The Congressional Energy and Commerce committee held a hearing today to explore the environmental impact of cryptocurrency mining. The full memo can be found here. The committee raised concerns that the energy consumption resulting from crypto, namely bitcoin mining, is immense and surpasses that of even some entire countries. Fortunately, concise and articulate witness testimony from Cornell Tech professor Ari Juels, Soluna CEO John Belizaire, and Bitfury CEO Brian Brooks among others, instilled confidence that concerns on the environmental impact of cryptocurrency mining are largely unfounded.
The energy consumption of bitcoin mining currently equates to about 15.5 million cars on the road. While this is not insignificant, it’s improperly framed. By international standards, bitcoin energy consumption is 58% sustainable. This is significantly higher than the current U.S electrical grid, which stands at just 31% sustainable. This begs the question of why congress is even concerned about the energy consumption of cryptocurrency when it is clearly doing a superior job in sustainability than our electrical grid. Moreover, this puts into context the energy consumption. Consuming a massive amount of energy isn’t inherently bad, especially when it provides economic value. The source of that energy is what matters, and cryptocurrency mining is becoming more sustainable every day.
Cryptocurrency mining, according to John Belzaire, presents a possible solution to the problem of “curtailed energy.” Put simply: curtailed energy is excess energy produced by solar, wind, or other sustainable resources that go to waste. This number can sometimes be 30% of the energy produced. Naturally, this curtailed energy vastly cuts into profits. The ability to complement these sources of renewable energy with cryptocurrency mining is a win-win. The curtailed energy is diverted to cryptocurrency mining in what’s considered a “flexible load” both allowing mining to flourish, while also allowing renewable energy sources to cut down their waste. This in turn incentivizes investment in renewable energy by increasing the profit margin.
The United States is both capable and motivated to harness as much sustainable energy as possible. Why, then, would we discourage mining operations that will just end up relocating to more mining-friendly countries with significantly less sustainable or clean sources of energy? Even if a mining facility uses fossil fuels, our electrical grid is significantly more efficient than that of say, Kazakhstan or China.
Many believe that Proof of Stake (PoS) is the answer to the environmental concerns surrounding cryptocurrency mining. While it’s true that PoS is significantly less energy-intensive, Brian Brooks brought up important benefits to the Proof of Work (PoW) system that Bitcoin and Ethereum currently use. PoW has, thus far, proven to be more robust, fair, and significantly more decentralized than the vast majority of PoS systems. There is no doubt that cryptocurrency mining consumes a significant amount of energy, but cryptocurrency mining and sustainable energy are not in opposition, and actually can be complementary to creating a more sustainable future.