Crypto Mining Could Hurt Climate Progress, New White House Report Says

The White House says the environmental impact of producing cryptocurrencies like Bitcoin could impede U.S. efforts to combat climate change.

The conclusion thrusts the Biden administration into the center of an already raging debate over the carbon footprint of digital assets. Critics have been ringing alarm bells for months over the amount of electricity used in crypto mining operations.

While the White House Office of Science and Technology Policy stopped short of prescribing specific regulations, the report it released on Thursday said the U.S. must take action to mitigate pollution tied to crypto production. The federal government should collect more data on power usage and work with states and the crypto industry to set standards, the office said.

“Depending on the energy intensity of the technology used, crypto assets could hinder broader efforts to achieve net-zero carbon pollution consistent with U.S. climate commitments and goals,” the White House office said. Crypto operations in the U.S. now use about as much energy as home computers do, according the report.

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President Joe Biden ordered the study in March as part of a sweeping executive order on cryptocurrencies. In the coming weeks, other federal agencies and offices are expected to release recommendations and reports for how the U.S. should deal with the asset class.

The conclusions released on Thursday dovetail with the Biden administration’s focus on mitigating climate change. Since early 2021, American government agencies have launched a series of efforts related to global warming.

Creating new coins and validating transactions on the Bitcoin and Ethereum blockchains involves an energy intensive process in which multiple computers compete to solve complex math puzzles, with the winner adding new verified transactions to the blockchain in exchange for token rewards.

Read More: Fact-Checking 8 Claims About Crypto’s Climate Impact

Software upgrade

The Ethereum network is set to undergo a major software upgrade this month, known as the Merge, that will transition the blockchain to a less energy-intensive approach. Bitcoin and Ether are the world’s first- and second-biggest tokens, respectively.

According to statistics cited Thursday by the White House, the U.S. now does 38% of the world’s Bitcoin mining, compared with 3.5% in 2020. Meanwhile, blockchains that support crypto assets now use more energy than many countries, including Argentina and Australia, according to the report.

Air, noise, and water pollution from crypto mining operations can hurt the environment and “exacerbate environmental justice issues for underserved communities,” the document says. At the same time, increased electricity demand from those operations can put extra strain on already-stressed power grids.

Developing standards

The White House said new standards developed by federal agencies working with states and the crypto industry could reduce the impact. Those might include measures to reduce noise generation and promote clean energy usage.

Under Biden’s March executive order, agencies and offices across the government are supposed to send the president a series of reports this month. Thursday’s report was the first one to be released publicly.