White House Report Assesses Impact Of Cryptocurrencies On The Electric Grid
September 12, 2022
by Peter Maloney
September 12, 2022
A new White House report recommends government agencies should take steps to minimize the environmental impact associated with cryptocurrency mining.
The report, Climate and Energy Implications of Crypto-Assets in the United States, by the White House Office of Science and Technology Policy, calls for “the Environmental Protection Agency (EPA), the Department of Energy (DOE), and other federal agencies to provide technical assistance and initiate a collaborative process with states, communities, the crypto-asset industry, and others to develop effective, evidence-based environmental performance standards for the responsible design, development, and use of environmentally responsible crypto-asset technologies.”
Those steps should include standards for very low energy intensities, low water usage, low noise generation, clean energy usage by operators, and standards that strengthen over time for additional carbon dioxide-free generation.
If those measures prove to be ineffective, the Biden 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,” the report said.
The report also recommends the DOE work with the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) to conduct reliability assessments of current and projected crypto-asset mining operations on electricity system reliability and adequacy and, if needed, develop or update reliability standards to ensure system reliability under the growth of crypto-asset mining.
In addition, the Energy Information Administration (EIA) and other federal agencies should consider collecting and analyzing information from crypto-asset miners and electric utilities to enable evidence-based decisions on the energy and climate implications of crypto-assets, the report said.
And the White House Office of Science and Technology Policy “could establish a National Science and Technology Council subcommittee to coordinate with other relevant agencies to assess the energy use of major crypto-assets,” the report said.
The United States is estimated to host about one-third of global crypto-asset operations, which currently consume about 0.9 percent to 1.7 percent of total U.S. electricity usage, a level similar to all home computers or all residential lighting in the United States, the report noted.
U.S. crypto-asset activity is estimated to result in approximately 25 to 50 metric tons of carbon dioxide per year or 0.4 percent to 0.8 percent of total U.S. greenhouse gas emissions, a level similar to emissions from diesel fuel used in railroads in the United States.
While there are a variety of cryptocurrencies, two are estimated to be responsible for most electricity usage. Bitcoin is estimated to account for 60 percent to 77 percent of total global crypto-asset electricity usage, and Ethereum is estimated to account for 20 percent to 39 percent of electricity usage.
Both Bitcoin and Ethereum use proof-of-work consensus mechanisms that are designed to require more computing power as more entities attempt to validate transactions in exchange for digital “coins” to help disincentivize malicious actors from attacking the network.
An alternative consensus mechanism, proof-of-stake, uses less energy but it is not as widely used. Ethereum, however, has promised to launch Ethereum 2.0, which would use a proof-of-stake consensus mechanism, the report said.
There are other potential uses for blockchain technologies, such as keeping track of environmental attributes such as renewable energy credits (RECs) or managing distributed energy resources (DERs), but the benefits of using those technologies would need to outweigh the additional emissions and other environmental externalities that result from their use, the report said.