Each year at the annual UN Climate Change Conference (COP), individual countries are pressured to ramp up their emissions reductions pro
Each year at the annual UN Climate Change Conference (COP), individual countries are pressured to ramp up their emissions reductions promises and showcase evidence they are taking steps to meet them.
With Bitcoin mining blamed for using as much power as an entire country, and politicians searching for easy targets to strike, the industry appears to be on a collision course with these global commitments to achieve net-zero emissions.
While it’s not possible to ban Bitcoin completely, lawmakers and regulators can tank the price and make life very difficult in the years ahead for the number one cryptocurrency.
There are signs it’s already happening.
A report from the European Commission at the end of 2022 stated that EU countries “must be ready to block crypto mining,” and the trading block’s new MiCA rules were at one stage set to include a ban on Bitcoin mining. The recently adopted legislation still leaves this door ajar, however, aiming to “reduce the high carbon footprint of crypto-currencies” by making service providers “disclose their energy consumption.”
Across the pond, the Biden administration has proposed a 30% excise tax on the power consumption of U.S. cryptocurrency mining operations. The tax would be imposed regardless of whether the power is renewable, with the administration arguing Bitcoin mining’s power consumption of renewable energy will slow down the transition to Net Zero. That’s in contrast to a New York moratorium on Bitcoin mining in 2022 that exempted firms powered by renewable energy.
The U.S. government appears to be taking to heart the White House Office of Science and Technology Policy’s September 2022 report that claimed the environmental impact of producing cryptocurrencies could “impede U.S. efforts to combat climate change.”
Former member of the Bitcoin Mining Council and independent researcher Hass McCook doesn’t mince his words about threats to ban mining.
“Governments should focus on greening their grids, which miners rely upon, as opposed to trying to ban an unbannable technology.”
The Swedish government was behind last year’s push to outlaw crypto mining in the EU and, last month, took steps to price Bitcoin miners out of the market by abolishing various tax incentives. Starting in July, Sweden will increase the electricity tax by 6,000% from 0.006 Swedish kronas ($0.0006) to an extraordinary 0.36 kronas ($0.035) per kilowatt-hour (kWh).
“Governments around the world are actively looking at Bitcoin mining’s energy consumption,” explains Brad van Voorhees, co-founder and CEO of Sustainable Bitcoin Protocol, which incentivizes the use of renewables for mining.
“Sweden has already imposed a 6,000% tax on energy for BTC mining, and the Biden administration has proposed a 30% tax, which would undoubtedly mean miners move offshore,” he adds.
“The tax will likely never pass in the U.S., but nonetheless, the sector should focus on clean energy use and data transparency to mitigate this risk.”
Others agree with van Voorhees that Net Zero is an opportunity to set Bitcoin mining on a new and more sustainable path. Morten Røngaard is a member of the Nordic Blockchain Association and CEO of Reality+, a Web3 and blockchain company.
“The collision between Bitcoin and Net-Zero commitments is a call to action. It’s an opportunity to harness the power of innovation and renewable energy, steering both towards a greener and more inclusive landscape,” he says.
Good cop, bad cop
The focus on Bitcoin mining power usage was given additional impetus after Ethereum moved to proof-of-stake last year and saved 99.95% of its energy consumption as a result. While Bitcoiners believe PoS stands for “piece of shit,” the success of the blockchain’s energy transformation has made Bitcoin look like it is stuck in a corner using anachronistic tech.
There are now groups demanding changes to Bitcoin’s underlying protocol as well.
Greenpeace’s Change the Code Not the Climate (Clean Up Bitcoin) lobby group is pushing to change Bitcoin’s consensus mechanism from proof-of-work, to proof-of-stake.
“We know a basic software code change would reduce Bitcoin’s energy use by 99.9%. If only 30 people — the key miners, exchanges, and core developers who build and contribute to Bitcoin’s code — agreed to reinvent proof-of-work mining or move to a low-energy protocol, Bitcoin would stop polluting the planet. So why isn’t Bitcoin changing its code?”
This is misinformation, however, given the Bitcoin community needs to agree on a change, rather than a small group of just 30 people. The Bitcoin community split over the much…
cointelegraph.com