The Biden administration’s new findings on bitcoin (BTC) mining’s environmental impact united industry advocates and critics: Both sides declared their views had support from the highest levels of the U.S. government.
On Thursday, the White House’s Office for Science and Technology Policy (OSTP) released a much-anticipated 45-page report on bitcoin (BTC) mining. It detailed the pros and cons of the industry’s impact on the environment and energy grids, calling for more research so that federal agencies can come up with standards to minimize harm.
If these measures prove inefficient, the report said, the administration and Congress should consider limiting or eliminating energy-intensive technologies like proof-of-work, the system that powers the Bitcoin blockchain and, for now, Ethereum.
Bitcoin mining in particular has faced criticism for its energy usage and carbon emissions, but the industry has argued that it can actually support the world’s transition to renewables.
Two sides of the same coin
Advocates said the report highlights the positive potential of bitcoin mining, whereas critics noted the OSTP tried to debunk some of the miners’ arguments.
“Every major bitcoin influencer going on national TV should be hammering the point that the White House report found that PoW mining could yield positive results for climate change,” tweeted Joe Carlassare, who co-chairs the Cryptocurrency, Blockchain and FinTech group at law firm SmithAmundsen.
The White House report said that bitcoin mining “can be good for the environment” and is “incredible progress,” Dennis Porter, who advocates for bitcoin mining as co-founder and chairman of the non-profit Satoshi Action Fund, said on Twitter. He posted parts of the reports that said crypto mining could be used to help capture otherwise vented methane to support his statements.
On the other side of the debate, the Environmental Working Group (EWG), a non-governmental organization (NGO) that has been advocating to change the Bitcoin network code to reduce its energy consumption, also praised the report.
“Today’s report confirms that digital assets are using a significant and growing amount of electricity, and contributing more climate pollution,” a statement on their site read.
Alex de Vries is one of the industry’s most vocal critics and has argued that bitcoin mining is a “dirty” industry that contributes to global emissions and waste, in research that is heavily contested by the industry. He tweeted that the report actually “dismantles most of the beloved talking points by bitcoin influencers.” Research from de Vries was quoted in the report.
For example, the section on methane flare-powered mining “immediately takes aim at a bitcoiner favorite: ‘Mining operations that replace existing methane flares would not likely affect [carbon dioxide] emissions,’” de Vries said.
The middle ground
Others saw the White House’s attitude in the report as more of a middle-of-the-road approach that is still taking shape
The report was praised by some mining industry insiders and experts for its research, particularly with regard to how it considered the potentially climate-positive effects of flared-gas mining and how it can support the development of renewable energy.
The OSTP produced a report that showed “a nuanced understanding of the implications of #crypto for climate and energy,” tweeted Jesse Morris, CEO and founder of Energy Web, a company trying to build transparency around mining’s energy use.
Elliot David, who is head of sustainability engagement at Sustainable Bitcoin Protocol (SBP), said that “the bulk of the report” is “pretty positive.” It signals regulators want to learn more “and are willing to work directly with the industry as they've done with other sectors, which is all we are asking for,” he said.
Troy Cross, a professor of philosophy and humanities at Reed College in Portland, Oregon, and a fellow at the Bitcoin Policy Institute, tweeted that even though the report might look bad, it shows the Biden administration is trying to gather all the data necessary to make sound policy.
It “represents a shift in a very good, truth-responsive direction,” contrary to the “fear-mongering” of earlier politicians’ moves on the industry, such as the letter sent to the Environmental Protection Agency by Rep. Jared Huffman (D-Calif.) and Sen. Elizabeth Warren (D-Mass.) in July, Cross said.
The report also lays out what concerns the administration, which is making miners’ jobs easier, Cross said: “We show the worries are unfounded. We tick all the boxes.”
“As soon as this issue is fully studied and the rhetoric starts to fade, it will become apparent that proof-of-work mining is a boon to resilient, abundant, renewable energy,” Rachel Silverstein, general counsel and senior vice president of compliance at bitcoin miner CleanSpark (CLSK), told CoinDesk.
Silverstein added that the firm looks forward to working with the White House to set standards for the industry.
New York-based bitcoin miner Bit Digital’s chief strategist, Samir Tabar, said the company applauds “the administration's ambition to combat climate change,” and recognizes that there have been “growing pains” as the industry has boomed in the U.S. However, he found parts of the report to be “myopic.”
The OSTP didn’t mention the “overarching benefits” the industry can bring to local communities, such as jobs, and that increased energy use, which the report found problematic, “is often a precursor, or prerequisite, to economic development.”
“We firmly support regulating the less eco-friendly aspects of the industry, but well intentions must be fully informed and carefully balanced to yield effective policy," Tabar said.
The backlash
Mining insiders, however, took issue with other aspects of the report, including the possibility of banning the consensus algorithms that underpin bitcoin mining as it exists right now.
Should the standards “prove ineffective at reducing impacts, the administration should explore executive actions, and Congress might consider legislation, to limit or eliminate the use of high-energy-intensity consensus mechanisms for crypto-asset mining," the report said.
Mitch Klee, who writes for Bitcoin Magazine and was previously with Compass Mining, said that “banning PoW is banning GDP and innovation at the expense of the American people. We already know what happens at the end of this story. Re: China.”
Ethan Vera, chief operating officer at mining service firm Luxor Technologies, urged U.S.-based miners in a tweet to learn about other regions such as Northern Europe, Latin America and Southeast Asia.
In a LinkedIn post, Lee Bratcher, founder and president of the Texas Blockchain Council, a state industry association and lobbying group, also picked out the possibility of banning the industry.
In his view, an attempt to do that with an executive order would be “on questionable legal ground” and Congress “has trouble passing legislation in general … [C]ertainly a ban on PoW mining, with many elected officials from both parties supporting the industry, the chances of this are quite small.”
SBP’s David said the office likely added that in order to “be implacable, because they know that any attempt to eliminate PoW will be infeasible and unpopular.”
However, according to SBP’s David, die-hard bitcoin advocates are unlikely to reach any other conclusion: “Unless the OSTP came out and said, ‘bitcoin is going to save the planet from climate change’ and offered total support of the industry, the community will perceive it as an attack,” which is understandable because the industry has been so villainized, he said.
“I worry that this notion of us ‘needing to be on offense’ will make it difficult to work with environmental experts,” David said.
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