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Bitcoin mining is good for the energy grid and good for the environment

BusinessCryptoBitcoin mining is good for the energy grid and good for the environment

This week, the US Senate Committee on Environment and Public Works (EPW) will hold a hearing on digital assets and the environment. The hearing will focus almost exclusively on the energy use from bitcoin’s proof-of-work mining process.

In its simplest form, bitcoin data centers (also known as miners) use computers to secure the bitcoin network and process transactions. For this work they are rewarded in bitcoins (B T c, Critics have highlighted the large amount of energy use of bitcoin miners and argued that governments should either ban bitcoin mining or require miners to move away from the proof-of-work protocol and operate in a less energy-intensive fashion. must be forced.

Dennis Porter is the CEO of the Satoshi Action Fund.

This critique lacks important context, such as the fact that more energy is lost transmission and distribution The annual use of electricity is comparable to that of the entire bitcoin network. Attempts by governments to cap bitcoin’s energy use or change the way transactions are processed will not only undermine the bitcoin network but also stifle energy innovation, positive environmental outcomes, and economic opportunity in the US.

Bitcoin can drive renewable energy innovation

Bitcoin has the potential to scale renewable energy production. Renewable energy currently struggles with reliability, cost, and access to electricity throughout the US power grid. Bitcoin mining offers solutions to each of these problems.

are solar and wind energy Intermittently Because they generate energy only when the sun is shining and the wind is blowing. Much of this energy is generated when demand is low, and if this energy is not stored in a battery it is simply wasted or “run down”. currently, state of California On track to reduce 5 million megawatt hours by 2030. it has more energy than below 36 nations Use combined. Bitcoin miners are ready to buy excess power from wind and solar farms, improving revenues for renewable generation and preventing taxpayers from subsidizing energy production. a victory.

miners can also smooth out intermittent generation of renewable energy by participating in grid-balancing services. Miners will not only consume the excess production from wind and solar power, but they will reduce their energy consumption to almost zero when ratepayers and other key sectors need the power, such as hospitals and businesses. Miners routinely reduce their consumption in states that allow such grid participationEnsuring grid operators have the ability to keep the lights on and electricity prices down.

Miners just aren’t good for renewables. They can also use trapped methane, a potent greenhouse gas, which is often uneconomical to bring to market. Methane is often vented or flared from landfills, abandoned wells, and oil and gas operations.

Because bitcoin miners can work anywhere, they can convert trapped methane gas into electricity and use it to mine bitcoins, generating both monetary and environmental benefits. Former Greenpeace activist and researcher Daniel Batten Having said It would take “about 50 mid- to large-sized landfills in the US to completely combust their methane… to make the entire bitcoin network carbon negative” – a feat that would be difficult for any other industry to accomplish. Almost impossible unless they do so via buyout. carbon credits.

These use cases highlight just a few of the ways bitcoin mining can reduce overall emissions while encouraging the creation of America’s energy resources. Bitcoin mining should be viewed as an effective tool for a low-emission future, not as a contributing problem.

The Dangers of Proof-of-Stake

Despite these advantages, many have pushed the bitcoin industry to go the other way to create new blocks of transactions, specifically a mechanism known as -proof-of-stake, Rather than using specialized computers, proof-of-stake relies on users locking up their cryptocurrency for a period of time in a process known as “staking”. This allows users to process transactions and generate a passive income while contributing to securing the network. While this process uses less energy, it comes with other complications.

Gary Gensler, chairman of the Securities and Exchange Commission (SEC), recently sat down for a Interview Wherein he argued that every cryptocurrency other than bitcoin was a security and therefore under the jurisdiction of the SEC. came a few days after the interview SEC filed An enforcement action against cryptocurrency exchange Kraken for letting its US customers use its Ethereum token – EtherETH) – to participate in “staking” to validate the Ethereum network. This enforcement action included a hefty fine and a cease and desist order.

On top of these actions, Gensler has commented separately that any cryptocurrency that uses proof-of-stake may be a security and therefore fall under the regulatory jurisdiction of the SEC. By maintaining its current proof-of-work structure, those in the bitcoin space can avoid such complications.

The bitcoin community should continue on its current path and empower renewable energy, reduce methane emissions, and use stalled energy to improve both the network and America’s electricity generation. EPW’s core mission is balancing fundamental American needs such as energy reliability alongside environmental stewardship. Bitcoin can help America achieve this.

With this in mind, we must embrace bitcoin mining and promote its development across the country to ensure that America leads the world in the next wave of energy and environmental innovation.

The views and opinions expressed here are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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