Daily News | Online News
Key Takeaways
- The White House Office of Science and Technology Policy has released a detailed report on the possible environmental impacts of various blockchain consensus mechanisms.
- While it was widely reported that the White House wants to ban Proof-of-Work mining, the actual text of the document tells a different story.
- The report can more accurately be described as a cost-benefit analysis, with substantial attention given to the idea that the value offered by distributed ledger technology could outweigh its costs—it simply acknowledges that the costs are real.
The White House drew the ire of crypto enthusiasts everywhere Wednesday after it released a report on the climatological impact of blockchain technology. While it was widely circulated that the report recommends banning Proof-of-Work consensus mechanisms, Crypto Briefing took the time to read it and see what it really says.
Daily News | Online News Is the White House Planning a Proof-of-Work Ban?
Does the White House want to ban Proof-of-Work mining? It doesn’t seem so, despite what many crypto enthusiasts have been saying.
The White House Office of Science and Technology Policy riled the crypto community Thursday after it released a report to guide policymakers in considering blockchain technology’s environmental costs and benefits. Titled “Climate and Energy Implications of Crypto-Assets in the United States,” the report is the first in a series of interagency policy reports ordered by President Biden in March.
In the hours since its release, it’s caused quite a stir.
While the report is wide-ranging and competently researched, it has been widely condemned by the crypto community. Reactions on social media have been swift and indignant, with critics homing in on one paragraph in the 46-page document:
“The Environmental Protection Agency (EPA), the Department of Energy (DOE), and other federal agencies should provide technical assistance and initiate a collaborative process with states, communities, the crypto-asset industry, and others to develop effective, evidence-based environmental performance standards for the responsible design, development, and use of environmentally responsible crypto-asset technologies. These should include standards for very low energy intensities, low water usage, low noise generation, clean energy usage by operators, and standards that strengthen over time for additional carbon-free generation to match or exceed the additional electricity load of these facilities. 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.”
A quick browse around Crypto Twitter reveals countless screenshots of this portion of the text, usually with that bolded text above highlighted to emphasize its importance. The consensus among the crypto faithful has been to take this to mean that the Biden Administration actively wants to ban Proof-of-Work crypto mining, with many jumping straight to the most paranoid of conclusions. “It’s not about climate change, it’s about complete and utter control,” tweeted Bitcoin Magazine’s Dylan LeClair. “Don’t give them one inch.”
Except, of course, it is absolutely about climate change. Far from making a policy recommendation to ban Proof-of-Work mining, the report points out that any such ban would be a last resort—advancements in ASIC technology, migration to greener energy sources, and even building blockchains specifically for tracking and mitigating environmental impact are all mentioned in the report as alternatives to banning Proof-of-Work consensus mechanisms. In fact, they are considered as the things to try first.
Crypto fans are painting the report from the White House as an attack on the industry, but this reading fails to consider its actual purpose, which is made clear to anyone who bothers to read it—it’s a cost-benefit analysis weighing the benefits of blockchain technology against its potential climatological costs. One excerpt reads:
“The potential benefits of [distributed ledger technology] would need to outweigh the additional emissions and other environmental externalities that result from operations to merit its broader use in the carbon credit market ecosystem, relative to the markets or mechanisms that they are displacing. Use cases are still emerging, and like all emerging technologies, there are potential positive and negative use cases yet to be imagined.”
In other words, the government is happy to experiment with digital assets. Its job, however, is to establish that they add more value than they subtract.
Daily News | Online News Stakes Are High
For those unaware, the planet Earth is experiencing rapid and perhaps irreversible changes to its climatological structure. Those who are in the business of understanding how climate works have been shouting for a century that the amount of greenhouse gasses our species pumps into the environment will bring about, as a matter of causal necessity, the destabilization of Earth’s ecosystems. Now that it’s happening at a more noticeable rate, it should be clear that we are running out of time to do anything meaningful to stop it. I’m not interested in rolling out facts and figures to counter the climate change deniers—the weather itself will soon prove persuasive enough.
But to many in the space, the environmental impact of Proof-of-Work mining is dismissed as mere FUD, seemingly unaware that dealing with fear, uncertainty, and doubt is the day-to-day purview of governments everywhere. And there are some problems of such global magnitude that they should inspire fear, uncertainty, and doubt—all of which, I would remind anyone who’ll listen, are perfectly healthy emotions with distinct functions in aiding our survival. Dismiss them at your peril.
Crypto Twitter, though, seems more inclined to resort to mockery and ridicule, which contributes exactly nothing to the discourse. LeClair followed his earlier alarmist tweet with a companion piece, writing, “Yeah we almost had stateless global money but the climate activists protested so effectively.”
I won’t bother diving into the statistics on the energy consumption of Proof-of-Work blockchains, but it is no secret that it is high. That, in fact, is the whole point of a Proof-of-Work system. To fail to consider its climatological impact is like lighting a fire inside a house without bothering to see if there’s a chimney.
Daily News | Online News Serious Work
It’s worth keeping in mind that yesterday’s climate report is not a shoddy piece of work, and there is hardly any U.S. federal agency that did not play a part in its composition. In keeping with the President’s executive order that the various departments work out a “whole-of-government” approach to crypto regulation, the climate report is the result of collaboration between over a dozen government departments and agencies. Led by the White House Office of Science and Technology Policy (OSTP), the Interagency Policy Committee that contributed to the report includes the Commodity Futures Trading Commission (CFTC), the Consumer Financial Protection Bureau (CFPB), the Environmental Protection Agency (EPA), the Federal Deposit Insurance Corporation, the Federal Reserve Board, and several others. It also includes extensive input from several cabinet departments, including the Departments of Commerce, Defense, Energy, Justice, Homeland Security, Treasury, and State.
These departments and agencies are not slouches at what they do. The government invests a great deal of time and money into hiring extremely competent people to do its grunt work, and the research it produces is top-notch. I understand that it’s fashionable in the crypto sphere to have no trust in government whatsoever; but then, its also fashionable for people to say taxation is theft while still insisting on farm subsidies, elderly care, interstate highways, ubiquitous police forces, half-decent schools, and robust national defense.
Anyone who’s ever worked in or around the federal bureaucracy, though, knows exactly how serious these people are. In this case, the result of their work is a serious piece of policy exploration, and it’s unfortunate that so few people in the space have been willing to read what it actually says. In a field that is dominated by the mantra, “do your own research,” it’s an amusing irony that such a formative document can be so widely and so terribly misread, if indeed it is read at all.
I’ll close with one last observation: it’s notable that the report does not employ the term “cryptocurrency,” instead opting for “crypto-assets.” That the government refused to use the established terminology, “cryptocurrency,” in its report is likely a significant indicator of how officials and government researchers think about crypto’s role more broadly in society. There is very little in the report’s text that gives credit to crypto as a functional currency for day-to-day consumer use. If the White House thought of crypto as currency akin to the dollar, it would raise questions about how it should be regulated. Treasury Secretary Janet Yellen has made clear her hopes for stablecoins to be regulated in the near future, but barring Biden’s executive order, concrete plans for the broader space have yet to be established.
Nevertheless, the Treasury is expected to release its own report on crypto assets in the coming days as its contribution to the President’s whole-of-government plan, which will undoubtedly shed further light on how U.S. officials are thinking about the complex field of digital asset adoption. Whatever it says, I hope it will be greeted with a bit more nuance—though I must admit, my hopes aren’t high.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
“Responsible Development of Digital Assets”: Biden’s…
The Biden administration has issued an executive order that will help determine the U.S. government’s crypto policy in the months ahead. Order Will Create New Policies Early today, President Joe…
New Bitcoin Political Advocacy Groups Announced at Bitcoin 2022
News
The Bitcoin Advocacy Project announced two new pro-Bitcoin political advocacy organizations today: the Bitcoin Policy Institute, and Financial Freedom PAC. Together, these groups will seek to influence legislation, regulation, and…
Ark Investment Makes Its Case for a Greener Bitcoin
ARK Investment Management published a report rejecting the well-known narrative of Bitcoin’s heavy environmental impact. Bitcoin: A Battery for Renewable Energies? One of the primary criticisms against Bitcoin is its…
Biden Signs Executive Order on U.S. Crypto Strategy
News
U.S. President Joe Biden has signed an executive order on “Ensuring Responsible Innovation in Digital Assets.” Biden Signs Executive Order on Crypto President Biden has finally signed the White House’s…
0 Comments :
Post a Comment