Can Crypto Mining Reward Sustainability Survive Regulatory Eyes?
Crypto and Bitcoin mining continue to lock horns with the US Congress over their energy consumption. Various reports in the United States have raised environmental concerns. Now miners are changing their approach by taking the sustainability route.
The much talked about migration of crypto miners from China to the US has increased the need for energy consumption in regions of the US. Now American regulators have expressed concern over the intense energy consumption.
Mining cryptos like Bitcoin is an energy-intensive process. It requires specialized computers to solve complex mathematical problems to verify transactions on the blockchain. These computers consume considerable power. The process is highly competitive, as miners race to solve the problem first and earn a reward in Bitcoin.
Mining in the United States
Some states with low energy costs and favorable regulations, such as Texas and Wyoming, are popular destinations for crypto miners. As more miners establish operations in these states, a noticeable increase in energy consumption puts pressure on local power grids.
For example, in Texas, the Electric Reliability Council of Texas (ERCOT) raised concerns about the strain on the state’s power grid due to the influx of crypto miners. According to ERCOT, Bitcoin mining could consume up to 3% of the state’s electricity supply by the end of 2021.
Similarly, in Wyoming, some communities have reported significant increases in energy consumption due to crypto mining. The increased demand for electricity has led to concerns about power outages and grid reliability.
Regulators are cracking down on mining
Crypto mining and miners have faced criticism for their high energy consumption. Some estimates suggest that the industry uses as much energy as the entire country. Cryptocurrency mining requires significant computing power, which in turn requires significant energy consumption. The energy consumption needed for cryptocurrency mining has worried environmentalists and policy makers.
A Whitehouse 2022 report was among the first publicly available responses to the President of the United States Joe Biden’s Order on Cryptocurrencies. The office detailed its approach to the question of what kind of impact cryptomining has on the environment. Details in the Whitehouse report include the scale of the impact and how different cryptocurrencies require different energy needs.
Crypto mining, particularly bitcoin (BTC), uses significant electricity, undermining US sustainability goals.
“Global electricity production for cryptoassets with the largest market capitalizations resulted in a combined 140 ± 30 million tonnes of carbon dioxide per year (Mt CO2/year), or approximately 0.30% of global annual greenhouse gas emissions,” the report said.
How does mining affect the United States
Furthermore, the study uses another comparison in which the crypto industry’s operations use as much electricity as the country’s home computers combined.
Last year, Senator Elizabeth Warren and a group of Democrats called on the Environmental Protection Agency and the Department of Energy to take action against cryptocurrency mining. They cited the high energy consumption required for mining as “disturbing” and highlighted the potential environmental impact of the industry.
Here, Congress called out gigawatt-scale energy use by crypto miners, questioning the sustainability and environmental impact of the industry. Recently, Massachusetts Senator Elizabeth Warren called for greater transparency from cryptocurrency miners amid concerns over the environmental impact of Bitcoin, the bellwether cryptocurrency.
Senator Warren called on the Environmental Protection Agency (EPA) and the Department of Energy (DOE) to use their authority to require crypto miners to disclose their energy use and emissions.
Miners take responsibility, make changes
In response, many crypto miners have defended their energy use, pointing out that most of the energy comes from renewable sources. They argue that because the energy consumption of crypto mining is not constant, it can help balance the grid and use excess energy that would otherwise be wasted.
In addition, some crypto miners have pointed out that the industry is constantly working to improve energy efficiency, with new mining hardware requiring less energy to operate. They claim this is necessary to ensure the industry’s long-term sustainability.
BeInCrypto reported on February 21 that Bitcoin mining accounted for more than 50% of sustainable energy sources. Bitcoin has increased its sustainable energy mix to 6.20% annually since January 2020. Regions like Iceland emerged as the most stable Bitcoin mining region due to its famous abundance of cheap geothermal energy. It accounted for 1.30% of the global hash rate and the highest per capita hash rate of any nation.
Such a development in 2023 actually helps to empower struggling miners who found it difficult to make ends meet. Mining difficulty rose by more than 9% in the past two weeks to reach an all-time high.
Development room?
Others have criticized the cryptomining industry for its reliance on fossil fuels, especially in regions where renewable energy is not yet widely available or affordable. They argue that industry should prioritize using renewable energy sources more and that governments should encourage this transition through policy and regulation. Still, a few US lawmakers raised a green flag to support mining, given the financial incentives.
Overall, the debate surrounding the energy use of the cryptomining industry is complex and ongoing. One such topic of discussion is sustainable reward for Bitcoin mining. Speaking to BeInCrypto, one of the Redditors claimed that BTC’s reward halving model could lead to its downfall in the future.
While there are concerns about the industry’s environmental impact, there are arguments about its potential benefits and efforts to improve sustainability.
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