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Comment to the Office of Science and Technology Policy

BPI submitted this research to the White House Office of Science and Technology Policy.

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Summary

A complex technology like bitcoin raises a series of questions for policy makers, all of which must be considered before reaching an overall judgment, and certainly before taking action. In this report, we focus on a subset of these questions: the nature and importance of bitcoin’s value, the role of proof of work in creating that value, and on bitcoin’s unique profile as a consumer of energy, which dictate its likely future trajectory. Our conclusion is cautiously optimistic: bitcoin could prove instrumental in accelerating renewable energy production, stabilizing our new, greener grid, and curbing methane emissions.

Key Takeaways

1. Bitcoin’s value—its economic value and promotion of American values and American national interests—must frame any discussion of its environmental impact.

2. Bitcoin’s value is inherently tied to its consensus mechanism: proof of work.

3. While bitcoin mining is energy-intensive, its energy use is often overestimated and improperly characterized as a function of transaction volume.

4. Due to bitcoin’s exponentially decreasing schedule of issuance, mining’s actual emissions are likely to peak at under 1% of global emissions, even if prices rise more than tenfold within the decade.

5. Mining’s profile as a consumer of energy is unique: extremely cost-sensitive, and invariant across times and locations.

6. Bitcoin mining, as a buyer of first and last resort, incentivizes the buildout of renewable power production. As a controllable load resource (CLR) bitcoin mining also strengthens the grid, allowing it to reliably function at a high level of renewable penetration.

7. Mining’s energy use is increasingly non-rival, trending towards a diet of renewables and stranded, wasted energy resources such as flared methane.