Bitcoin mining should be hailed as an effective tool for a lower emissions future, not demonized as a monkey
The U.S. Senate Committee on Environment and Public Works (EPW) will hold a hearing this week on digital assets and the environment. The majority of this hearing’s attention will be given to the energy consumption of Bitcoin’s proof-of-work mining.
At its simplest, Bitcoin data centers (also known as miners) use computers to secure the Bitcoin network and process transactions. For this work they are rewarded in bitcoin (BTC). Critics have highlighted the large amount of energy use of bitcoin miners and argued that governments should either clamp down on bitcoin mining or force miners to switch away from the proof-of-work protocol and operate in a less energy-intensive fashion.
Satoshi Action Fund’s CEO is Dennis Porter.
Important context is missing from this criticism, such as the fact that more energy is lost in electricity transmission and distribution than the entire Bitcoin network consumes annually. The Bitcoin network would be weakened if governments attempted to regulate Bitcoin’s energy use or change how transactions are handled. They would also obstruct energy innovation, favorable environmental outcomes, and American economic opportunity.
Bitcoin Can Drive Renewable Energy Innovation
Bitcoin has the potential to expand renewable energy generation. The reliability, cost, and use of electricity from renewable sources are currently problems in American power grids. Each of these problems is addressed by bitcoin mining.
Due to the fact that they can only generate energy when the sun is shining and the wind is blowing, solar and wind energy are intermittent. Much of this energy is generated when demand is low, and if this energy is not stored in batteries it is simply wasted or “curtailed.” As of right now, California is on track to reduce 5 million megawatt hours by 2030. This consumes more energy than the bottom 36 countries put together. Bitcoin miners are prepared to buy excess power produced by wind and solar farms, increasing the revenue for renewable energy production and avoiding the need for taxpayer subsidies. A win-win.
Miners can also smooth out the intermittent generation of renewables by participating in grid-balancing services. When ratepayers and other important sectors, such as hospitals and businesses, need power, miners will not only consume any excess wind and solar generation but will also reduce their own energy consumption almost to zero. In states that permit this kind of grid participation, miners frequently cut back on their consumption, ensuring grid operators can maintain the ability to keep the lights on and power costs low.
Miners have benefits beyond renewable energy. A powerful greenhouse gas that is frequently difficult to commercialize, stranded methane, can also be used by these technologies. From oil and gas operations, abandoned wells, and landfills, methane is frequently vented or flared.
Buy Bitmain Antminer S19 – Best Bitcoin ASIC Miner
Due to the fact that bitcoin miners can work from any location, they can convert stranded methane gas into electricity and use it to mine bitcoin, which has financial and environmental benefits. Former Greenpeace activist and researcher Daniel Batten has stated that it would take “around 50 mid-large sized landfills in the U.S. fully combusting their methane … to make the entire Bitcoin network carbon negative” – a feat which is nearly impossible for any other industry to accomplish unless they do so through the purchase of carbon credits.
These use cases only show a handful of the ways that mining bitcoins can lower overall emissions while promoting the expansion of America’s energy resources. Bitcoin mining ought to be seen as a powerful tool for a future with fewer emissions, not as a source of issues.
The Perils of Proof-of-stake
Despite these benefits, many have pressured those in the Bitcoin industry to move to another way to create new blocks of transactions, specifically a mechanism known as proof-of-stake. Rather than using specialized computers, proof-of-stake relies on users locking up their cryptocurrency for a period of time in a process known as “staking.” In addition to helping to process transactions and secure the network, this enables users to earn a passive income. Even though this method uses less energy, it has additional drawbacks.
Gary Gensler, the chair of the Securities and Exchange Commission (SEC), recently participated in an interview where he argued that every cryptocurrency—aside from bitcoin—was a security and fell under the SEC’s purview. The interview was conducted just a few days after the SEC brought an enforcement action against the cryptocurrency exchange Kraken for allowing its U.S. customers use their Ethereum tokens – ether (ETH) – to participate in “staking” to validate the A significant fine and a cease-and-desist order were part of this enforcement action against the Ethereum network.
In addition to these steps, Gensler has separately stated that any cryptocurrency using proof-of-stake may be a security and as such come under the regulatory authority of the SEC. Those involved in the Bitcoin space can prevent these difficulties by maintaining the current proof-of-work structure.
In order to strengthen the network and America’s power generation, the Bitcoin community should stick to its current course and work to promote renewable energy, reduce methane emissions, and make use of stranded energy. The primary goal of EPW is to strike a balance between basic American needs like energy security and environmental stewardship. Using bitcoin, America can accomplish this.
In light of this, in order to ensure the U.S. leads the globe in the next wave of energy and environmental innovation.