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Following an executive order issued by US President Joe Biden in March in the wake of the extraordinary rise in bitcoin prices in 2021, the Office of Science and Technology said that the government “has a responsibility” to “protect” people from pollution caused by cryptocurrencies.
The proposal comes amid a jolt in the cryptocurrency market over ethereum, the second-largest cryptocurrency after bitcoin, as it begins its long-awaited transition from proof-of-work to more energy-efficient proof of stake — something that some believe could trigger a massive crash in the bitcoin price.
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“Electricity from digital assets contributes to [greenhouse gas emissions]and additional pollution, noise and other local influences depending on markets, policies and local electricity sources” Report It reads, adding, “The United States government has a responsibility to ensure the stability of the electrical grid, enable a clean energy future, and protect communities from pollution and the effects of climate change.”
The climate impact of bitcoin mining has become a hot topic in recent months as the bitcoin price rally drives up bitcoin energy demands and concerns about climate change come to a head.
Bitcoin’s price skyrocketed towards the end of 2020 and into 2021 only to crash this year – although it’s still about twice its level in mid-2020.
The bitcoin network is believed to use roughly the same amount of energy each year as some smaller countries, with the Cambridge Center for Alternative Finance recently calculating that it consumes about 110 TWh per year, or 0.55% of global electricity production, equivalent to the annual energy requirements of the likes of Malaysia. and Sweden.
The Office of Science and Technology recommends creating so-called clean energy “performance standards” for bitcoin and crypto mining — which include the use of powerful computers to secure the blockchain network and the creation of new coins — including encouraging “the use of environmentally responsible crypto-asset technologies.”
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“If these measures prove ineffective in reducing impacts, then [Biden] The administration should explore enforcement action, and Congress may consider legislation to limit or eliminate the use of high-energy-density consensus mechanisms for crypto-asset mining” — referring to Bitcoin’s proof of work.
Earlier this year, internal EU documents revealed that Swedish financial regulators and the European Commission in the European Union discussed the possibility of banning the proof-of-work bitcoin mining mechanism due to its environmental impact.
Meanwhile, Ethereum, which is currently still using Bitcoin’s devised Proof of Work system, has embarked on the long-awaited Proof of Stake transformation, eliminating its reliance on miners while reducing the carbon footprint of the Ethereum network by 99%.
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