The four biggest US-based mining operations – Core Scientific, Marathon Digital Holdings, Riot Blockchain, and Stronghold Digital Mining – received a letter from the House Committee On Energy and Commerce. The Committee is seeking information about their energy usage and efforts to mitigate environmental impacts to ensure their operations do not strain the energy grid or hinder the nation’s climate goals.
Is this a pivotal moment or a foreshadowing of things to come? Are these companies prepared for the scrutiny? Could the government’s interest signal a positive development for the sector, or is it a precursor to stricter regulations targeting the bitcoin mining industry? Why are these specific companies being targeted now? Could it be related to BlackRock endorsing bitcoin mining? Or is it linked to the recent sanctions on Tornado Cash?
JUST IN – 4 U.S. #Bitcoin mining companies including Marathon, Riot, CoreScientific, and Stronghold have received a letter from the U.S. House Committee on Energy and Commerce demanding explanations on energy usage and e-waste. pic.twitter.com/IX4IHttG0b
— Dennis Porter (@Dennis_Porter_) August 19, 2022
In a press release, the House Committee On Energy and Commerce outlined their concerns regarding the environmental impact of Core Scientific, Marathon, Riot, and Stronghold:
“Blockchain technology has the potential to enhance data security and economic efficiency. However, the energy consumption and electronic waste generated by PoW-based cryptocurrencies may lead to harmful emissions and excessive waste.”
Where did the House Committee obtain this information? Perhaps from the discredited Digiconomist? Have they read the letter sent to the EPA by 14 Members of Congress? Are they aware of how bitcoin can utilize methane and reduce gas flaring?
Context Behind the Core Scientific, Marathon, Riot, and Stronghold Cases
Consider BlackRock’s recent shift in attitude towards bitcoin:
“BlackRock has been a proponent of the Environmental, Social, and Governance (ESG) movement. The company has invested billions in companies that align with their criteria. Bitcoin was initially thought to be incompatible with this movement due to its perceived high energy consumption.
The recent announcement from the world’s largest investment firm sends a different message to the financial sector. According to MacroScope analytics, BlackRock is endorsing “green” BTC to the ESG-focused investment community.”
However, also consider the significant sanctions imposed on Tornado Cash:
“The sanctions came directly from the Office of Foreign Assets Control (OFAC), responsible for targeting countries and entities deemed hostile to the US or engaged in significant criminal activities. As with transacting with OFAC-sanctioned entities being illegal, conducting transactions with Tornado Cash or associated funds is also prohibited.”
The question remains: Are the Core Scientific, Marathon, Riot, and Stronghold cases related to the first narrative or the second? Is the US on the verge of recognizing bitcoin mining as environmentally friendly? Or are they preparing for stricter regulations?
BTC price chart for 08/21/2022 on Bitfinex | Source: BTC/USD on TradingView.com
What Information Does the US Government Seek?
Another statement in the press release raises concerns about bitcoin mining in the US. The House Committee On Energy and Commerce cautioned Core Scientific, Marathon, Riot, and Stronghold:
“Given the urgent threat of climate change, we are troubled by activities that increase fossil fuel demand and strain our energy grid. While blockchain technology can aid in combating climate change, the growing energy demand and reliance on fossil fuels for PoW cryptomining facilities may negate the benefits and hinder our climate goals.”
However, consider the findings of the Bitcoin Mining Council. “The BMC survey shows that participants are using 66.8% sustainable energy, an increase from Q1 2022 data, indicating a 59.5% sustainable energy mix across the entire Bitcoin network.” If the government confirms this data, it could provide the industry with the approval it desires.
However, the outcome is uncertain. Regardless of the greening of the bitcoin network, the situation could go either way.
Specific Questions for Core Scientific, Marathon, Riot, and Stronghold to Address
The US Government is seeking answers to:
- “What was the energy consumption of each company’s cryptomining facilities in 2021?”
- “What energy sources are utilized by the utilities serving the facilities, including the energy mix?”
- “What percentage of energy usage is offset by renewable energy credits?”
- “How many days in the past year did the companies halt mining operations to support grid stability?”
- “What were the average costs and profits per megawatt-hour at each mining facility in 2021?”
Do you believe that Core Scientific, Marathon, Riot, and Stronghold are unprepared for these inquiries? They have likely been working towards meeting these standards from the start. The House Committee On Energy and Commerce may find their responses reassuring.
Featured Image: House Committee On Energy and Commerce header | Charts by TradingView
