Congressional oversight, which comes after Democrats in states like New York also proposed clamping down, is expected to intensify now that the US has more crypto mining capacity than any other country, following a crackdown in China. Now that crypto mining is a multi-billion dollar business, the industry is struggling to show that lawmakers shouldn't stand in the way of an economic boom.
"It's not up to the government to decide whether Bitcoin is important to the future of the country — that's the market," said Bitfury CEO Brian Brooks, who served as one of Trump's top banking regulators before taking the helm. the crypto mining company. "The market has spoken."
Deciding how to address the environmental consequences of Bitcoin is the latest political conundrum facing lawmakers and regulators with the crypto market now worth $2 trillion. While much of the focus in Washington has been on protecting consumers from financial risks, crypto mining is spilling over into the broader debate on how to address climate change.
The House Committee on Commerce and Energy will have industry leaders testify at a hearing on Thursday. Democrats are expected to push executives to adopt sustainable practices, while Republicans plan to frame mining as something the United States should encourage as a competitive advantage.
Lawmakers have only begun to explore what tools they have to address the environmental consequences of Bitcoin, including potential EPA regulations and state-level restrictions on power generators. For now, they will have to rely on political pressure to force changes, similar to how Tesla CEO Elon Musk rocked the Bitcoin market last year after he said the company would not accept the digital currency due to its fossil fuel demands.
“The extraordinarily high energy consumption and carbon emissions associated with Bitcoin mining could undo much of our work to address the climate crisis, not to mention the damaging impacts crypto mining has on local environments and electricity prices. Warren said in a statement. “It is time for Congress and federal regulators to step up and address the serious risks that cryptocurrencies pose to our economy and our environment.”
Powering the computers that mine digital currency, as well as the cooling systems that keep them from overheating, requires an enormous amount of energy in what's called the proof-of-work process.
High-endurance computing systems compete to solve cryptographic puzzles that assemble the underlying blockchain of a digital currency, the decentralized public ledger that records new transactions. In exchange, computer operators receive digital assets like Bitcoin as a reward.
Because the odds of "winning" any given puzzle are low, energy costs often determine whether or not crypto miners are profitable. It has become an industrial-scale process as digital currency prices have skyrocketed, with Bitcoin trading around $41,000.
TO memorandum from the office of House Energy and Commerce Chairman Frank Pallone (DN.J.) ahead of Thursday's hearing characterizes mining markets as caught in a "vicious cycle." As the value of Bitcoin and similar digital currencies grows, more miners will launch power-hungry rigs to cash in.
The memo states that the annual emissions of Bitcoin and Ethereum, another digital currency, are equivalent to approximately 15.5 million car exhaust pipes. Ethereum backers are planning a transition to a so-called proof-of-stake process that consumes less power than proof-of-work.
The companies say they have fed mining farms with energy that would otherwise have gone to waste. Some develop agreements with utilities looking to offload trapped or stranded energy. Others have connected their mining units to oil wells, relying on natural gas that is normally flared as a byproduct of drilling.
“The more efficient and profitable we run these things and build these farms, the more money everyone makes,” said Bit5ive CEO Robert Collazo, whose firm builds the hardware and cooling systems for Bitcoin mining rigs.
The trend is also creating new demand for fossil fuel power plants.
Missouri's largest utility launched a pilot program to mine Bitcoin with one of its coal plants last year, a move its executives say could stabilize its network as it transitions to more energy sources. intermittent, such as wind and solar. Bitcoin mining company Greenidge Generation Holdings owns a former coal plant in Dresden, New York, which it converted to natural gas and now uses primarily for cryptocurrencies.
Federal and state officials have begun to clamp down.
This month, the EPA rejected requests submitted by the two cryptocurrency-focused power plants in Missouri and New York to continue using waste disposal sites at their facilities.
Democrats in New York state last year tried to pass a bill that would have imposed a three-year ban on new or renewed permits for carbon-based generators that sell their power to proof-of-work miners, such as those operating on the Bitcoin and Ethereum networks. The policy, which ultimately stalled in the state assembly, would have effectively shut down crypto mining operations during that period.
Warren, one of the fiercest critics of cryptocurrencies in Congress, has begun pushing miners to mitigate their energy use and climate impacts.
“Energy consumption from crypto mining facilities is also causing significant increases in energy costs for local small businesses and residents,” he said in a letter to Greenidge Generation Holdings, which owns the New York plant, in December. "I am concerned about this potential impact of Greenidge's actions."
Publicly traded mining companies such as Marathon Digital Holdings and HIVE Blockchain Technologies have increased their lobbying presence in recent months to defend the industry's job creation and clean energy efforts. The Bitcoin Mining Council, an industry group, is trying to make mining companies leaders in clean energy, claiming that nearly 60 percent of their energy mix now comes from sustainable sources.
"If you can't immediately see the personal value you provide to your constituents, you're probably more likely to be more skeptical," said Teana Baker-Taylor, chief policy officer for the Digital Chamber of Commerce, who represents digital exchanges. encryption and mining companies. "If you don't really understand the technology, or if you've never invested in Bitcoin, it's easy to ask, 'What's the value?'"
Mining companies such as Marathon Digital and Lancium have announced plans to connect hundreds of thousands of rigs to solar and wind farms. Payments company Block, run by Twitter co-founder Jack Dorsey, recently announced plans to build an open source crypto mining business and has also financed projects based on renewable energy.
The industry's arguments are gathering steam among Republicans, who are expected to applaud the sector's growth at Thursday's House hearing.
A Republican adviser to the House Energy and Commerce Committee said the US "has an opportunity to lead here, particularly in our competition with China, and we should work to build a regulatory environment that rewards innovation and the spirit of business".
