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U.S. Lawmakers Look to Limit Energy Use of Crypto Mining Firms

  • In a letter sent to the Department of Energy and the Environmental Protection Agency, lawmakers demanded that crypto mining companies submit more reports on their activities.
  • Lawmakers are concerned about the level of energy used by crypto miners, and its impact on climate change.

In a letter sent on Friday, July 15th, a group of senators and representatives from the United States Democratic Party called on the Joe Biden administration to step in and limit the environmental impact of cryptocurrency mining.

The request arose in response to information offered to Congress by seven of the largest crypto mining companies in the country in regards to the environmental impact of the cornerstone sector of the crypto industry.

The legislators asked Head of the Environmental Protection Agency (EPA) Michael Regan, and Secretary of the Department of Energy Jennifer Granholm to install requirements for mining operations to submit more reports on their use of energy.

According to the concerned party, the lack of a legal framework necessitating the provision of permanent information about the sector hinders the government’s ability to measure and understand the full scope of the impact that crypto mining has on the environment.

The Proof of Work Problem

The letter was signed by Massachusetts Senators Elizabeth Warren and Edward Markey. Also listed were Rhode Island lawmaker Sheldon Whitehouse, Oregon lawmaker Jeff Merkley, California representative Jared Huffman, and Michigan’s Rashida Tlaib.

The lawmakers argue that the Proof of Work model, under which miners create new cryptocurrencies such as Bitcoin and Ether, is excessively energy-intensive, even to the point of matching the energy consumption needs of entire populations.

The concerns raised largely revolved around the impact that cryptocurrency mining has on global warming, but the representatives also underlined the sector’s potential contributions to rising in energy prices across the U.S.

In late April, the state of New York passed a bill banning the use of new cryptocurrency mining equipment, except in the event that miners could prove that they were using 100% renewable energy. The bill has yet to be signed by Gov. Kathy Hochul (Democrat).

“Disturbing” Research Results

Although the legislators confirmed that they had not yet received responses from all of the companies the questionnaire was sent to, they highlighted that “the information they did provide reveals that these companies’ mining operations are significant and growing, have a major impact on climate change, and that federal intervention is necessary.”

By making an equivalence of the energy consumption capacities provided by six of the seven companies consulted (Bitdeer, Greenidge, Stronghold, Riot, Bit Digital and Marathon), the legislators found that the level of energy being used would be enough to provide power to all the homes in Houston, Texas. The seventh company, Bitfury declined to include such information in their responses, according to the representatives.

The aforementioned companies also disclosed their plans to increase their mining capacity by approximately 230% over the next few years.

Should those plans come to fruition, the energy consumed could be “enough new capacity to power a city of over 1.9 million residences,” the lawmakers said, calling the results of their investigation “disturbing.”

“This limited data alone revealing that cryptominers are large energy users that account for a significant — and rapidly growing — amount of carbon emissions,” they stated.

“Our investigation suggests that the overall U.S. cryptomining industry is likely to be problematic for energy and emissions,” they added.

The Environmental Protection Agency is expected to respond to the request in the coming days. A DOE spokesperson told CNBC that the agency is preparing its response to the letter.

On the Flipside

  • Senator Elizabeth Warren, who heads the group of concerned legislators, has been one of the harshest critics of the crypto industry in the U.S.

If the governor of New York commits to signing the bill, which would see non-renewable mining banned, the state would become the first in the country to enact restrictions upon mining activities, and could have a domino effect.

American and European legislators agree that limiting emissions from cars and industry will prove futile if the gigantic energy consumption of crypto mining is not curbed.

Why You Should Care

  • One of the biggest challenges facing BTC and ETH lies in moving away from the use of fossil fuels into clean sources. 
  • This ties inextricably with blockchain validating processes, which would also need to be transitioned to meet the needs of clean energy.
  • Ethereum has taken its first step on the path as it approaches its transition to a Proof of Stake consensus mechanism, but Bitcoin remains unchanged.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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