White House Calls for Crypto Mining Standards to Minimize Environmental Impact

The report is the first public response to U.S. President Joe Biden's executive order on crypto, and also called for standards to be set to reduce energy usage.

AccessTimeIconSep 8, 2022 at 2:11 p.m. UTC
Updated Sep 9, 2022 at 5:33 p.m. UTC

Eliza Gkritsi is CoinDesk's crypto mining reporter based in Asia.

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

The White House Office of Science and Technology Policy called for the U.S. to conduct further research on the energy impact of crypto mining in order to set standards for the industry, in a new report published Thursday.

In the report, among the first publicly available responses to U.S. President Joe Biden's executive order on cryptocurrencies, the office detailed its approach to the question of what sort of impact crypto mining has on the environment, including what is the scale of the impact and how different cryptocurrencies differ in their energy needs.

The report calls on federal agencies including the Environmental Protection Agency and the Department of Energy to work with states and local officials to develop standards for the industry’s impact on the environment; the intensity and source of energy that goes into it, noise pollution, water usage as well as how to build carbon-free energy to balance out crypto mining’s consumption.

"Should these measures prove ineffective at reducing impacts, the 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 said that crypto mining, particularly bitcoin (BTC) mining, uses a lot of electricity, which undermines U.S. sustainability goals.

"Global electricity generation for the crypto assets with the largest market capitalizations resulted in a combined 140 ± 30 million metric tons of carbon dioxide per year (Mt CO2/y), or about 0.3% of global annual GHG emissions," the report said.

Protecting the grid

The Biden administration also wants energy regulators and grid operators to ensure that crypto mining doesn’t jeopardize the stability of electricity grids and drive up prices for consumers. Bitcoin miners, on the other hand, argue they can contribute to the reliability of electricity grids because they can act as a base load consumer that can power off at times of peak demand, as happened this summer during heatwaves throughout the U.S. and particularly in Texas.

To this argument, the White House said: “While reducing this peak during a grid emergency is valuable, the increased peak is often why demand response is necessary, establishing misaligned incentives between crypto-asset miners and grid operators. Full transparency of demand response participation and payments by crypto-asset miners and other demand response participants are essential.”

At the same time, the White House is asking for better data on the use of clean energy by the industry, pointing out that miners that don’t use carbon-emitting energy do not contribute to emissions. “Uncertainty” around how much clean energy the industry uses has to be dispelled with better data, the report said.

On the bright side

Interestingly, the White House report did cautiously express support for crypto miners that use flared and vented methane to operate their machines. This method has gained popularity in the past couple of years, with mining firms deploying data centers at natural gas extraction sites.

“While the EPA and the Department of the Interior have proposed new rules to reduce methane for oil and natural gas operations, crypto-asset mining operations that capture vented methane to produce electricity can yield positive results for the climate, by converting the potent methane to [carbon dioxide] during combustion,” the report said. “Mining operations, though, could potentially be more reliable and more efficient at converting methane to CO2.”

Using vapor capture technologies may be more effective at reducing methane emissions, however, the report added.

The report concluded that while net-zero emissions would have zero methane venting or flaring, “Crypto-asset mining that installs equipment to use vented methane to generate electricity for operations is more likely to help rather than hinder U.S. climate objectives.”

The White House did lay out which miners lead to zero direct emissions; those who buy or build new renewable energy capacity, and those that consume renewable energy that would otherwise be wasted, of which there is plenty in the U.S.

“To help U.S. climate objectives, industries could volunteer or be required to build zero-carbon energy capacity that produces more electricity than the crypto-asset miner requires, selling excess clean energy back to the grid,” the report said.

Though the environmental report represents one of the more controversial issues, two previous reports had emerged from the executive order. One, from the Treasury Department, was a fact sheet issued in July outlining how the U.S. could work with foreign regulators to address the cryptocurrency sector. The other came from the Justice Department and suggested the U.S. should share more information about crimes tied to cryptocurrency and help build up its overseas partnerships to help combat them.

Jesse Hamilton contributed reporting.

UPDATE (Sept. 8, 2022, 15:05 UTC): Adds additional detail throughout.

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Eliza Gkritsi is CoinDesk's crypto mining reporter based in Asia.

CoinDesk - Unknown

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

CoinDesk - Unknown

Eliza Gkritsi is CoinDesk's crypto mining reporter based in Asia.

CoinDesk - Unknown

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.