Response to HM Treasury, future regulatory regime, Part 2

Bitcoin Policy UK responded to HM Treasury's consultation on the future financial services regulatory regime for cryptoassets, answering its questions on mining, validation and the environmental impact of cryptoassets. The response explains that energy is what secures Bitcoin: new blocks can only be mined by spending energy, which makes the record of past transactions impossible to rewrite without repeating that work. It challenges the Treasury paper's claim that proof of work becomes more energy intensive over time, noting that mining difficulty adjusts roughly every two weeks, so the network's power use can fall as well as rise.

It recommends the Cambridge Bitcoin Electricity Consumption Index as the authoritative source on Bitcoin's electricity use. Pointing to the government's own statement that cutting methane emissions is one of the fastest and most cost effective ways to limit warming, it describes how Bitcoin mining can act as a buyer of first and last resort for landfill gas. It also argues that mining can reduce the risk of investing in renewable energy by acting as a flexible buyer of last resort for surplus power, and suggests the government explore incentives for mining's role in building and stabilising renewable grids and in methane mitigation.