Time may be close to up for the crypto trade for those that remain after the carnage seen this past spring. Today, the Office of Science and Tech for the White House released a report focused on the energy and climate impacts of crypto assets – and its not exactly bullish for the sector.
Entitled the “Climate and Energy Implications of Crypto0Assets in the United States,” the report is entirely focused on the energy use of the sector. The 46 page report highlights the impact of the sector on the grid via its electricity usage, the impact on greenhouse gas emissions and other environmental impacts, and how digital asset tech could support climate monitoring or mitigation.
Most significantly, however, it suggests that “depending on the energy intensity of the technology used, crypto-assets could hinder broader efforts to achieve net-zero carbon pollution consistent with US climate commitments and goals.”
This is in reference to proof of work mining, which is more energy intensive than proof of stake. The report highlights that global electricity usage is between 120 and 250 billion kWh per year, of which bitcoin is estimated to account for between 60% to 77%, and ethereum is believed to account for between 20% to 39%. The US’ share of bitcoin mining is estimated at 38%.
Greenhouse gas emissions are meanwhile believed to account for 25 to 50 Mt of carbon dioxide per year, or roughly 0.8% of all greenhouse gas emissions in the US. Globally, crypto is believed to account for roughly 0.3% of all emissions.
In terms of recommendations, the first is perhaps the most prominent. The report suggests that greenhouse gas emissions from the sector, along with environmental justice and other local impacts, need to be reduced. To do so, it suggests that the EPA, Department of Energy, and other federal agencies get involved to develop environmental standards. Should these fail to be effective, the report suggests executive action should be taken, which includes that “Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining.“
Other recommendations surround energy usage, for which the DOE should conduct reliability assessments to find current or anticipated risks to the grid as a result of crypto mining, and that reliability standards should be put in place in connection with the growth of the sector. The overall energy use should also be assessed as per the report, which includes reviewing power purchase agreements related to crypto mining, energy usage and fuel mix, as well as the implementation of greenhouse gas emission reports to be required of crypto miners.
Finally, the report states that to meet climate objectives in terms of emission reductions, policy on the sector should focus on avoiding operations that reduce the reliability of the grid, that increase the cost of power to consumers, and that have negative impacts on equity, communities, and the local environment.
In other words, significant regulation is expected to be on the way for the crypto sector in the United States – and if that fails, a potential all-out ban.
Information for this briefing was found via the White House and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
