Fresh off a victory in Congress, President Joe Biden is mustering the powers of the federal government to rein in the Bitcoin mining industry, citing the climate crisis. It isn’t going to be quick or easy, but for crypto, the report should still come as a wake-up call.
Until now, most crypto climate battles have occurred at the state level. Some left-leaning states like New York have considered limits on Bitcoin mining or even outright bans. Meanwhile, states like Texas have welcomed miners, citing the jobs and economic development they bring.
But in a series of recommendations issued Thursday, a White House report suggested activating the Environmental Protection Agency, Energy Department, and other federal agencies to start measuring and potentially regulating crypto’s environmental impact. At the most-extreme, the White House even floated a ban on energy-intensive crypto mining.
The environmental concerns center around the core process that maintains Bitcoin’s digital ledger. Massive server farms use specialized computer equipment to guess the answers to cryptographic puzzles, for which mining companies are rewarded Bitcoin. The operations use as much power as small countries, and some climate defenders have argued that if crypto’s popularity grows, the process could lead to a massive increase in emissions.
The White House earlier this year issued an executive order calling on various agencies to make policy recommendations surrounding digital assets, and on Thursday it released a report related to crypto’s climate impact.
The report cites well-worn statistics detailing the industry’s massive energy usage and makes a series of policy recommendations, including that agencies should collect more data on crypto mining, develop efficiency standards and push for mining facilities that use green power sources. If all else fails, the report says, Congress and the White House should consider limiting or banning energy-intensive mining, though so far it doesn’t appear there is much of an appetite in Congress to take that step.
If all this sounds familiar, it should. The EPA and Energy Department have long measured and issued energy and emissions standards for cars, home appliances, and all manner of U.S. energy hogs and producers. Such standards have developed over decades, but ultimately drastically changed the landscape for those products.
Some Democrats believe the EPA has power to rein in at least some of the crypto industry’s practices right now through authorities it has under the Clear Air and Clean Water acts. The EPA and state authorities, for example, control the approval of permits for some power plants considered to be major pollution emitters. Some lawmakers have called on the EPA to more closely review renewal applications for power plants that have recently added crypto-mining facilities, even though some industry supporters argue that the facilities use energy that would be wasted otherwise.
Existing laws also empower the EPA to regulate the disposal of electronic waste—which crypto miners create in droves as equipment becomes obsolete or breaks—and noise pollution, which is often the subject of complaints from homeowners near mining facilities.
“As cryptocurrency continues to gain popularity and demand more mining, we must ensure communities are not left with the toxic burdens associated with this technology,” wrote a group of Democratic lawmakers in a letter to EPA Administrator Michael Regan earlier this year.
More drastic steps, like an outright ban, would likely require Congress, and crypto-friendly states or mining companies could always challenge new regulations in court.
“The White House is on questionable legal ground if they were to ever attempt to ban Bitcoin mining,” tweeted Lee Bratcher, the president of the Texas Blockchain Council, whose members include major miners like
and Foundry. Bratcher called the report “merely signaling.”
So far, the crypto industry seems to have received Thursday’s White House report with cautious optimism.
“The industry stands ready to work with the White House to further demonstrate how crypto data centers can help facilitate—and, in some cases, expedite—the United States’ transition to a carbon-free electricity grid,” said Blockchain Association senior policy manager Lindsey Kelleher in a statement.
In contrast to Bitcoin, other cryptocurrencies maintained by less energy-intensive processes could actually be bolstered by a crackdown on mining. The Ethereum blockchain, for example, has nearly completed a transition to a different method of verifying transactions that uses less energy, and the White House report specifically called out the growth of that method, called proof of stake, as posing a “considerably lower” environmental risk.
But if history is any guide, these early steps by the White House to better measure industry energy usage and emissions could be a precursor to standards that ultimately hinder miners’ profits.
Whether a potential U.S. crackdown could actually slow climate change remains to be seen.
Unlike most other industries, Bitcoin mining is highly mobile. Much of the growth in marketshare of U.S.-based crypto mining happened only in the past couple of years, after China cracked down on miners in the country. New federal regulations that increase the cost of mining in the U.S.—to the extent they’re not replicated globally—may ultimately just push miners to open operations in cheaper countries.
Write to Joe Light at firstname.lastname@example.org