The White House recently authored a report containing policy guidance on the environmental issues related to cryptocurrency mining, recommending that the Environmental Protection Agency, Department of Energy (“DOE”) and other federal agencies assist states, local communities, and the cryptocurrency industry to develop standards for environmentally responsible technologies. As part of its recommendations, the White House would like to see low resource usage, including low energy intensity, low water use, clean energy usage, and minimal noise generation -- goals the administration states are important to climate change issues, as well as energy security.
The Biden administration also recommends that the DOE work with the Federal Energy Regulatory Commission, the North American Electric Reliability Corporation and regional entities to conduct reliability assessments. If energy reliability risks are identified, the report states updated standards should be developed to ensure system reliability and adequacy.
If these steps alone prove unproductive, the Biden administration mayconsider executive orders or supporting Congressional legislation to achieve the desired results. Specifically, the report acknowledges that the Biden administration and/or Congress may need to consider eliminating the use of proof-of-work technology, which is the more energy-intensive cryptocurrency transaction authentication process often beleaguered by energy-inefficiency claims.
This recent report has drawn support from both proponents and critics of the cryptocurrency industry, with both sides pleased that it calls for more research to be conducted to aid federal agencies’ development of standards. Cryptocurrency advocates tout the report’s finding that mining processes can be good for the environment, as they have the potential to capture and use otherwise vented methane to generate electricity for their operations. On the flipside, the Environmental Working Group NGO praised the report’s recognition that digital currency’s increasing popularity and usage overall contributes to increased climate pollution through its growing use of electricity.
Connell Foley will continue to monitor these developments regarding the potential regulation of cryptocurrency mining operations.