A group of cryptocurrency experts conceded the vast energy needs of the burgeoning crypto mining industry but told Congress on Thursday there are many ways to mitigate the growing energy use.
“Perhaps the most important point I will make here today is to turn the conventional narrative on its head and consider that crypto’s energy consumption is a feature, not a bug,” said John Belizaire, CEO of Soluna Computing, a developer of green data centers for cryptocurrency. “The reality is that if we execute well, computing can be a catalyst for growth in clean energy – a crucial component to meeting our goals of pollution reduction and rural job creation.”
Soluna, he explained, builds modular data centers on-site at clean power plants to repurpose energy that would otherwise go to waste. “We buy this ‘curtailed energy,’ as it’s called, from renewable power plants and convert it into clean, low-cost global computing. Our data centers process jobs that can help discover new drugs, provide security to new digital assets, or enable your home assistant to play your favorite song – all dispatchable and computer intensive.”
“I encourage you to think about how computing technology can help improve the flexibility of the grid, accelerate the renewable energy transition and boost our global competitiveness,” he said. “The place to focus is on what we can do to deter the bad actors in the industry from using anything other than cleanly produced electricity.”
Belizaire and four other crypto experts were testifying during a hearing by the U.S. House Energy and Commerce Subcommittee on Oversight and Investigations on the energy impacts of blockchains.
The blockchain community, according to Ari Juels, a professor of technology at Cornel Tech in New York, has devised new ways to realize blockchains without proof of work, a term he described as ensuring fair participation, and that no one individual can easily take over the system. The leading alternative, which he said consumes far less electricity, is proof of stake. Juels said the No. 2 cryptocurrency, Ethereum, plans to adopt proof of stake.
“Nearly all new blockchain systems already use it today to secure hundreds of billions of dollars in value,” Juels said. “These systems are faster than Bitcoin and support what are called smart contracts, small programs that run on blockchains. Smart contracts are powering some of today’s most exciting blockchain applications, including what’s called decentralized finance, or DeFi, and non-fungible tokens, or NFTs.”
“But we have far more energy efficient alternatives than proof of work. For the sake of the environment and our energy infrastructure in the United States, I believe that we need to embrace these newer options,” Juels told lawmakers.
Rep. Diana DeGette (D-CO), chair of the subcommittee, said she is concerned with the increase in energy demands by the crypto industry while the focus of the United States is on reducing its carbon footprint and greenhouse gas emissions.
Democrats cited one recent study that found the amount of energy required to validate just one Ethereum transaction could power a U.S. home for more than a week, while the energy required for a single Bitcoin transaction could power a home for more than 70 days.
Brian Brooks, CEO of BitFury, which provides infrastructure products and services for the cryptocurrency market, told lawmakers the available data suggests that bitcoin mining consumes a small but “nontrivial” amount of energy relative to the amount of value created, and that energy is on average drawn more from sustainable sources than the U.S. electric grid as a whole.
“It is important that bitcoin not be judged solely on the basis of how much energy it uses, but rather on the basis of its energy mix relative to other energy users in the economy and on the basis of the incentives bitcoin creates for creating a more sustainable energy mix,” Brooks said.
Rep. Morgan Griffith (R-VA) said crypto miners are already partnering with energy producers in his state to make energy costs lower for other users and to smooth out the electric grid.
Brooks said efforts to find more incentives for the crypto industry have already helped create more energy efficient methods with spillover effects, like application-specific integrated circuits (ASIC) semiconductors.
Rep. David McKinley (R-WV) said he hoped that Congress would not penalize fossil fuel states like his that have attracted high energy users like crypto companies. Rep. Neal Dunn (R-FL) said he hopes Congress will not try to apply new regulations to the crypto industry that would “strangle” it.
Gregory Zerzan, a shareholder of financial services law firm Jordan Ramis P.C., told the panel “an increasing interest in financial regulation for crypto would be inappropriate” and could drive the industry to other markets. “It is worth noting that excluding the bulk of digital assets from financial regulations does not mean they are unregulated,” he insisted. “For instance, the Federal Trade Commission Act has protected Americans from “unfair or deceptive acts or practices in or affecting commerce” since 1914. The potential for fraud, misconduct and abuse certainly exists in the digital assets market, as in all markets. The FTCA’s powerful consumer protection provisions, which clearly apply to internet-based transactions, afford a strong layer of protection for market participants.”
Rep. Jan Schakowsky (D-IL) expressed concern that crypto’s need for additional energy has promoted the reopening of shuttered coal mines in Pennsylvania and Oklahoma, harming clean energy efforts.
Rep. Griffiths asked if the cold water and air in abandoned mines in southwestern Virginia could be used to help cool large crypto data centers. Both Zerzan and Steve Wright, former CEO of Chelan County Washington Public Utility District and Bonneville Power Administration and another expert witness, answered in the affirmative.
Rep. Tom O’Hallaran (D-AZ) said the committee needs to explore the issue of crypto mining on the nation’s electric grid in greater detail.