US Committee Announces Hearing on Cryptocurrency Energy Consumption
The United States House Committee on Energy and Commerce has announced a hearing on the cryptocurrency industry’s energy consumption. The hearing will take place on Thursday, January 20, 2022.
“In just a few short years, cryptocurrency has seen a meteoric rise in popularity. It’s time to understand and address the steep energy and environmental impacts it is having on our communities and our planet,” said Committee Chairman Frank Pallone (D-NJ) and Oversight and Investigations Chair Diana DeGette (D-CO) in a joint statement.
The two added that a focus of this hearing would be on proof-of-work (PoW) blockchains—like those used by Bitcoin and Ethereum—and how such cryptocurrencies could migrate to cleaner alternatives.
“We look forward to examining the crypto mining's growing energy footprint and how proof of work blockchains, in particular, may migrate toward cleaner alternatives and renewable energy solutions.”
The hearing, titled “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains,” will occur on January 20 at 10:30 am EST.
Cryptocurrency and the environment
The environmental impact of PoW blockchains is already well-documented.
Proof-of-work blockchains require powerful computers to conduct complex mathematical calculations around the clock to secure the network. This computational activity requires a lot of energy.
According to Cambridge University, the Bitcoin network consumes approximately 120 terawatt-hours (TWh) of energy per year—a higher figure than most of the world’s countries.
If, per Cambridge University’s data, only 39% of the Bitcoin network is powered by renewable energy, this level of energy consumption broadly translates to billions of pounds of burned coal or millions of homes’ average electricity consumption per year.
Bitcoin is not the only PoW-based cryptocurrency that consumes a lot of energy. According to the Digiconomist website, which tracks the unintended consequences of technology, the Ethereum network consumes about 106 TWh per year.
There are, however, alternatives to this approach, such as proof-of-stake (PoS) consensus algorithms. Cryptocurrencies built on PoS-based blockchains are secured by having validators lock up their own cryptocurrency rather than having computers perform energy-intensive calculations.
PoS blockchains are broadly said to be less environmentally damaging. Alex de Vries, the founder of Digiconomist, recently told Decrypt that “if more companies care, the alternatives can easily become more widely used.”Source