White House Suggests a Ban on Bitcoin Mining

• The White House  suggested that U.S. lawmakers and regulators should soon crack down on cryptocurrency mining because of its large carbon footprint
• It proposed that the government collect more data on power usage from the industry, advance energy, and efficiency standards

Bitcoin mining should be greener. The White House Office of Science and Technology released a report saying that the proof of work method of mining Bitcoin is not friendly to the environment. The U.S. must take action to mitigate pollution caused by Bitcoin mining.

The US takes up to 38% of the world’s Bitcoin mining, compared with 3.5% in 2020. Currently, a large part of Bitcoin mining is concentrated in the U.S. Meanwhile, blockchains that support crypto assets now use more energy than many countries, including Argentina and Australia, according to the report.

Air, noise, and water pollution from crypto mining operations hurt the environment. At the same time, increased electricity demand from those operations can put extra strain on already-stressed power grids.

President Joe Biden ordered the study in March as part of a sweeping executive order on cryptocurrencies. The competitive and constantly changing nature of the market means that there will be a constant flow of participants entering and exiting the market. This means that more cryptocurrency will be mined, hence larger amounts of energy are consumed and more carbon is emitted.

The White House said new standards developed by federal agencies working with states and the crypto industry could reduce the impact. Those might include measures to reduce noise generation and promote clean energy usage.

In the coming weeks, other federal agencies and offices are expected to release recommendations and reports on how the US should deal with the asset class. The cryptocurrency industry may start changing the way it operates for Bitcoin’s sake.

Why is mining Bitcoin bad for the environment?

Bitcoin consumes around 110 Terawatt Hours per year — 0.55% of global electricity production, or roughly equivalent to the annual energy draw of small countries like Malaysia or Sweden. This is definitely a lot of energy. There’s an important distinction between how much energy a system consumes and how much carbon it emits.

Proof of work is a consensus mechanism that allows users to validate cryptocurrency transactions by solving a complicated mathematical problem. The first person that solves the puzzle validates the transaction and is awarded a fixed amount of cryptocurrency. Then the cycle starts again. It’s the most widely used consensus mechanism.

Does Bitcoin need Proof of Work? yes. It uses a PoW algorithm based on the SHA-256 hashing function in order to validate and confirm transactions as well as to issue new bitcoins into circulation. Proof of work at scale requires huge amounts of energy, which only increases as more miners join the network.

Proof-of-work mining that installs equipment to use vented methane to generate electricity for operations is more likely to help rather than hinder U.S. climate objectives.

In the US, Bitcoin mining creates an estimated 40 billion pounds of carbon emissions. The proof of work mining requires a lot of computing power which uses amounts of electricity capable of powering countries.