In a much-anticipated hearing earlier today, Congress heard testimony on cryptocurrency mining.
Despite standing criticisms of environmental impacts and energy usage, the hearing saw remarkably little excoriation of mining.
The lawmaker perspective
The hearing took place before the House Energy and Commerce Committee’s Oversight Subcommittee. It was actually the subcommittee’s first hearing since September, highlighting the increased profile of crypto as a current focal point for policymakers.
With Ethereum expected to transition to proof-of-stake consensus this year, the Bitcoin network was the central point of debate. Impressed with PoS's reported advantage in energy use, subcommittee chairwoman Diana DeGette (D-CO) even asked, "Why can’t Bitcoin be moved to the proof-of-stake method?"
"We cannot bring entire fossil fuel plants back online," said Rep. Frank Pallone, chairman of the full Energy Committee, of the return of peaker plants now used for Bitcoin mining. "Particularly in light of cleaner blockchain technologies that already exist."
Bitcoin's energy use is an especially pressing topic as the US has become the top source of Bitcoin's hash rate in the world over the past year, since a widely reported clampdown on mining in China. That crackdown also cited energy use, but China has, in the same time period, taken drastic steps against its domestic tech industry, especially local pay platforms.
"The Chinese are more concerned about control than about energy consumption," Morgan Griffith (R-VA), the leading Republican on the oversight subcommittee, told The Block. "They haven't hesitated to build new coal power plants to take care of whatever other industries they want. From our viewpoint, I think we have to try to find ways that we can maximize the potential of cryptocurrency and at the same time minimize the energy consumption."
And indeed, even the most caustic commentary from today’s hearing did not go so far as to advocate an explicit crackdown.
As far as legislation goes, the vehicle most likely to focus on crypto mining would be the remnants of the Build Back Better Act. The Biden administration has effectively conceded defeat on that massive bill and is looking to divide its provisions into chunks, many of which will be focused on addressing climate.
It's possible that some of those will include new propositions to restrict crypto mining or provide oversight of mining companies' energy mix. But right now, any consensus on approach has yet to materialize at the federal level given Congressional gridlock.
The witness controversy
As The Block anticipated earlier this week, despite a fairly strident hearing memorandum, the witnesses in attendance were fairly positive towards the role of PoW mining. The only one who truly seemed to support the idea of abandoning it was Cornell Tech’s Ari Juels, who began his testimony by declaring: "Bitcoin does not equal blockchain."
In contrast, Brian Brooks, CEO of Bitfury said that "decentralization is what crypto is all about, and Bitcoin is the most decentralized." It's a situation he explicitly attributed to Bitcoin.
Another witness, John Belizaire, CEO of Soluna, advocated for policies that would incentivize green energy usage among US miners over potential attacks on PoW. Soluna’s origins were as a renewable energy firm. It now sets up modular data centers and, especially, crypto mines for isolated energy sources.
"We had a lot of the same challenges that power plants here in the US and all over the world faced, which is that our power gets stranded," Belizaire told The Block. "We realized that if you combined mining and other computing that's like mining, you could essentially bring a new load that you can bring to the generation instead of having to bring the generation to the load."
There was, nonetheless, considerable controversy over the witness list. Nic Carter, a partner at Castle Island Ventures and a person many in the crypto industry put forward to testify, took to Twitter to decry the hearing’s preparations, which did not include any of a number of mining companies that are publicly traded in the U.S.
In an email to The Block, Carter said: "It's a scandal that core sci, riot, mara, greenidge, stronghold, etc weren’t invited. The memo calls out greenidge and stronghold by name. But they don't get a chance to defend themselves? It's like a hearing on EVs without inviting Tesla. It makes no sense."
Carter further wrote that he knows "for a fact that they weren’t invited. They were all willing to participate. Same for me."
A representative for Core Scientific, for one, told The Block: "Core Scientific, and others, provided briefing information to the staff," but did not mention any invitations to testify.
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