White House targets crypto, reduces carbon footprint.

  • June 8, 2022
  • Jennifer Moore
White House targets crypto, reduces carbon footprint.

News has it that the U.S. government is focussing energies on a study to draw up future policy decisions about the energy consumption and carbon footprint of cryptocurrency.

The proof-of-work model that a lot of blockchains use is energy-exhaustive. This can be completely replaced by the more climate-friendly proof-of-stake model to also conserve energy costs.

‘Energy consumption’, and ‘carbon emission’ are key to the research work initiated by the Biden administration. The objective behind the effort is to strike out the prevalent proof-of-work consensus mechanism that Bitcoin and other blockchains use. This raises major suspicions regarding its impact on the prices of Bitcoin and Ethereum. One can’t but speculate a major game-change as Ethereum has progressed a leg in making the shift from PoW to PoS. 

Also Read: Paraguay May Accept New Crypto Bills Despite Internal Objections

Crypto and Energy

This is something crypto owners and investors did not consider in the rising years of crypto. It is the inordinate amount of energy consumed by cryptocurrencies through their mining processes. Bitcoin mining alone accounts for power consumption that is more than the total energy consumption by the entire of Argentina, each year. This is aside from generating 65 megatons of carbon dioxide in the same length of time. Considering the sheer number of other cryptocurrencies in operation and imagining the quantity of energy lost to their mining, it’s not hard to accept that governments and climate activists are growing increasingly concerned. There is a valid reason why these agencies would want to look at alternatives to reduce the harmful environmental impact at the very least. 

Also Read: Climate Tech Solutions is The Need Of The Hour! Here’s Why

The New Crypto Policy

Given that the invention of cryptocurrencies has unearthed a totally different perspective on assets and investments. The alternatives proposed by it backed by the philosophy behind it are indisputable and revolutionary at the same time. Despite that experts and pioneers in this field have emphasized the need for regulations. Be it to curb corrupt practices, protect public interests, secure the assets, or cut down the enormous carbon emission from its mining. Regulations and appropriate policy-ing are required to optimize the applications and the utility of crypto. 

Among the two alternatives, proof-of-stake is the more energy efficient one while proof-of-work offers the more secure staking model. It is also notable that Ethereum the foremost among altcoins and second only to Bitcoin in market value has already initiated the shift from PoW to PoS. The outcome of this research may mandate the blockchains to change to the PoS staking mode, going forward. Chances are that the enactment of this policy may not sit well with a number of crypto-organizations. They may choose to move base to operate out of a country that does not impose such regulations. 

The Price Impact

Following the massive crackdown by China last year on the mining of Bitcoin, and Ethereum, mining rigs were forced to flee the country for more crypto-friendly jurisdictions. This triggered a market crash of the leading cryptocurrencies wiping several trillion USD out of the market.

In this context, it is relevant that Ethereum’s transition to a PoS began last year. It may complete in the next three months. This could also tilt the outcome of the report siding heavily with the PoS staking model. This could, in turn, lead to Ethereum toppling Bitcoin for the first time in their run.

Wrapping up

The White House initiative has only commenced the investigation into the mentioned staking mechanisms. The resultant report would second President Joe Biden’s March executive order. Thereafter, that alerted federal agencies on the fast-growing crypto market and industry. It also dictated the publishing of reports that could pilot the administration’s policy decisions.

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