Biden Wants To Study Crypto’s Effect on the Environment

In An executive order that is longPresident Biden signed an order earlier this week directing his administration to study environmental costs of digital assets. He specifically focused on the climate impact of the top cryptocurrency networks like Bitcoin, Ethereum, and others.

Within the next 180 days, the order reads, President Biden expects a cross-cabinet team that includes the Secretary of the Treasury, the Secretary of Energy and the Administrator of the Environmental Protection Agency to deliver a report on “the potential for these technologies to impede or advance efforts to tackle climate change at home and abroad; and the impacts these technologies have on the environment.”

It continues: “[The report] should also address the effect of cryptocurrencies consensus mechanisms on energy usage, including research into potential mitigating measures and alternative mechanisms of consensus and the design tradeoffs those may entail.”

Biden is specifically interested in exploring the relationship between blockchain mining, energy policy, and grid management and reliability. How could energy be sourced differently? Could carbon offsets play an important role? What if there was “an exchange of liabilities” by which cryptocurrency networks were incentivized to limit emissions?

For those who aren’t aware of how damaging cryptocurrency is for the environment Which is the majority of peopleTake a look at the following: This photo. It was shot by The New York TimesIn 2017, crypto fever was just beginning to accelerate. All those racks, all those servers! They’re mining Bitcoin and Ethereum. There are over 12,000 cryptocurrencies, though many are not of financial value to anyone except their developers. This has fuelled an industry that reached a market cap exceeding $3 trillion in November.

It’s an unimaginably lucrative enterprise, it isn’t going anywhere (elected officials, like New York’s new mayor, Eric Adams, have even started Bitcoin paychecks) and it’s more important than ever that we study and understand how those many racks and servers may be hurting our planet. We already know some amazing statistics about the part that blockchain mining is taking in the carbon emissions pie Bitcoin All by itselfMore carbon dioxide is released into the atmosphere annually than Greece, with a population of almost 11 million people. (For more information on Bitcoin’s energy usage, check out the Cambridge Bitcoin Electricity Consumption Indice.)

To be clear, some cryptocurrency networks are actually trying to disrupt the private sector using energy-efficient models. Hedera Hashgraph, Nano and Hedera Hashgraph are just two examples of companies that use cryptocurrency. Use no-mining technologiesThey can be as low as 0.000112 Kilowatts per transaction. (They are cheaper for consumers too. These companies have been identified by many Fortune 500s as high-growth businesses.

However, regulatory involvement seems necessary in order to make a real difference (translation: slow down Bitcoin or Ethereum). It’s going to take a little while Biden gave his team six months, after all but here’s hoping for a future where digital assets don’t have devastating IRL consequences.