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According to Cambridge University’s Bitcoin Electricity Consumption Index, Bitcoin mining activity across the globe now consumes 121.36 terawatt-hours (TWh) of electricity per year, more than Argentina or the Netherlands and roughly equivalent to Norway. 

Bitcoin mining requires ever-increasing computing power to verify transactions and create new blocks on the chain. The precise environmental impact is difficult to measure, at least for the time being, but Bitcoin mining operations have already been blamed for widespread power outages in Iran. Large-scale Bitcoin mining operations using renewable energy sources may not impose significant environmental costs. But mining operations in countries like China, which is heavily dependent on coal-fired power plants, could worsen carbon emissions.  

LEGAL TOKENS

To this point, political leaders and regulators have not indicated concern over Bitcoin-related environmental issues. In all likelihood, Bitcoin mining will continue to consume increasing amounts of energy, which may focus lawmakers’ attention. The long-term regulatory consequences could include direct restrictions on Bitcoin, or more indirect measures, such as the imposition of a carbon tax on Bitcoin transactions. Coordinated action likely is years away, but this is a problem that will need to be addressed.

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Author's Assets

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Casey Jennings | Associate

A member of Seward & Kissel’s Financial Services Regulatory Group and Blockchain and Cryptocurrency Group, Casey advises financial services companies – including banks, broker-dealers, investment funds, service providers, and financial technology companies – on federal and state banking and securities law issues and the structuring of new financial products, including anti-money laundering, deposit issues, token offerings, custody of traditional and crypto assets, transfer and liquidity issues, Volcker Rule issues, and investments in crypto assets by funds and other investors. Before joining the firm, Casey served as counsel to the Consumer Financial Protection Bureau, where he developed and implemented financial regulatory policy, including the first CFPB rulemaking to rely on unfair, deceptive, and abusive acts and practices (UDAAPs) authority. Since then, he has:

  • Represented e-retailer APMEX Inc. and alternative asset manager Sprott Inc. in connection with the launch of the online marketplace, OneGold.com.

“The whole notion of crypto is that there are no gatekeepers and the BSA requires that there be gatekeepers. Those two notions are very much at odds with one another. But the BSA is the best system that we’ve got right now.”

Casey’s perspective on crypto AML regulations as published in Cointelegraph article “How U.S. authorities are using old AML tools to crack down on crypto”