It Sounds Like Biden’s Ready to Study Crypto’s Horrible Impact on the Environment
His latest executive order intends to "ensure the responsible development of digital assets"
In a lengthy executive order signed earlier this week, President Biden directed his administration to study the environmental costs of digital assets, with specific attention to the climate impact of leading cryptocurrency networks like Bitcoin and Ethereum.
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 specifically wants to interrogate the relationship between blockchain mining and energy policy — how does it affect grid management and reliability? How might energy be sourced differently? Could carbon offsets play a 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 most people — start by taking a look at this photo. It was shot by The New York Times way back in 2017, when crypto fever was starting to accelerate. See all those racks and servers? They’re mining Bitcoin and Ethereum. There are now over 12,000 different cryptocurrencies (though many of them are of little financial use to anyone but their developers), fueling an industry that touched a market cap of $3 trillion last 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 taking paychecks in Bitcoin) 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 have some crazy stats on the slice that blockchain mining is carving within the carbon emissions pie — Bitcoin alone releases more carbon dioxide into the atmosphere on an annual basis than Greece, which has a population of nearly 11 million people. (For more information on Bitcoin’s energy usage, check out the Cambridge Bitcoin Electricity Consumption Index.)
To be clear, there are some cryptocurrency networks actually looking to disrupt the private sector with energy-efficient models. Companies like Nano and Hedera Hashgraph use no-mining technology, and can cost as little as 0.000112 kWh per transaction. (They cost less for consumers, too.) A number of Fortune 500s have identified these companies as high-growth players.
But in order to really make a difference here (translation: slow down Bitcoin and Ethereum), a bit of regulatory involvement seems necessary and inevitable. 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.
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