The White House Office of Science and Technology proposes to ban Bitcoin, a cryptocurrency that uses the energy-intensive proof-of-work consensus mechanism.
Several months after U.S. president Joe Biden issued an executive order in March following a dramatic rise in the price of Bitcoin in 2021, the Office of Science and Technology indicated that the government must "protect" the public from cryptocurrencies' pollution.
In the midst of a crypto market shake-up caused by Ethereum, the second largest cryptocurrency after bitcoin, transitioning from proof-of-work to proof-of-stake, some believe this could result in a massive collapse of bitcoin prices.
"Electricity usage from digital assets is contributing to [greenhouse gas emissions], additional pollution, noise, and other local impacts depending on markets, policies, and local electricity sources," the report reads, adding: "The U.S. government has a responsibility to ensure electric grid stability, enable a clean energy future, and protect communities from pollution and climate change impacts."
After rocketing higher in 2020 and 2021, the Bitcoin price crashed back this year, though it remains twice its mid-2020 level.
As a result, the Bitcoin network consumes roughly the same amount of energy each year as some smaller countries. According to the Cambridge Center for Alternative Finance, Bitcoin consumes approximately 110 terawatt hours each year, or about 0.55% of the world's electricity production. This is equivalent to the annual energy requirements of Malaysia and Sweden combined.
Science and Technology recommend developing "performance standards" for Bitcoin and cryptocurrency mining based on clean energy technology. This involves both securing the blockchain network and creating virtual coins using powerful computers. Additionally, -- the Office recommends encouraging the "use of environmentally responsible crypto-asset technologies."
“Should these measures prove ineffective at reducing impacts, the [Biden] 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"— In reference to Bitcoin's proof-of-work system.
Swedish financial regulators and the EU's European Commission discussed the possibility of banning Bitcoin's proof-of-work mining mechanism earlier this year, according to internal European Union documents.
While this is going on, Ethereum, which used to rely on the proof-of-work system pioneered by Bitcoin, has begun a long-awaited transition to proof-of-stake, removing its reliance on miners while reducing its carbon footprint by 99%.
