What happens when smoke and mirrors burn the planet? While the epic collapse of overhyped digital currencies and exchanges grabs the headlines, the environmental damage caused by cryptocurrency mining lurks in plain sight. Especially for energy-intensive “proof-of-work” cryptocurrencies like Bitcoin.
Any claim that Bitcoin is environmentally friendly is just as flimsy as the industry’s brash statements about the stability of cryptocurrencies and crypto exchanges. As the United States and the world seek to slow the effects of climate change, it makes no sense to continue to ignore Bitcoin’s growing energy demands.
The largest cryptocurrency by market share, Bitcoin requires ever-increasing amounts of electricity to power its mining and validation operations, which in turn leads to more greenhouse gas emissions. The White House Office of Science and Technology Policy found that crypto assets already account for up to 1.7% of electricity consumption in the United States, which is comparable to what powers all home computers. or residential lighting. If nothing is done, this demand will increase exponentially. Bitcoin now uses the equivalent of about half of the electricity consumption of the global banking sector and is on track to overtake industry consumption within two years.
In November, I attended the COP27 global climate change summit in Egypt, where world leaders took up the challenge to limit global warming to no more than 1.5°C. To achieve this goal, more countries must join the United States in making specific commitments to address the climate crisis. To deliver on our commitments, the United States must lead the way in all industries and sectors of our economy. There is no special exception for Bitcoin.
By design, “proof-of-work” digital currencies rely on extremely power-intensive calculations that strain power grids and burn computers, creating tons of e-waste. Cryptomining facilities not only undermine our efforts to address the climate crisis, but can also create air, waste, and other pollution for nearby communities. Granting this industry impunity to inflict such environmental damage runs counter to many federal policies, including accelerating energy efficiency, addressing the climate crisis, and reducing e-waste.
It is high time for the government to seriously monitor and regulate the cryptocurrency industry.
There is nothing radical or unusual about setting energy efficiency and performance standards or establishing other regulations to protect natural resources and public health. We do this for everything from passenger vehicles to refrigerators, but not for crypto.
That’s why I’ve led the charge with Sen. Elizabeth Warren (D-Mass.) to push for oversight of the environmental and energy impacts of cryptocurrency, especially on communities near crypto mining operations. We assembled a coalition of congressional colleagues to ask EPA Administrator Michael Regan to assess these facilities for compliance with the Clean Air Act and Clean Water Act, sent letters to the OSTP, to the EPA and DOE to share our findings on the environmental impacts of cryptomining, and worked to uncover exactly how crypto is impacting energy use, emissions, and costs for Texans.
The implosion of so many overhyped crypto scams is a cautionary tale for investors, consumers, and would-be heavyweight regulators. We cannot take the same wait-and-see approach when it comes to the climate and environmental impacts of cryptomining systems like Bitcoin. The time for transparency, oversight and accountability has come.
Jared Huffman represents California’s 2nd District.