Several bitcoin communities and industry leaders have issued a letter to the Environmental Protection Agency (EPA) to clear up confusion and educate the public about bitcoin’s electricity consumption. Among its 55 signatories are Microstrategy CEO Michael Sayer and “Block Head” Jack Dorsey.
proof of stake is not the answer
The letter – shared by the Bitcoin Mining Council – was designed as a response to a previous Congressional request to review mining facilities compliance with the Clean Air Act and the Clean Water Act.
Specifically, the request alleges that evidence of work mining facilities “poison communities” by creating massive greenhouse gas emissions, electronic waste and “noise pollution”. It also claims that the consensus mechanism itself is “inherently energy inefficient”, and cites Proof of Stake as an alternative, clean “mining technology”.
However, the reaction of the bitcoin industry considers many of these claims to be misleading. First, it fixes the congressional combination of data centers with power generation facilities. Datacenters that host miners only buy pre-produced energy from the open market, like Amazon, Apple and Microsoft.
In addition, it discusses the problems surrounding the proof of stake consensus mechanism:
“Proof of Part is not a ‘mining technology,’” it says. “It is a technique to set authority over a distributed ledger, but it does not achieve decentralized distribution.”
At a basic level, proof of work requires network users to expend energy competing for the right to build the next block of bitcoin. Conversely, Proof of Stake provides creation rights to those who stake the largest amount of their existing crypto holdings without the need for electricity consumption.
Many in the crypto industry, including the co-founders of Ripple and Solana, argue that Bitcoin should adopt the latter mechanism due to its greater efficiency.
However, the council’s letter states that Proof of Stake lacks a proven track record, has “single points of failure”, and is less credible for “controlling a global, non-political monetary system”.
Conversely, members claim that the proof of work’s energy consumption is not as bad as it is made out to be. For one, while Congress stated that coal and gas facilities are being reopened to mine bitcoin, the letter makes clear that the general trend among the industry is in fact toward renewable energy.
clearly false claims
Although most of the initial letters were simply “misleading”, the council considered Congress’s claims about bitcoin’s e-waste as “outright false”. His letter cited a paper by Alex de Vries – an economist at the Deutsche Central Bank – which estimated that mining ASICs depreciate every 1.3 years on average. This led to a theoretical estimate that miners generate 30,700 tons of electronic waste each year.
In fact, there is currently an active market for vintage bitcoin miners. For example, Bitmain’s s7 and s9 ASICs are still visible on the blockchain accounting for a significant portion of bitcoin’s hash rate. These machines were released in 2015 and 2016 respectively.
The council also corrected the claim that a single bitcoin transaction could “power the average American household for a month”. In fact, bitcoin transactions consume slightly more electricity than a Google search and are not redeemable for energy.
They do this to compete for newly created coins and transaction fees that consume energy on the network. Almost all current miner revenue now comes from the East, making bitcoin’s ‘per transaction’ energy cost analysis deeply flawed.
The letter concludes by saying that bitcoin mining does not raise environmental issues, but is “the most important financial, economic and accounting innovation in the history of humanity”.
PrimeXBT Special Offer: Use this link to register and enter code POTATO50 to get up to $7,000 on your deposit.