Biden Government To Push Ahead With Crypto Energy Restriction Plans

Last year, the cryptocurrency industry was definitely a bust. After the demise of the crypto exchange FTX, the crypto market was almost knocked down as it drove the prices down and led to increased regulatory scrutiny. However, President Joe Biden’s administration is keeping on with its goal of assessing crypto’s climate impact on crypto energy. This comes as Biden might kick the crypto space while it is down to keep it from interrupting climate progress.

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— Nick Sobczyk (@nick_sobczyk) February 16, 2023

According to an Axios report, Senator Elizabeth Warren noted that:

I had conversations with the Department of Energy(DOE), and I believe that the Department  would be announcing crypto mining and energy usage soon enough.

Reportedly, the U.S. Senators, including Elizabeth Warren, sent a letter to the DOE and Environmental Production Agency (EPA). The letter stated that both departments should work together to require crypto miners to report their emissions and energy use. It read:

It is essential that your agencies work together to address the lack of information about crypto mining’s energy use and environmental impacts. Use all the authorities at your disposal to require reporting of energy use and emissions from crypto miners.

Crypto Energy Concerns

There are concerns that crypto miners could wreck the electric grid and the U.S. cutting plans as the value of Bitcoin and other digital currencies rebounded after plunging in 2022. It led to crypto platforms reframing their roles on the grid as they look for ways to minimize power demand and boost renewable energy. Notably, the crypto ecosystem knows that the crypto crackdown could bar them from unrestricted electricity use.

Various companies receive virtual money by working out a sequence of computational puzzles in a “mining process” requiring a group of computers to run for hours. Additionally, depending on the location of those computers, the load may be met with coal plants or natural gas, delaying a transition to renewable energy. It can also lead to climate-warming emissions.

However, in the letters sent to various large firms in December 2021 and January 2022, seeking to be informed about the energy sources and consumption, locations of their facilities, and climate impacts, noted that:

1. Crypto miners are significantly increasing production
2. Crypto mining leads to substantial emissions of carbon
3. Crypto miners use a considerable amount of electricity

Notably, as per the White House Office of Science and Technology Policy, as of August 2022, the total electricity for crypto use was 240 billion kilowatt-hours per year. The White House also found that the U.S. accounted for 0.9% to 1.7% of the country’s total electricity usage. The U.S. hosts about a third of the world’s crypto operations, and the electricity usage was higher than all the residential lighting.

”A moratorium keeps us a step back,” John Olsen

Last year, that sort of energy pull led the New York government, Kathy Hochul (D), to sign legislation imposing a moratorium on the new crypto mining in the state. However, various local governments have placed restrictions on running on renewable energy. John Olsen, the New York State lead for the Blockchain Association, noted that some regulations that go too far could affect the industry when looking to reshape its energy story.

Additionally, Olsen gave his remarks concerning the imposing of a moratorium noting that it keeps them a step back.

Other areas of the country have embraced the technology and enabled the out-of-the-box thinking, where we don’t rely on hydro, wind, or solar. However, they have ways of reducing emissions, capturing waste, and contributing to the economy’s overall health.

On the other hand, Joe Burnett, a mining analyst for Bitcoin firm Blockware Solutions, noted that the strategy isn’t just a regulatory dodge or good spin but also good business.

A way Forward

Despite concerns from various states, some states are encouraging crypto miners to move in and take root in emerging technology. Reportedly, Wyoming lawmakers considered legislation that could create deregulated power zones for large industrial users, enabling them to operate off the regulated grid and obtain a wide range of power at lower prices. However, the legislation has received various feedback as some have supported it, noting that it could enable renewables to be built to support the operations. On the other hand, some individuals critiqued it, alleging that it could weaken the business model for existing utilities. Noteworthy, Texas has actively recruited crypto miners from over 28 companies to build their regional operations in the state.

Climate advocates have stated that the sheer energy drag from crypto mining would enable uneconomic coal, gas power plants, and oil to be alive. However, in the coming month, the DOE will outline its efforts to evaluate crypto’s energy intensity. The Energy Secretary, Jennifer Granholm, sent a letter to Warren noting that it has the authority to collect the data to disclose how much energy they use. She noted:

I welcome your input on how we can best partner to understand and mitigate any harmful energy and environmental impacts of the crypto industry.

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