US House of Representatives lawmakers discussed the energy impact of mining in a hearing yesterday: Questions ranged from whether Bitcoin (BTC) could potentially transition to a proof-of-stake consensus mechanism (PoS), to that of determining whether the mining can be considered “waste”.
Most of the witnesses disagreed among themselves, especially on whether proof-of-work (PoW) as a consensus mechanism for blockchains can be considered wasteful.
According Ari Juelsprofessor at Cornell Tech and chief scientist of Chainlink Labs (Chainlink uses PoS), proof-of-work blockchains are a “wasteful” use of energy, given that proof-of-stake exists as a “perfectly viable alternative”.
However, according to Brian BrooksCEO of blockchain infrastructure provider Bitfury and former “Comptroller of the Currency”, mining does not fit the definition of waste in its most basic sense.
“The measure of waste in an economic activity is whether the activity produces value that other people are willing to pay for,” Brooks said. He added that Bitcoin, as the first cryptocurrency in the market, is therefore “clearly not wasted, it is an asset that a large number of people are willing to pay for.”
He also explained that while proof-of-stake is “an important innovation”, the two systems serve different purposes in the crypto ecosystem but only proof-of-work being able to offer what he called “a system truly untrustworthy.”
“Proof of stake has a reliance on stakeholders at its core,” Brooks said.
“Decentralization is what crypto is all about, and Bitcoin is the most decentralized of all blockchains. […] It’s not just about replacing forms of money in financial transactions, it’s about replacing the concept of networks in general,” the former regulator said.
Brooks also argued that PoW systems not only benefit crypto networks, but also contribute to technological advancements in other areas of the economy.
“Bitcoin mining isn’t the only place low-voltage ASICs are used, nor is immersion cooling just used in mining. And thanks to the economic incentives created by this activity, these innovations energy-saving devices have been developed and are now being used in other sectors of the economy,” Brooks said.
With the exception of Professor Juels, the other witnesses at the hearing were generally in favor of proof of work, the CEO of Soluna Computing, John Belizaireand the shareholder of Jordan Ramis PC, Gregory Zerzanboth highlighting how crypto-mining can help stabilize power grids.
Unlike traditional data centers, flexible network-connected mining rigs can scale operations up or down at the request of the network operator, the pair explained, noting that this can help keep networks balanced.
“The question for regulators is not how much energy Bitcoin uses, but what kind of energy it uses. We believe miners can be partners in the important work of decarbonizing our economy,” said declared CleanSparkan American Bitcoin mining energy technology company, in an emailed comment.
According to her, mining also leads to the development of new energy infrastructure by allowing faster return on investment from renewable energy projects such as solar and wind power.
However, members of the crypto community did not seem impressed with the talks.
“Congress Calls on Chainlink’s ‘Chief Scientist’ to Denigrate Proof of Work,” Says Alex Gladsteinresponsible for the strategy of the Human Rights Foundation.
Some users of Reddit’s r/CryptoCurrency forum said the testimonials still helped them better understand the energy usage in Bitcoin.
“Bitcoin mining does not destroy the environment but accelerates green energy production by providing a stable baseline when demand is low,” wrote one user who was concerned about Bitcoin’s energy consumption.
Disappointed before the hearing by the choice of people invited to testify, Nic Carterco-founder of Corner Metrics and general partner of Castle Island Venturessaid he “won’t follow the hearing” because no major US-based mining companies were invited to participate.
It is “revealing that the committee specifically avoided them”, said declared Mr Carter, adding that Mr Brooks’ testimony was the “only bright spot” of the hearing.
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