President Biden issued Executive Order 14067 to encourage responsible digital asset development in accordance with climate change goals and for the benefit of all Americans. The executive order-mandated energy assessment has been published in a report. The report suggests that legislation be considered to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining. It could essentially mean a Bitcoin ban. According to the energy report, Cardano is one of the world’s largest Proof-of-Stake blockchains in market valuation while also being one of the most energy-efficient.
Technological Advancement Cannot Be Stopped
For a long time, Proof-of-Work (PoW) was thought to be the most secure network consensus with no competitors. For the past two years, the IOG team has been developing Proof-of-Stake, which has been running smoothly in Cardano. Thanks to technological advances, power consumption can be reduced by up to 100,000 times. Cardano is also more decentralized than Bitcoin. The PoS consensus allows the blockchain’s scalability to be increased by several orders of magnitude.
The report contrasts various consensus mechanisms. The study’s authors believe that PoW and PoS are first-rate regarding security and decentralization. PoW projects consume 0.4 to 0.9% of global electricity consumption, while PoS projects consume 0.001%.
To give you an idea, Bitcoin uses more energy than all of the refrigerators in American homes combined.
PoW supporters will always claim that energy consumption is required for network consensus. However, Cardano is a top ten project, and no one has been able to demonstrate that PoS does not work. The source code and all academic studies are available for free. Anyone can run Cardano nodes. Every day, Cardano demonstrates that we can have a highly decentralized and secure blockchain without sacrificing our planet.
The main reasons for considering a PoW ban are excessive energy consumption, noise pollution, threats to the electricity grid’s stability, and increased consumer prices.
Making Difficult Decisions
Bitcoin enthusiasts lobbied the White House to prohibit PoS. We might now be able to rejoice that the government has considered the environmental impact of PoW and is proposing a Bitcoin ban. PoS is regarded as the more environmentally friendly option that should have been chosen.
Governments are most certainly not our friends. If PoW can be prohibited today, PoS can be prohibited tomorrow for various reasons. Not to mention that Bitcoin tycoons have lobbied for all projects other than Bitcoin to be classified as securities. So this danger is still present.
The people, not politicians, should decide the fate of cryptocurrencies and their adoption. Individual community representatives should not try to influence legislators and push their projects at the expense of others through legislation. This would undoubtedly be a setback for the entire industry. If Bitcoin were to be enforced through laws and the elimination of competition, it would be difficult to see it as the leader of a new free world.
Lobbyists should understand that their actions are returning us to the world of fiat currencies. I would withdraw all support for Bitcoin if it were to be enforced through laws or bribes.
What Does a Potential POW Ban Mean for Cardano?
In the first place, prohibiting PoW would rock the entire blockchain industry. It is difficult to predict the impact of this decision, but institutional investors will likely withdraw from PoW projects. Furthermore, it would directly impact the Bitcoin protocol’s security, as the value of BTC coins determines the security budget. If the situation does not improve, the team will have to consider introducing inflation or finding another solution, such as switching to PoS.
Bitcoin will survive a potential PoW ban in the United States or Europe. Miners can move their operations elsewhere. However, the hash rate may decrease in the long run, which must be considered. The miners moved on after China banned PoW. The Chinese ban had little effect on the value of Bitcoin coins. A ban in Western countries would affect not only mining but also the value of the coins. Unfortunately, we don’t know what a ban would entail. If not only mining but also trading and using BTC coins.
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The prohibition of PoW may be interpreted as a restriction on freedom. On the other hand, governments have a mandate to do their jobs for the benefit of the majority. It’s no surprise that they do what their job description requires. If you have any sway over legislators’ decisions, now is the time to speak up and make your feelings known. Cryptocurrencies have never had the opportunity to stand on their own. People’s freedom of choice is central to cryptocurrency adoption. People must sometimes take action to see a change in society.