Towards an Adequate Energy Policy Response to the Environmental Threat of Cryptocurrency Mining

Cryptocurrencies, for better or worse, allow their users to conduct payments pseudonymously without access barriers, owing to the absence of centralized oversight through intermediaries. Bitcoin is arguably the most popular cryptocurrency, facing a growing user base and a market capitalization of 373 billion, at the time of writing. Yet, this archetypal digital asset faces perpetual criticism for its electricity demand. This is unsurprising given the devastating effect its energy requirements have: they were found to lead to the production of up to 65.4 Mt CO2 annually–the equivalent of the overall emissions of Greece. While many alternative cryptocurrencies provide similar benefits to Bitcoin and consume orders of magnitude less electricity, Bitcoin continues to dominate the cryptocurrency market. Regulators have undertaken many attempts to address the energy needs of cryptocurrencies through a plethora of different approaches. Despite these best efforts, regulating cryptocurrencies remains challenging and, ultimately, fruitless as policymakers seem to consistently underestimate the technical complexity involved in efficiently targeting them. In this presentation, recent approaches to cryptocurrency regulation are discussed and a novel proposition, built on consumer education, is made. The effectiveness of this approach is illustrated through a user-focused perspective on cryptocurrency regulation that challenges the common “top-down” perspective.