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US congress debates clean cryptocurrency potential

From the shift to Proof-of-Stake to curtailed and renewable energy, a recent hearing suggests ways to reduce crypto’s carbon footprint

BIGSTOCK/Copyright: volodymyshtun
BIGSTOCK/Copyright: volodymyshtun

The House Committee on Energy and Commerce held on Thursday a hearing titled “Cleaning up Cryptocurrency: The Energy Impact of Blockchains”

“This hearing is not intended to stifle that promise nor discourage innovation, but instead to examine the potential environmental costs of the cryptomining industry and what can be done to address those impacts,” said Chairman Frank Pallone Jr. in his opening statement.

Pallone (D-NJ) noted that some blockchains are consuming massive energy amount at the moment. “One estimate found that the energy required to process transactions on the Bitcoin network could power a home for more than 70 days,” he said, adding that in light of President Biden’s ambitious emission reduction goals, “we need to be thinking about ways to encourage innovations that improve our energy grid.”

But not all blockchains are created equal, and different methods of adding new data and verifying the blockchain’s integrity have different implications for its energy use.

Diana Degette (D-CO), Chair of the Subcommittee on Oversight and Investigation, discussed common Proof-of-Work method, “which involves millions of computers racing to be the first to solve a complicated puzzle and be rewarded a valuable prize – new cryptocurrency coins or tokens.”

This is Bitcoin’s method. According to the Cambridge Bitcoin Electricity Consumption Index, bitcoin mining now uses 136.0 TWh per year – more than the annual energy production of countries such as Norway (124.3 TWh), and Ukraine (124.5).

Enter Proof-of-Stake

But to quote from the testimony of Prof. Ari Juels from Cornell Tech, whose main area of research is blockchain technologies, “Bitcoin does not equal blockchain.”

Prof. Juels, who co-authored a 1999 paper in which the term “proof of work” was coined, said that “a decade before the advent of Bitcoin, that paper already recognized the inherent waste” in this method.

“The tremendous promise of blockchain technology does not require Bitcoin or its energy-intensive component called proof of work,” said Juels. “In fact, some of the most exciting developments in the blockchain industry today are happening outside the Bitcoin ecosystem.”

The leading alternative, Juels explained, which consumes far less electricity, is called Proof-of-Stake (PoS), a method which the number-two cryptocurrency, Ethereum is planning to adopt.

In this method, the protocols select validators – a network of people competing to mint the next transaction block, who basically compete by “staking” their own crypto in exchange for the rights, Fast Company explains. The algorithm selects the winners, depending on who put up the most coin for the longest period of time.

Brian P. Brooks, Chief Executive Officer of leading full-service blockchain technology company Bitfury Group, disagrees with Juels, noting various security problems with the PoS method (which Juels claimed are untrue) and arguing in favor of Bitcoin, which his company mines, and Proof-of-Work (PoW).

“Only Proof-of-Work provides a truly trustless system of peer-to-peer exchange. Proof-of-Stake is essentially an electronic means of traditional corporate governance,” said Brooks.

“It is important that bitcoin not be judged solely on the basis of how much energy it uses, but rather on the basis of its energy mix relative to other energy users on the basis of the incentives bitcoin creates a more sustainable energy mix,” he added, noting that the “energy mix used for bitcoin mining was about 58% sustainable under the definition used by the International Energy Agency, as compared to 31% for the US energy grid as a whole.”

Brooks raised the question of whether there are more productive uses to which that energy could have been put instead of Bitcoin. He quoted the Cambridge Bitcoin Electricity Consumption Index, according to which bitcoin mining and gold mining consume approximately the same amount of electricity per year – but “gold mining presents a host of other environmental concerns.”

A feature, not a bug

John Belizair, Founder and CEO of, Soluna Computing, which develops green data centers for cryptocurrency mining and other batchable computing (and uses the Proof-of-Stake method) said that “crypto’s energy consumption is a feature, not a bug”.

Belizair explained that his company buys curtailed energy from renewable power plants and convert it into clean, low-cost global computing. The reality is that if we execute well, computing can be a catalyst for growth in clean energy,” he said.

“Curtailed energy is a nearly universal problem in clean energy development. Up to 30% of clean power generated on solar and wind farms can be curtailed – or waster – which decreases the profitability of these power plants,” said Belizair, and mentioned that his company sees crypto and computing “as part of the solution to one of the biggest problems in the renewable energy industry.”

In her opening remarks Degette also noted the importance of reducing carbon emissions overall and increasing the share of green energy on the grid. “Most cryptomining computers are now custom-made for mining activities and cannot be repurposed for any other use. These machines quickly become obsolete,” she said.

“The frenetic computing by hundreds of thousands of bitcoin miners spews more than 64 million tons of carbon dioxide into the atmosphere annually—a carbon footprint comparable to that of Montenegro,” says Netherlands Central Bank economist, Alex de Vries, as quoted in an IMF document. A single bitcoin transaction may emit as much carbon as more than 1.8 million Visa purchases.

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