18th July 2022 > > The environment.

tl;dr

Environmental concerns about cryptos continue to take centre stage.

Market Snap (at time of writing)

Market Wrap

That’s a nice couple of days under our belts. Long may it last.

Occasional Series – The Met Office …

… warns today that “in general” it would be safer to stay indoors if possible.

Seriously?

Curious Cryptos’ Commentary – US, cryptos and the environment

Included in Joe Biden’s executive order on March 9th 2022 was a demand that governmental agencies – including the Environmental Protection Agency (EPA) – should look at potential risks and benefits of cryptos and report back within 180 days.

One specific requirement was the potential for cryptos to “impede or advance efforts to tackle climate change at home and abroad.”

Unsurprisingly there is a very heated debate both inside and outside the crypto world regarding energy usage of cryptos, especially those utilising a proof-of-work (PoW) consensus protocol, the obvious examples being BTC and ETH, at least for now.

I refuse to be drawn into that debate, as it seems to consist mostly of twitter shouting at each other, but we must remain aware of the potential impact on cryptos.

A group of Congress members and Senators have written to the Department of Energy (DoE) and the EPA asking that regulators should demand more information from miners about energy use and associated emissions.

This letter was in response to written submissions from seven miners addressing some key concerns and questions raised by this group. The seven replies can be read in detail here:

https://www.warren.senate.gov/imo/media/doc/Seven%20Cryptominers%20Responses%20to%20Senator%20Warren.pdf

though I must warn you, it is a touch dry in places.

This focus and scrutiny on energy usage is having an impact at state level.

New York state recently denied an air permit to BTC miner Greenridge for a natural gas plant to power its mining operation, a decision somewhat at odds with recently installed New York City mayor Eric Adams’ pledge to make NYC “the centre of Bitcoins”.

Meanwhile I think it is Texas that is wooing miners with lower rates for electricity derived from renewable sources.

Taken in the round, greater transparency is always a good thing.

Curious Cryptos’ Commentary – EU, cryptos and the environment

The European Central Bank (ECB) has published a paper on crypto’s energy consumption:

https://www.ecb.europa.eu/pub/financial-stability/macroprudential-bulletin/html/ecb.mpbu202207_3~d9614ea8e6.en.html

The introduction sets the tone for the rest of the paper:

“Some crypto-assets like bitcoin have a significant carbon footprint, with an annualised energy consumption estimated to be similar to that of some mid-sized countries.”

It also however does put forward an alternative view, expressed by the Bitcoin Mining Council (BMC) last year:

“… bitcoin mining uses a negligible amount of energy, is rapidly becoming more efficient, and is powered by a higher mix of sustainable energy than any major country or industry.”

Ramping up the pressure, the report likens PoW to fossil fuel cars and PoS (proof-of-stake) to electric vehicles.

Regular readers will recall that a recent attempt was made to ambush the progress of the EU’s leading legislation on cryptos (Markets in Crypto Assets or MiCA) by “banning” PoW coins from the European arena.

This report from the ECB will give succour to the supporters of such a “ban”, which could be implemented from 2025 onwards.