Washington, D.C. – In case you missed it, Club for Growth Foundation released a policy brief after the White House Office of Science and Technology Policy (OSTP) released a false and politically motivated report on the so-called “climate impact” of cryptocurrencies.
The policy brief addresses and corrects the OSTP Report’s major misconceptions and false narratives, as well as shows how the Report is a politically motivated attack on the free market, freedom, innovation, and American ingenuity.
“Biden’s White House is clearly not ‘following the science’ and is instead pushing junk science to fit their phony narrative that cryptocurrencies like Bitcoin harm the environment,” said Club for Growth Foundation President David McIntosh. “When you look at actual data and real science, nothing could be further from the truth. This is just another political ploy by the Biden Administration to please radical environmentalists at the expense of American ingenuity.”
The OSTP Report affirms a false, yet increasingly common, narrative– that bitcoin and other digital assets, which rely on a “proof of work” consensus mechanism, harm the environment by using too much energy and must therefore be subject to strict regulation. The Report states that “To help the United States meet its climate change commitments, DLT (digital ledger technology) must be deployed in a manner that enables reductions in GHG emissions.” In the event of non-compliance, the Report goes so far as to recommend a potential ban on proof of work.
“Should these measures prove ineffective at reducing impacts, the Administration should explore executive actions, and Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining.”
To put bitcoin’s energy use in perspective, bitcoin mining, which is said to be the most intensive use of energy in the bitcoin network, utilizes about 62 TWh/yr. For comparison, domestic refrigeration uses 10 times the energy of bitcoin mining (630TWh/yr) and air conditioning/electric fans use more than 32 times the energy of bitcoin mining (2000 TWh/yr.)[i] So, if the White House recommends the elimination of bitcoin mining because of energy and GHG emission concerns, what will be next, a report calling for the elimination of refrigerators, air conditioning, and fans?
The OSTP claims in its mission to “provide the President and his senior staff with accurate, relevant, and timely scientific and technical advice on all matters of consequence…[and] to ensure that the policies of the Executive Branch are informed by sound science.” However, the OSTP’s treatment of digital assets, demonstrates very little regard for “sound science.”
To begin with, the OSTP Report admits that “The total power usage of today’s crypto-asset networks cannot be directly monitored.” To combat this problem, the Report cites widely discredited junk science throughout. In fact, almost 1 in 5 of the Report’s 208 citations come from Alex de Vries, the Dutch central bank employee without a doctorate who frequently blogs about cryptocurrency. His work, including his promotion of the idea that bitcoin has a per transaction energy cost, has been thoroughly debunked by energy scholars and industry advocates alike. In reference to DeVries’ work, Johnathon Koomey, Ph.D., says “the assumptions used by Digiconomist (like 60% of Bitcoin revenues equaling electricity costs and 5¢ U.S./kWh being the electricity price) are so simplistic as to make any careful analyst wary.”[iii] Ben Gagnon, who is in the bitcoin mining industry said “The Digiconomist Bitcoin Electricity Consumption Index is not being driven by real world metrics and profitability as stated in the methodology.”[iv]
While experts have long understood that bitcoin’s energy consumption is essentially unrelated to the number of transactions on its network, the Report affirms the “per transaction” lie.