Cryptocurrencies are continuing to gain mainstream and institutional acceptance, but the question of environmental impact still looms over the industry.
The U.S. House of Representatives Natural Resources Committee has recruited nearly two dozen Democratic lawmakers to push for further scrutiny into the environmental impacts of crypto mining. “We have serious concerns regarding reports that cryptocurrency facilities across the country are polluting communities and are having an outsized contribution to greenhouse gas emissions,” according to a letter signed by lawmakers. “People living near crypto mining facilities are already suffering the effects of air, water and noise pollution from these facilities.”
There are many possible solutions on the table, including pivoting to proof-of-stake instead of proof-of-work, as it uses significantly less energy. Many miners have leaned on carbon offsets, which are difficult to properly audit. If regulatory crackdown is coming, the mining industry will need new solutions.
“The entire industry is moving in a new direction… If you are looking at institutional capital today, the two sources of power for creating bitcoin are going to be nuclear power and hydropower,” said Shark Tank star and entrepreneur Kevin O’Leary to Coindesk.tv.
Nuclear power presents an interesting case. Formally feared due to high-profile disasters like Fukushima, nuclear energy is a surprisingly safe, clean source of enormous power that could be pivotal in the pivot to a green future.
O’Leary pushed back on accusations that bitcoin mining is the equivalent of wasting power, noting that many miners are following a zero-emissions model and taking advantage of excess energy that would be otherwise wasted. “By taking excess electricity that’s not being used, converting it into Bitcoin, you’re actually saving energy.”
Marathon Digital Holdings (MARA) made a decision recently to relocate a mining facility away from a coal-fired power plant in Montana and to a wind farm in Texas. “For us, it just came down to the fact that we don’t want to be operating on fossil fuels,” said company CEO Fred Thiel.
Of course, measuring the environmental impact of mining is more complicated than it appears. “There is a way to change the dialogue on bitcoin mining to make it more integrated into communities where it is being set up,” O’Leary notes, pointing to Bitzero’s new facility in a small town in Norway, which uses excess heat from server stacks to help grow tomatoes and helps power the data center for the local university.
As crypto mining joins every other industry in pivoting to green energy sources and iterating on reducing its carbon footprint, investors can find exposure to cutting-edge miners through the VanEck Digital Assets Mining ETF (DAM). DAM features Marathon among its primary holdings, as well as renewable energy-focused Canadian Mining Firm Hut 8.
For more news, information, and strategy, visit the Crypto Channel.