Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.
On September 8, the White House published a report (“Climate-Crypto Report”) on Climate and Energy Implications of Crypto-Assets in the United States, which was followed by a detailed Fact Sheet summarizing the findings in the report. The Climate-Crypto Report was prepared following President Biden's March 9, 2022 Executive Order 1407 that mandated examination of distributed ledger technologies' (“DLT”) impact on energy transactions and ultimately on the environment.
The Climate-Crypto Report addressed four questions: (1) how digital assets affect energy usage and grid management? (2) what is the scale of climate, energy and environmental impacts of digital assets? (3) what are potential uses of DLT that could support climate monitoring? and (4) what critical policy decisions, innovation and research are needed to mitigate the environmental impact of digital assets?
The Report acknowledges that although President Biden's Administration has set the policy at responsible development of U.S. digital assets markets, it also recognized the increasing costs on U.S. energy infrastructure and the impact on the environment, considering that mitigation of climate change is also one of President Biden's key priorities.
First, the Climate-Crypto Report finds that crypto-assets use a significant amount of electricity – globally equal to the amount of electricity used by Argentina or Australia. It also found that not all crypto-assets technologies consume the same amount of power, with Proof of Work (“PoW”) mechanisms far exceeding the power usage the Proof of Stake (“PoS”) processes.
Second, the Climate-Crypto Report found that there is a sizable impact on the environment of anthropogenic greenhouse gas (“GHG”) emissions associated with crypto-assets markets. In addition to the increased demand on the power grid, generation of crypto-assets also generates noise pollution, water impact, and a lot of other environmental waste.
Third, the Report also finds that there are broad and various uses of DLT in environmental markets, better resource coordination and supply chain management.
Finally, the Climate-Crypto Report recommends reduction of associated GHG emissions, reduction of power-intensive technologies (such as PoW) in favor of more low-impact PoS processes, and efforts to avoid negative impacts on the underserved and overburdened communities. In fact, on September 6, Ethereum did just that – it launched The Merge to switch to the less energy intensive PoS process.
During the recent Senate hearing on September 15 to review the recently proposed Digital Commodities Consumer Protection Act, several panelists acknowledged the carbon footprint of crypto-assets markets. These findings are further addressed in a September 16 release from the White House that proposed a comprehensive framework for responsible development of digital assets in the U.S.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
  © Mondaq® Ltd 1994 – 2022. All Rights Reserved.

Passwords are Case Sensitive

Forgot your password?
Free, unlimited access to more than half a million articles (one-article limit removed) from the diverse perspectives of 5,000 leading law, accountancy and advisory firms
Articles tailored to your interests and optional alerts about important changes
Receive priority invitations to relevant webinars and events
You’ll only need to do it once, and readership information is just for authors and is never sold to third parties.
We need this to enable us to match you with other users from the same organisation. It is also part of the information that we share to our content providers (“Contributors”) who contribute Content for free for your use.


Write A Comment