First U.S. House Hearing On Bitcoin Mining Shows Misunderstandings
A lack of knowledge on proof of work prevailed by most Representatives as they questioned the energy use of bitcoin mining.
The first Congressional hearing on bitcoin mining took place on Thursday after a U.S. House subcommittee scheduled it to get a better understanding of the environmental impacts of the industry.
Rep. Diana DeGette, a Democrat from Colorado, said in her opening statement that despite the promising applications of Bitcoin and blockchain technology, mining’s energy usage and carbon emissions ought to be at the forefront of all discussions about cryptocurrency.
“We cannot bring retired fossil fuel plants back online or delay the retirement of some of our oldest and least efficient plants in support of energy-intensive crypto mining,” said Rep. Frank Pallone, the Democrat who heads the Energy and Commerce Committee, according to a Bloomberg report.
The hearing featured five witnesses, who testified on their knowledge of the power consumption of Bitcoin and cryptocurrency as well as their legitimacy.
However, only two witnesses portrayed a good understanding of Bitcoin’s proof of work (PoW) consensus mechanism, being able to explain to the subcommittee why PoW is needed and can’t be substituted by proof of stake (PoS).
John Belizaire, CEO of Soluna Computing, told Bitcoin Magazine in an interview after the hearing that Bitcoin “can’t take the risk to shift” to PoS, a consensus mechanism that “may actually undermine what has given [Bitcoin] its strength and growth.”
Belizaire added that consensus mechanisms other than PoW “reintroduce the centralized concept of trust,” and that he sees Bitcoin and crypto as “two separate things.”
“On the one hand you say [bitcoin mining] uses all of this energy, but it could be the catalyst for renewable energy,…there are billions of dollars being stored in it every day, and…it’s launching all of this ecosystem and financial services,” Belizaire told Bitcoin Magazine, referring to the level of misunderstanding the Representatives showed about bitcoin mining.
Brain Brooks, CEO of bitcoin miner Bitfury and former acting comptroller of the currency, said that it isn’t fitting for policymakers to decide whether Bitcoin represents a “good” use of energy — a decision that should be left to the market to decide. Brooks also highlighted how bitcoin can actually help the energy economy of the United States.
“Bitcoin…is like an energy derivative, it provides real-time price signals to the market about the most valuable use of energy in a given place,” Brooks said. “The vast majority of industrial-scale bitcoin miners are the price transmission belt for all of the energy globally.”
Brooks went on to explain that his company “virtually only” deploys mining operations in joint ventures with utility or renewable providers, because “they can only make the economics work if there’s a baseload consumer there, and that’s almost always bitcoin mining.”
“All of our projects are: some utility says, ‘We can’t build another plant unless you will come and be our interruptible source of baseload consumption,’” Brooks added. “That’s the beauty of bitcoin mining.”
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