Cryptocurrency expert criticizes White House report on cryptocurrency mining

As part of the executive order of US President Joe Biden, the White House Office of Science and Technology Policy (OSTP) conducted a study of the impact of cryptocurrency mining on the climate and published a report. According to Nick Carter, co-founder of the cryptocurrency asset testing company CoinMetrics, the document contains several critical errors, which he explained in his blog. The researcher also published a separate document on the White House report with his own comments.

Mistake 1 — no new data.

Carter emphasizes that «this report is basically a republication of data presented (and in some cases invented) by academia and bloggers.» The researcher blames the authors for their limited experience and lazy approach to studying the PoW phenomenon.

Mistake 2 — ignoring industry experts.

Carter also accuses the authors of «ignoring the intellectual achievements of experts on the subject of the industry» — Arcane Research, Bitcoin Mining Council, Ross Stevens' Bitcoin Net Zero report, and Carter himself.

Mistake 3 — inappropriate or biased citations.

The analyst criticizes the use of «non-academic» and «conflicted» work by Ulrich Gallersdorfer, Lena Claassen, and Christian Stoll, who «actually make money from their scientific efforts through a consulting company called Crypto Carbon Ratings Institute (CCRI), helping Proof of Stake blockchains launder their reputation.»

Mistake 4 — Conflicted approach to data use.

Despite recognizing the lack of data and the uncertainty of the estimates, the report still presents «wild assumptions» and quotes erroneous numbers. Carter comments: «Where we can have reasonably good models, like estimating the future energy consumption of bitcoin (…), they refuse to do it. Even though the report highlights the data gaps and emphasizes the epistemological limitations of the topic, the authors are generally undeterred and continue to postulate absurd claims.»

Mistake 5 — avoiding predictions of bitcoin’s energy trajectory.

The researcher questions the reluctance of the report’s authors to propose a single model for predicting future energy use from BTC mining, leaving the issue «wide open to the imagination.»

Mistake 6 — «stupid and counterproductive» proposals.

Finally, Carter criticizes the «stupid and counterproductive» recommendations that force miners of the flagship cryptocurrency to generate «new clean renewable energy to be eligible to mine.» Carter openly scoffs at the report’s citation, as this requirement is not applied to any other industry in the United States. It seems that the report needs to be thoroughly revised and involve a wider unbiased circle of academics, cryptocurrency industry experts, and market leaders.

Last week, the White House presented the first-ever concept of cryptocurrency regulation in the United States. The document includes information on ways to develop financial services and methods to combat cryptocurrency fraud. The new regulatory guidelines were created in accordance with an executive order issued by Joe Biden back in March. For six months, government agencies have been working on creating recommendations that have been incorporated into the concept of US cryptocurrency regulation.