The four biggest US-based mining operations – Core Scientific, Marathon Digital Holdings, Riot Blockchain, and Stronghold Digital Mining – got a letter from the House Committee On Energy and Commerce. The Committee wants to know about their energy usage and “how each company is mitigating those impacts and what steps are being taken to ensure their operations do not strain the energy grid or undermine our nation’s climate goals.”
Is this a teachable moment or a sign of things to come? Are Core Scientific, Marathon, Riot, and Stronghold prepared for the task? Could interest from the US Government actually be a positive sign for the sector? Or are they tightening up measures to attack the bitcoin mining industry? Why Core Scientific, Marathon, Riot, and Stronghold? Why now? Does it have to do with BlackRock’s green light to bitcoin mining? Or does it have to do with the severe sanctions against 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 described the Core Scientific, Marathon, Riot, and Stronghold cases as:
“Blockchain technology holds immense promise that may make our personal information more secure and economy more efficient. However, the energy consumption and hardware required to support PoW-based cryptocurrencies may, in some instances, produce severe externalities in the form of harmful emissions and excess electronic waste.”
Where does the House gets this information from? The completely debunked Digiconomist, perhaps? Did they read this letter 14 Members of Congress sent to the EPA? Do they know about how bitcoin can put methane to good use and curb gas flaring in the process?
Background: The Core Scientific, Marathon, Riot, and Stronghold cases
Consider BlackRock’s recent reversal on their bitcoin policy:
“BlackRock has been a leader in the Environmental, Social, and Governance (ESG) movement. The firm and others have injected billions of capital into companies that meet their criteria. Bitcoin was thought to be outside of this movement due to its alleged high energy consumption.
Today’s announcement, coming from the largest investment firm in the world, sends a completely different signal to the financial world. According to analytics account MacroScope, BlackRock is waving the “green “BTC is ok” flag to the entire ESG-focused investment sector.”
However, also consider the severity of the sanctions against Tornado Cash:
“This sanction came directly from the Office of Foreign Assets Control (OFAC), which is responsible for sanctioning countries and foreign entities that the US government has deemed enemies of the state or major criminals. So just as transacting with a country or organization sanctioned by OFAC is illegal, so is transacting with Tornado Cash or any funds associated with it.”
The question here is: Does the Core Scientific, Marathon, Riot, and Stronghold case relates to the first story or to the second one? Is the US about to declare the highly profitable activity of bitcoin mining as ESG-friendly? Or are they tightening the screws?
BTC price chart for 08/21/2022 on Bitfinex | Source: BTC/USD on TradingView.com
What Does The US Government Want To Know?
The other quote in the press release doesn’t sound good for bitcoin mining in the US. The House Committee On Energy and Commerce told Core Scientific, Marathon, Riot, and Stronghold:
“Given the existential threat posed by the climate crisis, we are deeply concerned about efforts like this that increase demand for fossil fuels, with the potential to put new strain on our energy grid. While blockchain technology is emerging as a potentially important tool in fighting climate change, increasing demand on the grid and burning more fossil fuels to power PoW cryptomining facilities only serves to undermine the potential climate benefits of blockchain technology and hold us back from achieving our climate pollution reduction goals.”
Consider, though, the findings of the Bitcoin Mining Council. “According to the BMC survey, participants are using electricity with 66.8% of the sustainable power mix. This represents an increase over Q1, 2022, data and records an estimate of 59.5% sustainable electricity mix across the entire Bitcoin network.” If the government makes a thorough investigation and concludes this to be true, a whole industry could get the stamp of approval it’s been waiting for.
However, the opposite is also true. It doesn’t matter how green the bitcoin network gets, this thing could go either way.
The Exact Questions That Core Scientific, Marathon, Riot, and Stronghold have to answer
The US Government wants to know:
- “How much energy did each of the company’s cryptomining facilities use during 2021?”
- “What are the energy sources used by utilities serving each of the facilities, including the energy mix of each?”
- “What is the proportion of energy used that is offset with renewable energy credits?”
- “In the last 12 months, how many days have the companies curtailed cryptomining to support grid stability?”
- “In 2021, what was the average cost per megawatt hour and per megawatt hour profit at each of the company’s cryptomining facilities?”
Do you really think Core Scientific, Marathon, Riot, and Stronghold aren’t ready for those questions? They’ve been working towards those goals since the very beginning. The House Committee On Energy and Commerce will be pleasantly surprised.
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