Representative Diana DeGette chaired a hearing on Crypto’s energy impact on Thursday, January 20. During this hearing, lawmakers probed for information relating to the basics of blockchain, crypto trading, and the various energy sources used for these activities.
Ever since China banned crypto mining, the U.S. became the new hub as many miners moved to cities and states. Due to this, lawmakers are starting to come to terms with the energy impact of mining, as well as other vital issues that define how these activities are powered. All these were discussed on the floor of the House during the congressional hearing to determine the environmental footprint of the cryptocurrency industry. The main objective for hearings like this is to establish efficient policies on cryptocurrency energy consumption.
Five notable names in the crypto industry appeared before the Energy and Commerce Oversight Subcommittee. Jordan Ramos shareholder Gregory Zerzan, Cornell Tech Professor Ari Juels, BitFury CEO Brian Brooks, Soluna Computing CEO John Belizaire, and former Washington State Chelan County Public Utility District General Manager Steven Wright. These industry experts shared their different views while discussing how cryptocurrency transactions are validated by the proof-of-work (PoW) consensus model and how it’s related to energy consumption levels. They also gave unique suggestions on how the legislature can address the energy consumption of digital assets without shutting them all down.
The Hearing
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The floor was opened by Representative Howard Griffith, who asked the witnesses how the current electrical infrastructure could support the high energy consumption rates caused by cryptos. The question was backed by recent data that shows that Bitcoin miners use about 110 to 180 terawatts (TW) of the world’s energy yearly.
John Belizaire responded that the energy invested in powering crypto is not a waste. From a porosity perspective, miners and computers can absorb excess from a power grid rather than strain it, which is more or less the primary reason why miners tend to settle in less populated areas. He stated that these systems could propel the development of more sustainable renewable energy sources. According to Soluna’s leading man, crypto mining helps renewable energy producers profit off of electricity that would have been wasted. This contributes to the growth of the power sector.
Gregory Zerzan commented that lawmakers need to tread a cautious path to ensure a pro-innovation environment is encouraged. He emphasized the great rewards everyone (investors, consumers, and even the government) stands to gain if everything works out well. Cryptocurrencies, though volatile and speculative, share the promise of a decentralized and widely shared internet.
The only professor among the witnesses, Ari Juels, argued that better energy-efficient alternatives need to be developed to support the crypto space. In the past, Juels criticized mining due to its high energy consumption, especially the commonly used proof-of-work model. Citing Ethereum’s network transition to proof-of-stake (PoS), he explained how less electricity would be consumed. Not to mention that these new models would have features like NFTs and smart contracts, whereas Bitcoin’s proof-of-work blockchain technology does not.
Other Inputs From the Witnesses
Steve Wright backed up the previous witnesses by saying that mining firms should look into better and more efficient mechanisms that would encourage less energy-intensive crypto production. He pointed out that the high cost of clean energy systems in different states is causing many crypto miners to use fossil-fired, carbon-emitting power sources.
According to Brian Brooks, the energy consumption rate of Bitcoin mining is similar to that of gold mining. He argued that both are economically productive and yield similar environmental concerns. He also stated categorically that at the current market cap, conventional banking systems consume at least twice the amount of power needed to produce the exact value of Bitcoin. In December, Brooks testified on the role of digital assets and blockchain technology in the future of finance in the United States.
Overall, the hearing provided lawmakers with much insight into how the crypto industry works and grows. Recently, the Senate Banking Committee discussed the potential benefits and risks of adopting digital currencies and stablecoins.
It is commendable that crypto committees in the legislature are interested in learning the essential details about the relationship between cryptocurrencies, energy, and commerce. The legislature could be the key to raising awareness for more green energy sources in the crypto space.
Other lawmakers, like Representatives Annie Kuster and Cathy Rodgers, learned more about profit-yielding innovations that could be established from crypto mining.
