Cryptocurrencies are “mined” as computers operate “proof of work” algorithms that solve complicated mathematical problems, thereby earning new tokens. According to the letter — signed by Sen. Elizabeth Warren (D-MA), Rep. Rashida Tlaib (D-MI), and other lawmakers — the amount of power used to procure the coins now rivals the total annual energy usage of countries like Norway or Sweden, and may surpass the reductions in greenhouse gas emissions ascribed to electric cars.
“State and federal regulators currently know little about the scope of the problem. There is no national or state reporting requirement or compilation of the locations of cryptomining facilities in the United States, and no federal regulations specifically governing cryptomining,” the lawmakers explained. “Consequently, policymakers and the public do not have a comprehensive source of information about where these operations are located, how much energy they consume, and what their sources of energy are — and without the energy use and source reporting, there is a subsequent lack of data regarding the associated air emissions of pollutants or carbon dioxide.”
The letter was sent after many cryptocurrencies — decentralized digital money that can be transferred between users’ virtual wallets — recently plummeted in price. The exchange rate of Bitcoin, for instance, fell from around $48,400 at the end of December to roughly $21,600 as of Monday. Exchange platform Coinbase is preparing to lay off 18% of its workforce, while the founders of cryptocurrency venture fund 3AC have been nowhere to be found as their company defaults on hundreds of millions in loans.
The lawmakers reached out to seven cryptocurrency companies in the United States, leading them to conclude that “cryptominers are large energy users that account for a significant — and rapidly growing — amount of carbon emissions.” Invoking the Clean Air Act, the letter urges the agencies to require energy consumption reports from entities mining the currencies.
“This collected data would enable valuable public policy activities, including better monitoring of energy use and trends, better evidence basis for policy making, improved data for national mitigation analyses, better abilities for evaluating technology policies for the sector, and better modeling of national and regional grid loads and transitions,” the lawmakers said.
Cryptocurrencies are particularly popular among younger Americans. The 2022 Investopedia Financial Literacy Survey showed that 28% of Millennials — those between the ages of 26 and 41 — expect to use the digital coins to support themselves in their retirements. Nearly 20% of Gen Z — those between 18 and 25 — said the same.
Warren has also called for a crackdown on the cryptocurrency sector due to a purported lack of regulation in the marketplace.
“I have become increasingly concerned about the dangers cryptocurrencies pose to investors, consumers, and the environment in the absence of sufficient regulation in the United States,” she wrote to Treasury Secretary Janet Yellen last summer. “However, as the demand for cryptocurrencies continues to grow and these assets become more embedded in our financial system, the Council must determine whether these trends raise concerns beyond investor and consumer protection and extend to broader systemic vulnerabilities that could threaten financial stability.”