Will the US Congress Ban Crypto Mining?
- Crypto mining consumes considerable energy and is less environmentally friendly.
- The US became the hub of mining activities following China’s crackdown on crypto activities.
- Congress will consider a total ban if the guidelines proposed are unsuccessful.
The White House has hinted at a possible ban on crypto mining due to its significant carbon footprint. According to sources, American politicians and regulators are considering restricting mining activities, which have recently seen a surge in some US states.
In a report released on Thursday, the White House Office of Science and Technology Policy suggested some crypto mining guidelines to promote environmentally friendly crypto-asset technologies. According to the report, ideal standards for the industry should include very low energy intensity and the operators’ use of clean energy. The report also suggested that the government collect more data from the mining community about power consumption and develop energy efficiency measures.
According to the report, the aim of these guidelines is to reduce the negative effects of crypto, such as emissions, noise, water impacts, and potential economic impacts. As of August 2022, the mining industry reportedly consumed over 120 and 240 billion kilowatt-hours per year of electricity.
The United States administration also provided details of its alternative plans in the event that these established criteria are unsuccessful. The White House said a total ban on mining would be considered as a response, especially for consensus mechanisms with high energy intensity, like the proof of work model.
According to the report,
Should these measures prove ineffective at reducing impacts, the Administration should explore executive actions, and Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining.
Mining activities are one of the most lucrative parts of the blockchain industry. Although revenue from the industry has reduced in recent months, mining remains a huge part of the system. Notably, mining activities are carried out on an industrial scale. This is because considerable computing power is required to validate blocks of transactions on blockchains when mining cryptocurrencies like Bitcoin.
The United States is currently a hub for Bitcoin mining. Mining companies flocked to North America after China imposed restrictions on the sector. States like Texas have become a commercial hotspot for miners seeking to leverage their energy resources and crypto-friendly policies. But all that might change in the coming months.
The energy impacts of mining have recently received a lot of attention, with Ethereum switching from the proof of work mechanism to the proof of stake mechanism. The White House’s directive to cut back on energy use may help the proof of stake programs garner more attention.
More than ever, global leaders are focused on the fight against climate change. Reducing carbon emissions is seen as a step in the right direction.