The U.K.’s Information Commissions Office (ICO), a data watchdog, announced it opened an investigation into Worldcoin mere hours after the digital identity startup co-founded by OpenAI CEO Sam Altman announced its mainnet. The government agency said organizations “need to have a clear lawful basis to process personal data,” and also ask for consent. For its part, Worldcoin said it was GDPR compliant. Elsewhere, Japan’s Prime Minister Fumio Kishida said the country is mulling new Web3 policies in the latest expansion of the new government’s pro-crypto stance while Namibia’s government passed the Virtual Assets Act 2023 on Friday, moving it closer to regulating the digital asset industry.
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An in-depth look into the latest advancements and current challenges in crypto and bitcoin mining
Oil and gas companies are keen to use gas that would normally be flared off to run bitcoin mining operations. But environmentalists claim the practice merely perpetuates the use of fossil fuels.
Regulators view Bitcoin and other proof-of-work cryptocurrencies as commodities. But mining firms can still trip over securities regulations if they’re not careful.
Scrimp and Save
Flashbots, the startup that changed the game for controversial “maximum extractable value” (MEV) transactions, closed a $60 million Series B funding round led by Paradigm. MEV is shorthand for profit that can be squeezed out of blockchain users by reordering transactions in the mempool – similar to front-running trades. Flashbots literally changed the game when it launched MEV-boost, and hopes to repeat that trick with its relatively new SUAVE platform, which stands for Single Unifying Auction for Value Expression. Meanwhile, VC giant Andreessen Horowitz (a16z) seems to be liquidating part of its investment in crypto lender MakerDAO’s MKR governance tokens as the price of coins hit a near one-year high.
Standard Proceedure?
Crypto exchange KuCoin said Tuesday it might lay off staff as part of “a normal process in organizational development,” but denied rumors of mass layoffs. Twitter-based (sorry, X-based) news account Wu Blockchain tweeted Tuesday the Seychelles-based exchange plans to cull 30% of its workforce as it grapples with a decline in profit after the New York State Attorney General Letitia James sued KuCoin in March on allegations that it violated securities laws by offering tokens. Finally, the Avalanche Foundation has created a $50 million incentive program to purchase tokenized “real world” assets that were minted on the network.
The Takeaway: Burst Bubble
(Nicholas Doherty)
This story is part of CoinDesk’s 2023 Mining Week, sponsored by Foundry. Margot Paez is a fellow at the Bitcoin Policy Institute, head of sustainability at Block Green and a sustainability and bitcoin mining consultant.
Bitcoin mining alone will not save the planet, but it is a valuable tool for managing some of the challenges of the energy transition. More important in the context of climate change is that bitcoin is essential for preserving freedom and liberty when growing climatic pressure to destabilize nations.
Let us start with what bitcoin mining will not be able to do. Bitcoin mining will not push global warming past two degrees Celsius above pre-industrial levels all on its own. Bitcoin mining, based on CBECI estimates, accounts for roughly 0.14% of total global emissions. This is but a few drops in a bucket of greenhouse gas emissions.
In reality, even if we banned bitcoin mining today, humanity would still be well on track to surpass 1.5 degrees Celsius of warming in the next decade. Not only that but there is a good chance that the two degrees target will also be missed due to a lack of strong governmental action to reduce society’s reliance on fossil fuels.
Bitcoin mining will not be the sole catalyst that increases the rise in exponential growth in renewable energy. Nor will it push us over the finish line for meeting our decarbonization goals. At the Bitcoin Policy Institute, we are busy trying to quantify exactly what effect it will have, but we suspect that network dynamics being what they are, bitcoin’s role as a “machine that greens” will not always be equal in all scenarios.
We should not expect bitcoin mining to have the easiest time setting up on wasted gas sites like landfills, orphaned wells or oil and gas fields. There is way too much anecdotal evidence that suggests many of these wasted methane sites are well out of the reach of bitcoin miners. This means that we should not expect bitcoin miners to mitigate all methane emissions from landfills and the oil and gas industries.
I am not saying bitcoin miners cannot mine with wasted methane – there are several energy startups trying to do just this. But let us be clear, they are going to have a hard time surviving the tight profit margins that bitcoin miners face when the market is not in the middle of a bull run. They are going to need additional revenue streams if they want to stay viable in the long term.
Do not misunderstand me, bitcoin mining is doing good! It is agile, highly modular and has minimal requirements for uptime. Bitcoin has unique properties that make it good at supporting revenue for renewable energy projects right now. Miners active in demand response programs are helping minimize strain on the electrical grid during severe weather emergencies. There are bitcoin mining companies that are selling their waste heat to greenhouses or working on using it for municipal heating.
Some miners are mitigating methane emissions in the oil and gas industry and there are a few trying to prove the business case for landfill and agricultural waste gasses. The tighter the profit margins, the more inventive bitcoin miners will have to be. This means that mining revenue might end up being a secondary thought in a larger energy operation. Would it be so bad if mining becomes another boring tool in our clean energy operations?
After all, did we really expect Bitcoin to solve climate change with emissions reductions alone? Bitcoin’s greatest impact on climate change will not come from mining but from the network’s original raison d’etre.
Climate change will and is destabilizing society with its unpredictable but increasingly probable effects on our food production, water resources, and infrastructure. People often turn to the political strongman in times of deep uncertainty. If Bitcoin does save the planet, it will be through its preservation of economic liberty and with that, human rights. Now that is a narrative that I can sing from the highest towers.
It is now more important than ever to set industry standards and align on practical short-term and long-term objectives through pointed conversations with the best legal minds and Washington D.C.’s most important decision makers.
Join us at State of Crypto: Policy and Regulation on October 24 in Washington D.C. for an unprecedented opportunity to evaluate, dissect and ultimately shape crypto regulatory frameworks that support a vibrant, secure and healthy future for the digital economy.
