• Considering the high energy usage and carbon footprint of Proof-of-Work, the U.S. government is considering banning it.
• The White House report also states that excess consumption by Bitcoin miners could raise electricity costs for local consumers.

On Thursday, September 8, the White House released a report on “Climate and Energy Implications of Crypto Assets In the U.S”. The report had a proposal over completely banning the Proof-of-Work consensus mechanism used for mining Bitcoins.

This could have huge implications considering that a large part of Bitcoin mining activity is currently concentrated in the United States. The report notes that Bitcoin negatively impacts the environment and even hints toward banning proof-of-work. Bitcoin’s high energy use was precisely the reason behind China’s ban on Bitcoin mining last year. In their report, the White House Office of Science and Technology notes:

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.

Should these measures prove ineffective at reducing impacts, the 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.

Amid this year’s soaring summer, U.S. consumers had a high demand for electricity, and major cities like California have been facing an energy crunch. Cities like Texas where Bitcoin mining is largely concentrated have been also facing heavy energy demand. Well, this has got the attention of the authorities and the regulators.

How crypto mining affects the electrical grid

The Office of Science and Technology also noted that Bitcoin mining facilities will create additional stress on the power grid which could lead to fire hazards, blackouts, and equipment deterioration. The report also states that excess consumption by Bitcoin miners could raise electricity costs for local consumers.

The report notes: “Depending on the energy intensity of the technology used, crypto-assets could hinder broader efforts to achieve net-zero carbon pollution consistent with U.S. climate commitments and goals”.

If the regulators were to announce a crackdown on proof-of-work mining, it could majorly impact Bitcoin. However, Bitcoin competitors and altcoins like Ethereum are already moving to a safer zone. Next week, the Ethereum blockchain will undergo the Merge event after which it will transition to a Proof-of-Stake consensus model.

The PoS network involves having stakers and validators for approving transactions and thus it’s free from any mining requirements. Last week, Ethereum co-founder Vitalik Buterin also expressed his concern with Proof-of-Work stating:

A consensus system that needlessly costs huge amounts of electricity is not just bad for the environment, it also requires issuing hundreds of thousands of BTC or ETH every year.

Similar to Ethereum, even the Cardano and other blockchains that run on the PoS consensus model shall stay unaffected. Soon as the report came out, Cardano founder Charles Hoskinson also shared his opinion on the decision to ban PoW mining. Hoskinson recommended that Bitcoin should consider adopting the Ofelimos protocol that employs the Proof-of-useful-work model. Here’s what he had to add more: