To understand one reason why the U.S. Senate Committee on Energy and Natural Resources held a full committee hearing Tuesday on the implications of blockchain, look to Montana.
According to Sen. Steve Daines (R-Mont.), the state is currently a net exporter of energy but the arrival of cryptocurrency mining companies could force it to begin importing electricity as coal-fired plants go offline.
“This could pose a threat to the expansion of bitcoin (BTC) operations and an even greater threat to energy supply and prices for Montana as a whole,” Daines said, citing the example of an Australian utility that brought a coal plant back online to accommodate miners.
Unlike an earlier day of hearings on Capitol Hill in July, no lawmakers at the Tuesday hearing were openly skeptical of blockchain or the cryptocurrency mined using it, perhaps because at least two of them, Sen. Maria Cantwell of Washington, the committee’s ranking Democrat, and Daines, come from technology backgrounds. But senators did voice concerns about the energy consumed by mining and security concerns if blockchain becomes a significant part of the nation’s electric grid.
Mining’s Impact
Cantwell’s opening comments were similar to those of other lawmakers on the committee. While she recognized blockchain’s potential in modernizing the energy market and adjacent industries such as electric cars, Cantwell also cited the impacts of cryptocurrency mining on utilities in her home state of Washington. “Let’s just say it’s very popular right now,” she said.
The industry experts and researchers who made up the hearing’s witness panel disagreed on the extent of energy mining consumes today, with global estimates ranging as high as 5 gigawatts annually, or about 0.1 percent of global energy demand. Even so, they argued, the issue is most critical in places where mining companies have gravitated due to low energy costs and cooler climates.
Energy consumption “can be thought of as somewhat small in a global context but can seem very large in concentrated areas that are experiencing bitcoin boomtowns,” said Thomas Golden, program manager for technology innovation at the Electric Power Research Institute (EPRI).
But energy demand could be mitigated by as many blockchains move to models such as proof of stake and proof of authority, argued Claire Henly, managing director of the Energy Web Foundation. Those models would reduce power consumption to that of “a small office building, not a small country,” she said, noting that she expects those models to drive future energy-sector blockchains.
However, Arvind Narayanan, associate professor at Princeton University, added that it’s unlikely that cryptocurrencies would switch to “mining–free” models.
