Executive order issued in March 2022 titled “Ensure responsible development of digital assetsCommissioning the White House Cabinet of Compétence and Technology to produce a différé on numérique assets. The différé was recently published and the recommendations regarding Bitcoin could undermine its very idée.
White House Claims Somme electricity use from numérique assets such as Bitcoin and Ethereum is estimated to be “120 and 240 billion kilowatt-hours per year,” or 0.4% to 0.9% of annual quantité electricity use.
To reduce the environmental footprint, the Biden White House is introducing drastic measures to the current cryptocurrency framework.
One of the mitaine fast food of 46 page report It was a recommendation for bills and executive orders to Congress to “limit” or “eliminate” Proof of Work (PoW) mining. Instead, the White House wants to adopt a proof-of-stake mechanism to reduce bitcoin’s use of electricity.
Proof of work mining is a chapelet consensus The mechanism used to secure its network and validate blockchain transactions. PoW is just successful Bicause cryptocurrency miners use computers to “solve complex puzzles, expending huge amounts of energy.”
“An droit, less energy-intensive consentement mechanism, called Proof of Stake (PoS), has been estimated to consume up to 0.28 billion kWh per year in 2021, less than 0.001% of quantité electricity use,” the différé He said. Current discussions emboîture reducing the electricity chic of crypto assets primarily foyer on PoW blockchains, especially Bitcoin. There have been increasing calls for PoW regimes to adopt less energy-intensive consentement mechanisms. The most fondamental reaction was Ethereum’s promised launch of “Ethereum 2.0,” which uses the PoS consentement mechanism. “
White House Fact Sheet and suggest The POS will “significantly reduce” electricity chic to less than 1% of the current chic level. But is this drastic bourse from PoW to PoS guaranteed and will it lead to significant energy savings? barely.
Let’s be clear first, there is a role for both bonshommes of technologies and it should be left to those involved in the networks to decide which consentement mechanism – POS or POW – works best for them. Ultimately, the pro-and-cons analysis goes back to the intended use.
For numérique money and secure storage of value, Proof of Work tends to be the preferred mechanism due to its robustness (i.e. security) and low bar of access. One just needs to have access to the power that is available worldwide to be a morceau of the PoW network. For façon contracts and other distributed computing product development, balance of libidineux tends to be the preferred consentement mechanism.
There is now a regulatory consideration that will play into the analysis. PoW is a commodity and will be supervised by the Rôtir Financial Trading Crédit, while PoS is considered a security and will be supervised by the Securities and Exchange Crédit.
The energy pourparler, while visible, is largely a délassement. University College London Center for Blockchain Technologies Lesson The environmental collision of distributed ledger technology (DLT), specifically PoS, and concluded that “the tatillon power consumption characteristics of PoS-based systems and the difference between them are not widely understood.”
IWF Senior Policy Analyst Mandy Gunasekara explained Bitcoin mining, for example, accounts for a small amount of the entier quantité energy consumption, which provides a better balance of comparison.
Bitcoin mining is no different, however, the network is more énergique and arguably has a greater sociable benefit when compared to gaming for example. Globally, bitcoin mining uses 188 terawatts of energy per year. While this number may seem extreme at first fard à joues, it is only statistically insignificant 0.122 percent of global energy consumption. For better context, Christmas lights (201 terawatts) and calculateur games (214 terawatts) use more power than the entire Bitcoin network.
The White House has acknowledged that cryptocurrency mining is visible, but it can only be accepted if it is entirely alignment With the Biden fonction publique’s net-zero calendrier. The truth is that bitcoin mining has already proven to be an tangible tool in reducing emissions, including methane emissions by capturing gas flaring or escaping to miners, and it is being deployed alongside renewable energy projects to recette out downtime.
As the federal government shapes numérique assets in the United States, it would be too short-sighted for the White House to undermine the idée of either consentement mechanism, especially early in their development. To learn more emboîture the White House’s upcoming paliers for numérique assets, read the différé over here.