Questions from lawmakers ranged from basic information about blockchain to questions about different energy sources.
While some lawmakers grappled with the basics of digital assets, key issues about the definition of energy efficiency and how crypto miners are powered were debated on the floor of the House during Thursday’s Congressional hearing on the crypto industry’s environmental footprint.
Before lawmakers can decide on policy regarding crypto currency energy consumptions they must first understand the basics of digital assets.
This was on full display at the two hour 15 minute hearing hosted by the Oversight and Investigations subcommittee in the House Energy and Commerce Committee that aimed to examine the environmental impact of crypto mining
The hearing featured Ari Juels from Cornell Tech, Soluna Computing CEO John Belizaire and BitFury CEO Brian Brooks. Steven Wright, former Chelan County Public Utilities District General Manager, and Gregory Zerzan, Jordan Ramis shareholder, discussed the energy consumption associated with the proof of work (PoW), consensus model to validate crypto-currency transactions.
“Some experts estimate Bitcoin mining uses anywhere from 110 to 188 terawatts (TW) of the world’s energy and annually, more energy usage than some small countries,” said Rep. Howard Griffith (R-Va.). “The question is, can our current electrical infrastructure support this level of consumption?,” he added.
The first witness was Cornell Tech’s Ari Juels, who in his opening statement said that “if my testimony achieves nothing else today, I would like to drive home one key point, bitcoin does not equal blockchain.”
Sustainable energy mix
It is not secret that the PoW consensus model, which is used in the largest cryptocurrencies, bitcoin and ether by market capitalization requires a large amount of energy. In fact, some data sources have compared bitcoin’s required energy to an entire country’s power consumption.
Witnesses at the hearing dug into the data deeper and informed lawmakers that it’s not an apples-to-apples comparison due to the mix of power sources used to validate a transaction.
“An activity that consumes 100 TW of power derived exclusively from coal or oil adds carbon to the environment and consumes a scarce resource; an activity that consumes the same amount of power derived from a mix of solar, wind and hydropower does neither,” said Bitfury’s Brian Brooks, the former acting comptroller of the currency.
He provided data showing that bitcoin mining used an energy mix of about 58% sustainably sourced last year, which included wind hydro, solar, nuclear and carbon offsets, compared to 31% for the U.S. energy grid as a whole.
Brooks and Juels argued about the efficiency of crypto-mining at a later stage of the hearing. Brooks argued that more efficient machines (which in industry terms means they use less electricity per terahash) means a better network overall.
Juels claimed that the only thing that matters to consumers is how much electricity was used per transaction. Because transactions per second have remained relatively stable at five per second, whereas the network’s energy usage has increased, the bitcoin network has actually become less efficient in the past few years, Juels said.
John Belizaire, Soluna’s shareholder, and Gregory Zerzan (the Jordan Ramis PC shareholder), said that crypto mining helps renewable energy producers to sell electricity that is otherwise lost, thus providing them much-needed capital.
Similarly, towards the end of the hearing, Brooks also mentioned that BitFury primarily works with local utility providers “because they can only make the economics work if there is a baseload consumer,” meaning the miners.
Get back to basics
The better part of the hearing focused on the basics of blockchain technology, educating the lawmakers on how different validation models such as proof-of-stake (PoS) operate and some of the cybersecurity concerns around blockchain networks, such as 51% attacks (when an attacker controls 51% of a network’s hash power, allowing them to control transactions).
A number of lawmakers also inquired about potential unintended negative or positive effects that could be caused by bitcoin mining.
Rep. Cathy Rodgers, R-Wa.), who began the hearing with an off-topic speech about inflation, COVID and the current U.S. president, asked about the potential of blockchain to protect citizens’ privacy, as well as the potential adverse impact of regulation on job and investment growth. Annie Kuster (D.N.H.), asked about innovations that could be derived from bitcoin mining and help other industries.
“I think what happened today is, we started the education,” said Soluna’s Belizaire in an interview with CoinDesk, after the hearing.
The hearing opened a learning process for some the most important legislators around energy and commerce, he stated. This could set the stage for legislation to encourage the use of greener energy for the sector.
“I thought it was really exciting for an oversight committee like that to really dig in and seek out the truth and really educate themselves,” he said.