By Darren Parkin
US Senator Cynthia Lummis called into question this week the federal government’s role in regulating energy use in crypto mining.
Bitcoin operates on a proof-of-work (PoW) mining model, meaning that ‘miners’ run high-powered computers to simultaneously create new Bitcoin and validate transactions.
For years there have been concerns raised by some politicians regarding reports that cryptocurrency facilities are polluting communities and are having an “outsized contribution” to greenhouse gas emissions.
In a Senate hearing committee in response to the Crypto Asset Environmental Transparency Act introduced in December, Lummis – one of the most the crypto-friendly advocates on Capitol Hill – argued that energy efficiency standards must not be utilised to target certain energy use cases like crypto mining.
She questioned why the legislation targeted crypto operations, instead of, say, electric vehicle chargers.
“If that EV charging station is powered by electricity from natural gas or coal, shouldn’t it also have the same monitoring that is being requested by this bill?” she asked.
She added: “Is it Congress’ job to decide whether an energy use is worthwhile or not?”
I’m confident that Cynthia Lummis is on the right side of history on the energy use in Bitcoin mining debate.
Unfortunately, some lawmakers seem to have been intentionally confusing data mining centres with power generation facilities.
Data centres, which contain miners – which is just an industry term for a computer server – are no different than data centres owned and operated by the likes of Amazon, Apple, Google, Meta, and Microsoft.
All data centres use electricity generated externally. Emissions are created at the power generation source ‘upstream’. Crypto miners simply buy electricity from the main grid, the same as firms such as Microsoft.
Digital asset miners do not emit carbon dioxide or any other pollutants, like other industrial facilities do; they are just computer servers. It is the energy source, the power generators, which are the cause of pollutants.
In addition, compared to other industrial consumers of energy, crypto mining is remarkably sustainable, and demonstrably so.
According to the Bitcoin Mining Council, the Bitcoin miners they surveyed use 64.6% sustainable energy (defined as wind, solar, hydro, or nuclear)…
“If you extend the analysis globally using conservative assumptions regarding energy mix, Bitcoin mining in the aggregate employs an estimated 58.4% sustainable energy. This is markedly more sustainable than the default US energy mix at 21% sustainable.”
Bitcoin Mining Council
Indeed, many now argue that the world’s largest cryptocurrency, far from being a danger to the planet, will help generate more electricity from renewable energy.
According to the ARK Invest model, without Bitcoin mining, solar energy could supply only 40% of grid power before utilities have to fund major investments with higher electricity prices.
“But with Bitcoin mining integrated into a solar system (solar + batteries) however, we believe energy providers — whether utilities or independent entities — could play the arbitrage between electricity prices and Bitcoin prices, as well as sell the ‘surplus’ solar and supply almost all grid power demands without lowering profitability,” Brett Winton, ARK Invest’s director of research, explained in a blog.
But back to this week’s Senate hearing.
There’s no meaningful difference between a crypto mining facility and data centres operated by the likes of Google, Apple and Microsoft. They’re all just buildings in which electricity is used to power computers.
Regulating what data centres allow their computers to do would be a monumental policy in the US.
If a facility is adhering to all laws and meeting all regulatory requirements, the type of computational work should be irrelevant.
Yet it would appear that some elected officials in the United States are using this bill for political grandstanding. They have an agenda. They are simply opposed to decentralised, global, borderless, permissionless currencies, and are using the energy used for Bitcoin mining as a stick to beat the industry.
Thankfully, we have Senator Lummis to dispel the false narrative.
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