Fossils vs. Renewables, PoW vs. PoS: Key policy issues around crypto mining in the U.S.

Fossils vs. Renewables, PoW vs. PoS: Key policy issues around crypto mining in the U.S.

Eight U.S. senators, including Senator Elizabeth Warren, wrote letters on Jan. 27 to six of the largest Bitcoin mining companies in the world, asking for detailed information about their electricity consumption. Senator Warren has requested the information before from mining operations many times. Greenidge Generation received a similar request last month. Greenidge Generation uses a natural gas power plant to power their facility.

These actions highlight the growing regulatory pressure on US crypto mining businesses. As Congress heard last week, increasing scrutiny could be an opportunity for the mining sector to develop in line with the larger political push for clean energy. These are the main themes surrounding crypto mining that caught the attention of lawmakers and will likely influence the intensifying policy discussion.

Total energy consumption

The question of how much energy crypto mining uses was expected to be a major focus of any environmental criticism of Bitcoin and cryptocurrency in general. A group of researchers published a paper in Nature (2018) predicting that Bitcoin’s growth would single-handedly increase global emissions to above 2 degrees Celsius in less than 30 years. This is not good news considering the stated mission of the international community to stop the planet from warming by the same degree.

The Cambridge University Bitcoin Electricity Consumption Indicator compared the annual Bitcoin-driven consumption to different nation levels. According to this source, the most widely used cryptocurrency consumes more energy per year than Ukraine (124.5 TWh), or Norway (124.3). Digiconimist currently estimates that Ethereum’s annualized energy footprint is around 73.19 trillion watts.

According to the Bitcoin Policy Institute’s recent fact-check report, none of the most popular estimates are undisputed. The peer-reviewed Nature Climate Change journal was cited in three articles. One of these articles debunked the 2 degree argument and criticised its methodology.

The preferred method of comparing Bitcoin energy consumption to other industries is to use the BPI report. In that instance, BTC’s 0.27 percent of global energy consumption is lower than that of gold mining. However, the Cambridge Index makes the comparison equal.

Fossils vs renewables

Any industry that wants to thrive in the digital age must search for a sustainable energy structure, especially given the growing political pressures on energy consumption.

Recent examples of mining operations relaunching existing fossil power plants have been highlighted by critics of crypto mining. In a letter sent by 70 non-governmental organizations to Congress before the crypto mining hearing, the authors called out several instances such as the relaunched coal waste plants in Pennsylvania by Stronghold Digital Mining or the partnership between Marathon Digital Mining and Montana’s coal-fired power plants.

Evidence also shows that these companies are not the only ones buying up old ‘dirty energy’ plants to fuel their mining operations. The pattern can be seen from Texas to Missouri. Steve Wright, the former general manager of Chelan County’s Washington public utility district, spoke at length about the issue. He explained that miners’ interest in dormant fossil assets is driven by a simple market mechanism. As renewable energy prices rise (on the West Coast in particular), coal prices fall due to investors fleeing ahead of the 2025 ban on all coal use in Washington.

Representatives kept returning over and over to this topic throughout the hearing. It became apparent that the tension between crypto mining’s use of fossil fuels and its potential shift to renewable energy sources was at the heart of policymakers’ thinking. John Belizaire (CEO of Soluna Computing), a developer of green data centres, stated that crypto mining could be transformed from an “unclean” energy concern to a vehicle for complementing and empowering renewable energy.

Belizaire’s core argument is that computation-intensive tasks like Bitcoin (BTC) mining can be powered by the recaptured excessive (or, in the industry terms, “curtailed”) energy otherwise wasted by clean power plants. He claims that solar and wind farms can waste as much as 30% of the energy generated due to incompatibilities to old energy grids. Belizaire also spoke out against the energy shortages caused by crypto miners. He highlighted the fact that any type of computation that miners perform can be stopped at will.

The problem of dirty mining is not going away for now simply because the U.S. level in electricity production from renewable sources is below 7.5%. According to a recent study done by DEKIS Research at the University of Avila, the United States ranks 25th in the world for its sustainable mining potential. Denmark is leading the list with 65% of renewable energy produced in America and Germany 26%.

America is still a safe place to mine, and many other countries’ electrical grids can handle more load. This could provide the U.S. with a significant competitive advantage and help it become a global mining hub. Belizaire spoke to Cointelegraph and explained that there are a few policy steps that can be taken to encourage crypto miners to “go eco.”

PoW vs. PoS

A possible alliance between crypto mining, green energy is a common topic of discussion. The recent hearing was no exception. Ari Juels, a Cornell professor, repeatedly said that Bitcoin does not equal Blockchain. This is because the energy-intensive PoW consensus mechanism doesn’t provide the only way to benefit from the decentralization benefits of crypto.

PoS consensus mechanism is the best option. It is being considered by the Ethereum ecosystem. This consensus mechanism is already used in many new blockchain projects. It is crucial for the development of smart contracts-based technologies like decentralized finance (DeFi), and non-fungible tokens.

Juels’ statements are indicative of the pressure on PoW. Erik Thedeen (vice chair of European Securities and Markets Authority, ESMA) proposed earlier this month a ban on PoW mining within the EU and called to transition to PoS because it has a lower energy profile.

The U.S. is the dominant player in the global Bitcoin mining market, holding 35% of the market. This is a much more urgent issue than it is in Thedeen’s home country, Sweden, which only mines 1.16%. The real problem is in Asia-Pacific, where almost half of the electricity used by Proof-of-Work miners comes directly from coal, according to The Global Cryptoasset Benchmarking Study.

The three experts who spoke to Cointelegraph about the subject did not see the combination of the consensus protocols as being productive. John Warren, CEO at crypto mining company GEM Mining, stated that there is “no chance” Bitcoin will transition to PoS. Given Bitcoin’s dominance, the CEO of crypto mining firm GEM Mining stated that there are “slim to none” chances that Bitcoin will transition to PoS.

John Belizaire rescinded the notion that the government should support one bulletin over another.

Congress lacks sufficient knowledge to call for a technical architecture of a global platform that powers billions in assets […]. The technology community should be the ultimate arbiter of innovation […]. The POW camp will solve its problems by itself.

Mason Jappa is the co-founder of Blockware Solutions and its CEO. He noted that both Proofs have some advantages. However, he also echoed Belzaire’s testimony to highlight the potential for PoW networks to work with renewable energy. Jappa views PoW mining as a net positive for society in this sense:

Mining is an excellent complement to the grid. It is also repurposing infrastructure which was not being used. This can be used as a case for expanding our energy grid.

What’s next?

Jappa stated, “It’s bullish for ecosystem that this hearing occurred”, because once again lawmakers confirmed that cryptocurrencies will be around.

Warren particularly appreciated the part that “underscored how the mining industry can innovate more eco-friendly solution.”

It is important to recognize that the discussion brought out many positive comments. These included highlighting to the nation that Bitcoin has introduced blockchain technology and created many jobs. This perspective was largely absent from recent public discourse on crypto mining.

Belizaire believes that there are clear points around which the industry of digital mining could rally.

Examples of such programs include laws and governmental programs that promote the use of renewable energy instead of legacy fossil fuels.

It appears that the green mining cards can be used to make a simple economic and environmental argument for crypto industry. The PoW/PoS debate should be left to the crypto community, not regulators.

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Amy Jimenez

Amy Jimenez– Services My name is Amy Jimenez, and I am the main writer behind the" allthetopnews.com" for the ground-breaking and most fragile bits of knowledge into the most recent news in the services sector. I began my voyage of work as an autonomous investment advisor. I had around 4 years of involvement in this field. I am a free soul so; my energy for investigating the world has taken me to the countries over the globe and allowed me to report for a part of the best news affiliations. At present, I am a full-time manager as experienced in the account and began to utilize my capacities.

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