The White House Criticizes Proof-of-Work Crypto Mining

The White House has released a report urging the Environmental Protection Agency (EPA) and the Department of Energy (DOE) to take measurable steps to control energy use in proof-of-work crypto mining.

This release is among the first responses to US President Joe Biden’s executive order on cryptocurrencies. It emphasizes that crypto-asset technologies use a significant amount of electricity, which contributes greatly to “[greenhouse gas] emissions, additional pollution, noise and other local impacts.”

According to the authors, the estimated global electricity use for mining crypto assets in August 2022 exceeds the annual electricity consumption of countries including Argentina and Australia, and is roughly between 120 billion and 240 billion kilowatt-hours per year.

High energy consumption is likely to have catastrophic consequences for everyday Americans, the White House says, not only exacerbating “climate-driven weather extremes” but also threatening the stability of the power grid, as it could “push up power prices for local consumers.”

Specifically, the report criticizes the proof-of-work (PoW) consensus mechanism – which currently represents more than 60% of the total market capitalization of cryptoassets, saying that “given the electricity consumption estimates, most discussions of electricity use of cryptoassets have focused on PoW applications, especially Bitcoin.”

It reasons that responsible development of digital assets must include solutions to drastically reduce energy consumption, and proposes the “less energy-intensive consensus mechanism, called Proof of Stake (PoS), estimated to consume up to 0.28 billion kilowatt-hours per year in 2021, less than 0.001 % of global electricity consumption”, may be a viable option.

“There have been increasing calls for PoW blockchains to adopt less energy-intensive consensus mechanisms,” the report said. “The most prominent reaction has been Ethereum’s promised launch of ‘Ethereum 2.0’, which uses a PoS consensus mechanism.

Ethereum, the second largest blockchain by market cap, is expected to move to PoS within the next week, making it 99.95% more energy efficient.

While the White House did not directly propose an outright ban on PoW mining in the US, it touted China’s ban as a boon for the environment and flagged the EU’s introduction of mandatory minimum sustainability standards for consensus mechanisms.

“In China, the incompatibility of large-scale Bitcoin mining with the country’s environmental goals has been cited as one of several reasons why the government banned crypto-asset transactions in 2021,” the report said.

Despite this, the White House showed support for exploring how crypto miners could use electricity generated from vented and flared methane at oil and gas wells and landfills.

“Cryptoasset mining that captures vented methane to produce electricity can have positive outcomes for the climate by converting the potent methane to CO2 during combustion,” the report said.

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