms.

“In China, the incompatibility of large-scale Bitcoin mining with the country’s environmental goals has been cited as one of several reasons that the government banned crypto-asset transactions in 2021,” the report read.

Despite this, the White House showed support for exploring how crypto miners could use electricity generated from vented and flared methane at oil and gas wells and landfills.

“Cryptoasset 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.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

HYATT REGENCY SALT LAKE CITY

TUES, OCT. 8, 2024

Guided by the expertise of Blockworks Research Analysts team, this one day event will feature senior leaders, entrepreneurs, and developers from across the crypto industry. Attendees will have the opportunity to participate in an immersive experience to explore the latest trends, […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

hivemapper.jpeg

Research

We believe crypto market participants overlook Hivemapper’s fundamental potential due to a poor understanding of both the niche map data market and Hivemapper’s positioning relative to incumbents. Hivemapper’s token model catalyzes both a cost and product advantage via unmatched map freshness and near real-time accuracy, which is its wedge into a market characterized by stale data and high data collection costs. Its current and potential future product suite may represent one of the strongest possibilities for PMF in crypto today.

article-image

Exploit shows centralization can sometimes be an asset

article-image

The Fidelity Ethereum Fund, like other proposed ETH ETFs, seeks to stake a portion of its assets, according to the firm’s Wednesday registration statement

article-image

The DAO first voted on enabling SAFE transfers over a year ago

article-image

The final Bitcoin halving, where the mining reward becomes smaller than one satoshi, is expected to occur in 2140

article-image

The Department of Justice and Commodity Futures Trading Commission announced back-to-back lawsuits against KuCoin Tuesday

article-image

Judge Failla found that Coinbase didn’t operate as an unregistered broker in offering its wallet service