‘We think that there is a large opportunity for innovation’
Crypto mining has exploded in the US over the past few years, and we’re just now starting to understand how that boom affects our infrastructure, environment, and daily life. As the US became the biggest hub for Bitcoin mining, for instance, crypto mines have revived ailing fossil fuel plants and driven up electricity bills.
We finally got a clearer picture of the fallout from US crypto mining last week when the White House Office of Science and Technology Policy (OSTP) published a report on the industry’s impact on energy and climate change. The analysis estimates that the crypto industry operations in the US pump out about as much greenhouse gas pollution annually as all the diesel fuel used on the nation’s railroads, 25 to 50 million metric tons of carbon dioxide per year.
The report also gave us a sneak peek into what actions the Biden administration is considering to prevent bigger problems with crypto mining. To learn more, The Verge spoke with Costa Samaras, Principal Assistant Director for Energy and Chief Advisor for Energy Policy at OSTP.
This interview has been edited for length and clarity.
Under the Paris agreement, the US has committed to cutting greenhouse gas emissions by at least 50 percent from peak levels by 2030. Global greenhouse gas emissions need to reach net zero by 2050 to reach the goals of the Paris agreement. Does the growth of energy-intensive crypto mining operations in the US threaten climate goals?
Anytime where we have an emission source that is going away from zero and not towards zero, it’s something that is going to make meeting our emissions goals and objectives more challenging. The biggest concern with this industry is the ability to grow rapidly. Now, that’s not to say that it will continue to grow rapidly. But the ability to grow rapidly is something that is worth all of the relevant stakeholders involved understanding the problem and finding a solution.
In the report, we say that depending on the energy intensity of the technology used and the carbon intensity of the grid, crypto asset mining could hinder broader efforts to achieve net zero. So I want to be clear that the technology matters, the type of electricity matters, and there are ways to drive innovation to get to net zero that enables us to meet our climate goals.
There’s a lot of attention paid to energy consumption and greenhouse gas emissions. But this report goes beyond that and looks at other on-the-ground impacts for Americans. What are your concerns about crypto mining at the local level?
It’s very important to the Biden-Harris administration to improve environmental justice during this energy transition. The administration wants to ensure that as new innovations and new emerging technologies get adopted, that communities that have had cumulative burdens over time don’t see additional challenges and have their communities improved rather than further burdened.
One of the things that crypto asset mining can potentially affect is a local community. That is through noise from the operations, or it could be from direct air or water pollution from any energy sources that are used in the local region. And it could be potentially through increased electricity prices that have been experienced in some regions in the United States. And we believe there are proven steps that all the stakeholders involved could take to ensure that local communities are not affected.
What are those steps?
So, the report lays out a set of recommendations. The first is about information and transparency.
What the report found was that crypto asset operations use about .9 to 1.7 percent of total US electricity. The reason that range is so big is that there’s not a lot of great information on the electricity use of crypto assets in the United States. And what is important is that we focus on getting better information so that we find and anticipate little problems before they become big problems. This amount of electricity is similar to all of the computer usage or all the residential lighting. And when we have a potential for electricity use to grow very, very rapidly, we want to ensure that it doesn’t affect consumers. We want to ensure that the grid remains reliable, and we want to ensure that greenhouse gases can get to net zero.
Some of the other steps include the ability for the federal government to provide technical assistance to state and local environmental agencies and communities as crypto asset mining operations are ramping up to find ways to ensure that these local impacts don’t get any worse.
The report mentions that if some of those early collaborative measures “prove ineffective at reducing impacts, the Administration should explore executive actions” — how soon before we start exploring executive actions?
There’s no outlined timetable. But we are in a climate crisis. And the administration has been very clear that bold climate action is needed, and bold action is what we’re taking. We think that there is a large opportunity for innovation and best practices to explore common sense ways to reduce the environmental impacts of crypto assets.
Ethereum just moved away from the proof of work consensus mechanism, which is responsible for a lot of that energy consumption and greenhouse gas emissions, to proof of stake, which drastically cuts that energy use and pollution. Do you have any expectations for what this kind of transition might mean for the crypto industry?
We are interested in understanding how technology shifts like this affect energy use, and that’s one reason why additional transparency will help across this entire industry.
We are tracking all the developments in this broader industry. One of the recommendations of this report was exploration of ways to adopt consensus mechanisms that have lower energy intensity, including things like proof of stake. It’s important for the entire industry, no matter what consensus mechanism is ultimately used by different stakeholders, to drive towards the lowest energy intensity possible and the lowest greenhouse gas emissions.
Would you like to see Bitcoin move away from proof of work?
We don’t have a position on individual technologies. Our position is about outcomes: getting to net zero greenhouse gas emissions, not increasing impacts on communities, and keeping the electricity grid reliable. And I think that when we start from those principles, rather than dictate the technology pathways, we’ll see a lot better outcomes.