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Following an executive order by US President Joe Biden in March following the extraordinary 2021 bitcoin price spike, the Office of Science and Technology said the government has a responsibility to “protect” people from pollution caused by cryptocurrencies.
The proposal comes amid a shake-up of the crypto market caused by Ethereum, the second-largest cryptocurrency after bitcoin, which some think will begin its long-awaited transition from proof-of-work to a more energy-efficient proof-of-stake. Could trigger a massive Bitcoin price crash.
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“Power consumption from digital assets is contributing [greenhouse gas emissions]additional pollution, noise and other local impacts based on markets, policies and local power sources,” the report states: “The US government has a responsibility to ensure electricity grid stability, enable and protect a clean energy future. Communities from the effects of pollution and climate change.”
The climate impact of bitcoin mining has been a hot topic in recent months as skyrocketing bitcoin prices have increased demands for bitcoin’s energy and fears over climate change have reached a fever pitch.
Bitcoin price rebounded in late 2020 and into 2021 before falling again this year—although it remains at twice the level of mid-2020.
The Bitcoin network is thought to consume roughly as much energy each year as some small country, which the Cambridge Center for Alternative Finance recently calculated equates to annual energy demands of around 110 terawatt hours per year, or 0.55% of global electricity production. Like Malaysia and Sweden.
The Office of Science and Technology recommends creating clean energy “performance standards” for bitcoin and cryptocurrency mining—which involves using powerful computers to secure the blockchain network and create new coins—”including promoting the use of environmentally responsible crypto-asset. technologies.”
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“If these measures prove ineffective in mitigating the effects, the [Biden] The administration should explore executive actions, and Congress may consider legislation to limit or eliminate the use of highly energy-intensive consensus mechanisms for crypto-asset mining”—referring to Bitcoin’s proof-of-work.
Earlier this year, internal European Union documents revealed Swedish financial regulators and the EU’s European Commission discussed the possibility of banning Bitcoin’s proof-of-work mining mechanism due to its environmental impact.
Meanwhile, Ethereum, which currently uses the proof-of-work system from Bitcoin, has begun a long-awaited switch to proof-of-stake, removing its reliance on miners while reducing the carbon footprint of the Ethereum network by 99%.
Ethereum is expected to complete its transition to proof-of-work by mid-September.