The White House has drafted a proposal that aims to set standards for cryptocurrency mining. However, these standards may limit or even prohibit mining via Proof of Work (PoW), which is used in cryptocurrencies such as Bitcoin (BTC). These proposals are part of a report released by the White House on Thursday (8), which sets out these standards. The report includes norms such as using very low energy intensities and using clean energy by miners. The purpose of these standards is to meet the carbon neutrality goals set by the administration of President Joe Biden. If miners do not comply with the rules, the government must impose a limit or even a ban on cryptocurrency mining.
Rules must limit or prohibit PoW
The report brought a series of measures to control high energy usage in cryptocurrency-related activities. According to the White House, the Environmental Protection Agency (EPA) and the Department of Energy (DOE) will participate in the new rules. The overall purpose of the standards is to minimize the unwanted impacts of cryptocurrency mining, he added. Among the main impacts, the White House cites: polluting gas emissions; noise pollution from equipment; impacts on drinking water quality; Negative economic impacts of cryptocurrency mining. If the measures and regulations do not prevent negative impacts, management may prohibit or limit activities. The report specifically mentioned electricity-intensive mining, ie mining via PoW. Although not mentioned by name, the document mentions the expression “energy-intensive consensus mechanisms for mining crypto assets”. Of the current consensus mechanisms in cryptocurrencies, PoW is the most electricity-demanding. Since China banned cryptocurrency mining last year, the US has turned into a global hub. According to the University of Cambridge, more than 37% of the processing power (hash rate) of BTC is in the US, which has attracted several companies in the sector. But despite White House concerns, reports point out that more than 60% of the energy used by BTC comes from clean, renewable sources. In the state of Texas, for example, many miners use solar energy to mine cryptocurrency.
What about PoS mining?
As the government tries to limit mining via PoW, another type of consensus may gain ground in the US. This is, of course, Proof of Stake (PoS), whose electricity use is much less intensive than PoW. PoS mining rose to prominence after the Ethereum network announced its update, The Merge, which will see the network embrace this consensus. As a result, the energy impacts of mining have been widely discussed in recent times. Thanks to the White House directive on reducing energy use, PoS projects can gain prominence. It remains to be seen whether the US would in fact take a tough stance to ban the PoW mechanism, affecting a billion-dollar industry. It is worth noting that the European Union tried to ban mining via PoW, but the European Parliament rejected the proposal in March. Also Read: ‘The Merge’ Should Drive Ethereum Staking and Institutional Adoption, Says Chainalysis Also Read: GameStop Partners With FTX Exchange to Boost Cryptocurrency Usage
