A new study from the Congressional Research Service outlined ways that the U.S. Congress and federal regulators could craft policies to make cryptocurrency mining and related blockchain technologies more efficient and less energy-intensive.
The recommendations are aimed at helping the U.S. power grid handle the rising popularity of digital currencies, whose associated electricity demand can exceed available power capacity in areas near cryptocurrency mining operations.
Virtual currencies such as Bitcoin can be used to make payments for goods and services without banks or other third-party financial intermediaries. To facilitate the exchange of cryptocurrencies, counterparties rely on an underlying digital ledger known as a blockchain, which can validate the transactions through a decentralized computer network. In addition to supporting cryptocurrency mining, blockchain technology can support energy and financial transactions on a smart grid, including purchases of power from distributed energy facilities such as rooftop solar panels.
The rise of digital currency mining and blockchain deployment has created a new source of electricity demand for utilities but has presented challenges as well, with power suppliers near cryptocurrency mining centers sometimes overwhelmed by the increased load. Parts of the U.S. with substantial amounts of affordable, reliable hydropower have been particularly affected, with Washington estimated to have hosted 15% to 30% of all global Bitcoin mining operations in 2018, the Congressional Research Service, or CRS, report said.
To handle the increased demand, the CRS study offered several options for Congress to address the energy intensiveness of cryptocurrency and blockchain technology. Congress could direct the U.S. Department of Energy to establish minimum national energy conservation standards for the equipment used to carry out virtual currency mining and to cool large-scale mining facilities. The DOE also could collaborate with the U.S. Environmental Protection Agency on voluntary energy efficiency standards through the agencies' joint ENERGY STAR labeling program that would apply to cryptocurrency mining technology and the equipment used in data centers supporting those operations, the report said.
More broadly, Congress could consider adopting energy efficiency standards for the data centers themselves or large computing facilities, the CRS researchers added.
Furthermore, U.S. lawmakers may look at extending or clarifying the Federal Energy Regulatory Commission's role in regulating blockchain technology for the energy sector. Peer-to-peer electricity sales using blockchain systems could be considered a sale for resale subject to FERC jurisdiction, the report said, while wide-scale adoption of the technology could create additional grid vulnerabilities related to the increased frequency of transactions and associated power movements.
"FERC has not issued guidance or announced standards associated with blockchain technologies," the Aug. 9 report said. "Within this context, utilities and industry groups may interpret the lack of guidance as a signal to continue business as usual."