As energy-intensive bitcoin mining increases in the United States, members of Congress debated ways to make cryptocurrencies greener on Thursday. One of the most pressing problems was whether to employ renewables to power the energy-intensive mining at the heart of bitcoin's blockchain or to switch to alternative blockchains that require less energy, to begin with.
The discussion took place during a House Energy & Commerce Committee oversight hearing on the "energy consequences of bitcoin." Last year, the United States became the de facto epicenter for bitcoin mining when China banned it within its borders, owing to bitcoin's high energy consumption.
This shift might have significant repercussions for the US electrical infrastructure and the Biden administration's ability to reach its aggressive climate change targets.
Representative Diana Degette (D-CO) opened the meeting by saying, "Cryptocurrency presence in everyday life will certainly continue to increase." "As the business evolves, bitcoin networks must find solutions to lower the requirement for continual high-volume energy usage while minimizing environmental impacts."
Power Consumption
The bitcoin network consumes more power in a year than in Ukraine and Norway. If bitcoin were a country, it would be the 27th most energy-hungry country on the planet. Because bitcoin mining is generally fueled by fossil fuel energy, it is also the most polluting cryptocurrency.
The fact that bitcoin is the largest crypto network contributes to its high energy consumption. However, bitcoin consumes more power than other cryptocurrencies because it employs a mechanism known as "proof of work," which acts as a security system to maintain the blockchain, which serves as a record of transactions, safe and correct. Miners verify transactions using specialized computers to solve tricky riddles in a race. They are rewarded with bitcoins. Meanwhile, all of that processing power is consumed by electricity.
When bitcoin mining was focused in China, miners tended to utilize clean hydropower during the rainy season and coal when the latter became unavailable. The energy mix for crypto mining in the United States is continuously forming. However, there are some concerning symptoms. Miners have already helped to extend the life of outdated coal-fired power plants, which are the dirtiest fossil fuel.
"Examples like these are profoundly alarming, given our current climate targets." Representative Degette stated, "Our focus now needs to be on decreasing overall carbon emissions and boosting the percentage of renewable energy on the grid."
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"Potential"
During the session, industry experts claimed that crypto mining had the potential to embrace renewable energy and, as a result, help clean energy growth in the United States. Solar and wind energy are intermittent sources of electricity, which means there isn't always enough and sometimes too much depending on the weather. Proponents suggested that miners can soak up extra renewable energy that would otherwise go to waste since there isn't enough battery storage for renewable energy on the grid.
During the hearing, John Belizaire, the founder and CEO of Soluna Computing, remarked, "Computing is a superior battery." His firm creates bitcoin mining data centers.
Other analysts doubt that renewable energy will be a panacea for bitcoin's energy woes. Renewable energy will someday be required to power everything from autos to home heating to reduce greenhouse gas emissions. As a result, bitcoin mining would compete with those requirements. When electricity demand exceeds supply, it might result in blackouts or the use of more fossil fuels to augment sustainable energy sources.
Another Option
Some experts believe there is another option. Some cryptocurrencies employ other ways to maintain their blockchains correct instead of proof of work. Because there are no riddles to answer, the most common choice is proof of stake. It does not require a lot of computational power. The Ethereum network, which is the second-largest behind bitcoin, is planning to switch from proof of work to proof of stake in the future.
Bitcoin, on the other hand, has no such intentions. There's no way to know if the network will ever agree to transition, primarily because miners have already invested in the devices they need to solve riddles. For the time being, it appears that cryptocurrencies will continue to use more and more energy as long as bitcoin remains the dominant player.
In his testimony, Ari Juels, a professor at Cornell University and a co-author of a paper that coined the term "proof of work" in 1999, said, "The bitcoin community deserves our deep gratitude for introducing blockchains to the world, but we have far more energy-efficient alternatives than proof of stake for the sake of the environment and our energy infrastructure in the United States." "I feel we ought to embrace these emerging possibilities," says the author.
It's unclear how Congress members intend to follow up on the hearing; DeGette closed by stating that the committee's topic of cryptocurrency's energy use will be "an escalating concern." "We don't have any answers right now," she remarked.
What Comes Next
Whatever happens next, the stakes for the globe are enormous. After China, the United States is the second-largest polluter of the environment. The Biden administration has set a target of almost eradicating all greenhouse gas emissions over the next few decades, which will be tough to achieve regardless of whether bitcoin mining is involved.
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