Staunch PoW defenders Brooks and Belizaire also made the case for more sustainable energy solutions. While renewable sources of energy are preferred because of the reduced emissions, their outputs depend on variable natural resources, making forecasting and meeting load demands difficult for grid operators. What the US needs, according to Belizaire, is a more flexible grid that could handle the volume of clean energy in the pipeline. The current inflexibility of the grid results in a high level of curtailment—spilled or wasted energy3. As such, renewable power producers are often weary of revenue uncertainty. Curtailed energy is a universal problem, Belizaire said. These power plants lose approximately 30% of unused energy when production exceeds demand. Storage technologies are still being developed and scaled and building transmission infrastructure to direct excess energy to areas with high energy demands is a long-term solution. A more immediately deployable application for this curtailed energy is to continue building data centers near renewable energy power plants to consume curtailed energy for computing applications, such as AI, machine learning, drug discovery, and, unsurprisingly, cryptocurrency mining. Because of crypto mining’s mobility, this is a plausible solution that would in turn reduce the need for transmission and distribution infrastructure. This solution is “better than a battery.” Brooks added that further development of renewable energy must be incentivized, and that crypto mining could be part of the solution4.
While it was generally acknowledged throughout the hearing that crypto mining requires significant energy consumption, the path forward was unclear. What was clear from the hearing is there is more work to be done—namely, understanding blockchain technology and its various applications to facilitate thoughtful legislation that achieves a balance between climate goals and crypto’s economic productivity. The PoS vs. PoW debate, for example, is highly technical and requires more education and ongoing discussion to properly inform legislature. The validation models have different goals, and banning one in favor of the other based on energy consumption alone may be too simplistic. Some hearing participants advocated letting the market decide instead.
Similarly, there were valid points made about mining’s energy requirement relative to the value produced. Several of the panelists contended that the fact that Bitcoin is a major asset for which users across the globe are willing to pay demonstrates Bitcoin’s economic productivity and, therefore, mining should not be deemed a waste. If Bitcoin competes with gold as a store of value and banking as a means of payment, according to Brooks, “…the appropriate question is whether the energy used in bitcoin mining produces more economic value per unit of energy than gold mining [and banking].”
Finally, more research on mining and climate is needed. As one member pointed out, there are vastly different estimates from different sources about the amount of energy mining consumes, making it difficult for lawmakers to assess the true severity of crypto mining on the environment, let alone create laws.
The hearing made clear that policymakers are likely setting the stage for mining-related policy. While we await further guidance, miners should consider their long- and short-term plans going forward. For the long term, they should consider ways to incorporate more energy-efficient alternatives into their operations, to manage climate risks and meet impending compliance obligations. For the short term, miners should consider how they will respond to potential congressional inquiries about their energy usage5.
Special thanks to Trisha Gangadeen for co-authoring this article.