WH suggests eliminating energy-intensive consensus methods, like Bitcoin mining, if they fail to reduce carbon emissions
The White House has suggested that energy-intensive consensus methods, such as Bitcoin mining, should be eliminated if they fail to reduce carbon emissions.
The report examines how DLT can help to combat climate change by providing a secure and efficient way to track and verify transactions related to carbon credits. It also outlines how DLT can help to create new markets for carbon credits and other environmental assets, and how it can help to improve the efficiency of existing environmental markets.
The office determined that crypto's relationship with the environment is a mixed bag. While acknowledging the positive impact that mining can have on grid stability and renewable development, it can also exacerbate "environmental justice issues" due to greenhouse gas (GHG) emissions and other factors. However, the office also noted that crypto mining can have a positive impact on the environment if properly regulated. For example, crypto mining can help to stabilize the grid and encourage the development of renewable energy sources. If properly regulated, crypto mining could be a force for good when it comes to environmental issues.
The office suggested that the administration may have to consider banning the use of proof of work as a consensus mechanism. However, it is important to note that proof of work is not the only consensus mechanism available. There are other options available that may be more viable in the long run.
Crypto: An Environmental Threat?
The report provides an overview of the potential implications of crypto assets on climate and energy in the United States. It is a response to President Biden's crypto executive order in March, which directed over 20 administrative figures and agency heads to submit research reports and recommendations on various crypto-related topics to help foster responsible industry regulation.
“Crypto-assets could hinder broader efforts to achieve net-zero carbon pollution consistent with U.S. climate commitments and goals,” stated the OSTP in the report.
The article paints a negative picture of blockchains that use a proof of work consensus mechanism, claiming that they use a lot of energy and contribute to pollution. However, it's important to put these numbers into perspective. While 0.3% of global annual GHG emissions is significant, it's still a small fraction of the total emissions produced by humanity every year. In addition, many of the areas where blockchains are located have little to no pollution to begin with. So while there may be some negative environmental impact, it's important to remember that the overall impact is still relatively small.
The report suggests that federal government action is required to ensure the broad adoption and responsible development of digital assets. One recommendation is that federal agencies collaborate with states and the crypto industry to develop environmental performance standards for the use and development of crypto-asset technologies. The report is a welcome development, as it recognizes the need for federal involvement in regulating digital assets. This is an important step forward, as digital assets are becoming increasingly popular and influential. The recommendations in the report are sensible and should help to promote the responsible development of digital assets.
The Obama administration is proposing new standards for reducing the environmental impact of mining operations. The standards would target low energy usage, low water usage, low noise generation, and clean energy use by mining operators. However, should these methods prove ineffective, the OSTP suggested using executive or congressional action. These standards would help to protect our environment from the harmful effects of mining, and would ensure that mining companies are doing their part to reduce their impact on the planet.
“Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining.” it read.
Is Proof of Stake the Answer to Bitcoin's Problems?
It is clear that the CFTC chairman Rostin Benham believes that there is a need to transition the Bitcoin network to a Proof of Stake consensus mechanism. This is something that Ripple co-founder Chris Larsen has also been supportive of, and he has even gone so far as to fund a $5 million campaign to help make this transition happen.
Bitcoiners have long claimed that POW is necessary to maintain a sufficiently decentralized network. However, this opposition may change in the future as Bitcoin's popularity and value continue to grow.
The Ethereum network is set to undergo a transition next week that is expected to reduce energy consumption by 99.5%. This would be a huge reduction in energy use and would be a major step forward for the Ethereum network.
I believe that banning Bitcoin mining in order to reduce GHG emissions is a short-sighted approach that will do more harm than good in the long run. Bitcoin mining is a relatively new industry that is still in the early stages of development.
