Are Regulations Coming to Address Energy Consumption in the Cryptocurrency Industry?
Creating a single bitcoin requires 750.33 kilowatt-hours of electricity, which is the equivalent of powering a house for 25.72 days. Recent crypto-focused legislative proposals are an indicator of the increased attention on energy usage and environmental impacts of the cryptocurrency industry.
March 15, 2023 at 02:19 PM
6 minute read
Banking and Finance LawsOver 300 million people worldwide own cryptocurrency. The cryptocurrency industry consists of over 12,000 cryptocurrencies, 200 exchanges, and myriad cryptocurrency "miners" that contribute to the market's $3 trillion net worth. Since the proliferation of cryptocurrency, the federal government has made calls for legislation on digital funds. In 2022, at least 50 bills focused on crypto policy were introduced to implement boundaries and rules for the largely unregulated industry, but lawmakers were unsuccessful in enacting any of the proposed bills. While the focus of policy discussions has been on investor protection, especially in light of the recent collapse of the major cryptocurrency exchange FTX, the issue of energy consumption is rising in prominence. Crypto mining is energy intensive and can have significant impacts on the environment and electric grid management. A robust bipartisan bill called the Responsible Financial Innovation Act (S. 4356) (hereinafter RFIA) was proposed in 2022, which sought to monitor cryptocurrency's energy consumption and could have led to a new government regulatory program. The bill, which is expected to be reintroduced this year, signals the beginning of a shift in the government's disposition to address concerns about the industry's impact on electric grid reliability and the environmental effects of its energy consumption.
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