The United States White House Office of Science and Technology Policy (OSTP) has released a report that examines the connection between climate change and distributed ledger technologies (DLT). The White House Office determined that cryptocurrency’s relationship with nature and the environment is a mixed bag.
While acknowledging the positive impact that mining has on grid stability and renewable energy development, it can also worsen environmental justice issues because of its greenhouse gas (GHG) emissions and some other factors. Because of this, the office suggested that the current administration should consider banning the use of proof of work as a consensus mechanism.
The report is a response to President Biden’s cryptocurrency executive order in March and the title of the report is “Climate and Energy Implications of Crypto Assets in the United States”. The president directed more than 20 administrative figures and heads of agencies to submit well-researched reports and recommendations on many crypto-related topics to help structure responsible cryptocurrency industry regulation.
Particularly, the report stated that blockchains using a proof of work (POW) consensus mechanism (especially Bitcoin) use a highly significant amount of electricity to function and generally contribute to air, water, and noise pollution in many affected areas. Summarily, Bitcoin and other large-cap Proof-of-Work networks are responsible for 0.3% of global annual GHG emissions.
The report suggested that U.S. government action is required to ensure the adoption and development of digital assets. One recommendation is that federal agencies should work with states and the cryptocurrency industry to develop environmental performance standards for the use and development of crypto-asset technology.
These standards will target low energy usage, low water usage, low noise generation, and the use of clean energy by mining operators. Should these methods prove ineffective, the OSTP suggested the use of executive or congressional action.
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