Digital currencies raise legal, climate questions
As cryptocurrency promises a resurgence for old energy sources in states like Pennsylvania, lawmakers are moving to investigate, regulate, and in some cases, promote the volatile investment items.
Cryptocurrencies have been heavily discussed in the halls of power in the last few months, especially with sharp drops and rises in the value of many of the most popular currencies. At a congressional hearing last month, legislators questioned the effects the products have on the nation鈥檚 climate goals.
The digital assets, billed as new forms of money but often used simply as investments, are already leaving an environmental footprint in Pennsylvania.
That鈥檚 because many popular cryptocurrencies 鈥� including Bitcoin, the best known of the bunch 鈥� rely on computer power to 鈥渕int鈥� new digital coins. That computer power can require tremendous amounts of electricity in a process called 鈥渕ining,鈥� leading to strain on some countries鈥� power grids and a revival for older and dirtier energy sources.
鈥淥ur focus now needs to be reducing carbon emissions overall, and increasing the share of green energy on the grid,鈥� Rep. Diana Degette, D-Colo., said last month at a House Energy and Commerce Committee hearing on cryptocurrencies. Rep. John Joyce, R-13th District, sits on the committee.
In the past year, several Pennsylvania power plants have taken up roles in powering cryptocurrency mining, with banks of climate-controlled computer processors humming away under coal and nuclear energy. One plant, in Venango County, processes the inefficient waste coal that lies in piles all over Appalachia, then uses the energy to create cryptocurrency tokens.
Politicians in coal- and gas-rich states have expressed interest in cryptocurrency mining, especially as older and less efficient power sources wane and coal plants close. Even once-skeptical legislators are singing the praises of cryptocurrencies, and some have proposed listing them as legal tender in their states.
鈥淎nyone who says all crypto mining is bad for the environment does not know what they are talking about,鈥� one U.S. lawmaker told E&E, an energy and environmental news service, repeating investors鈥� claims that the technology could be used to fund green-energy projects.
While cryptocurrencies are theoretically meant to serve as a secure digital alternative to traditional currencies like the U.S. dollar, in practice many are used as investment vehicles.
A subculture has grown around the investments, with owners encouraged to hold their tokens until they rise tremendously in value. Crashes and surges are common.
That volatility 鈥� and the lack of regulation 鈥� has led to growing political attention.
In November, Rep. Glenn 鈥淕T鈥� Thompson proposed a legislative blueprint for federal agencies to regulate and track cryptocurrencies and other 鈥渄igital commodities.鈥� Thompson is a member of the Congressional Blockchain Caucus, a group dedicated to cryptocurrencies and similar digital technologies.
鈥淒igital commodities have the potential to bring unprecedented change to the way we share information, exchange value and design digital services,鈥� Thompson told the Pittsburgh Post-Gazette last year. 鈥淏ut, these innovations are not inevitable. Poorly designed laws and legacy requirements could make it impossible for innovation.鈥�
In Harrisburg, too, lawmakers have touched on the novel investments. Last year state Rep. John Galloway, D-Bucks, proposed creating a Digital Currency Task Force to investigate the phenomenon, while Rep. Napoleon Nelson, D-Montgomery, proposed a blockchain working group to develop the technology behind many cryptocurrencies.
Other legislation would address the simpler, day-to-day reality of digital currencies, now a multitrillion-dollar industry.
A new bill by Sen. Marty Flynn, D-Lackawanna, would allow drivers to pay turnpike tolls online 鈥� including with 鈥渄igital wallets, peer-to-peer money transfer systems and cryptocurrencies.鈥�
Rep seeks state carbon role
Digital money isn鈥檛 the only climate-affecting technology drawing attention.
Last week, a state representative said he plans to seek approval for Pennsylvania regulators to take responsibility for underground wells that could store carbon from the atmosphere.
In a new memo, Rep. Eric Nelson, R-Westmoreland, said he鈥檒l submit a bill that would lead the state to oversee so-called carbon capture injection wells, a rising technology preferred by some in the fossil fuel industry to mitigate the climate crisis.
The wells enable producers of carbon dioxide 鈥� power plants and factories, for example 鈥� to inject the gas into pockets inside the earth, keeping it from the atmosphere where it contributes to climate change.
Nelson called it 鈥渁n exciting area of developing technology in the energy sector鈥� 鈥� and one preferred by energy companies.
Critics have said relying on technology like carbon storage could merely extend the use of CO2-pumping energy sources, delaying their replacement. Energy-producing states, however, are already pushing to ramp up its use.
Nelson鈥檚 bill would give state regulators primacy over the federal Environmental Protection Agency in approving the storage wells, potentially speeding the process. Several other states, including North Dakota, Louisiana and New Mexico, have already moved to do the same.
Environmental activists in some states are criticizing the technology as more energy companies move to open the wells.
鈥淥n a very superficial level, (carbon capture) and hydrogen technologies sound like, and are meant to sound like, very promising approaches to help mitigate climate change. But they are nothing of the sort,鈥� the Texas Sierra Club said last year, as gas producers adopted the technology. 鈥淭hey are meant to give cover for extremely damaging activities, i.e., the continual and increasing extraction and usage of fossil fuels.鈥�
Ryan Brown covers statewide politics for Ogden Newspapers. He can be reached at rbrown@altoonamirror.com.