Response to HM Treasury on Cryptoassets Regulation Part 2

In this episode, we present an audio version of Part 2 of Bitcoin Policy UK’s response to HM Treasury on Cryptoassets Regulation, originally published on 26 April 2023.

The paper responds to a number of questions raised by HM Treasury relating to cryptoasset regulation, environmental impact, and the role of Bitcoin mining within the UK economy and energy system.

What this episode covers

In this episode, Bitcoin Policy UK sets out:

• What Bitcoin is, and why its permissionless, energy-secured design distinguishes it from other digital assets
• Why Proof of Work is fundamental to Bitcoin’s monetary policy, security, and censorship resistance
• How common claims about Bitcoin’s environmental impact are often misunderstood or incorrectly framed
• Why metrics such as “energy per transaction” are misleading when applied to Bitcoin

Bitcoin mining and energy use

The paper explains:

• How Bitcoin’s energy use adjusts dynamically based on network conditions
• Why the Cambridge Bitcoin Electricity Consumption Index is the most reliable source for estimating Bitcoin’s energy usage
• How Bitcoin mining compares to other industries in terms of total global energy consumption

It also highlights that Bitcoin mining currently uses a high and increasing proportion of sustainable energy, with estimates approaching 60% at the time of publication.

Environmental mitigation and net-zero opportunities

The submission explores two areas where Bitcoin mining could support UK climate and energy objectives:

1. Methane mitigation
   • Using Bitcoin mining to capture and monetise methane from landfills and flaring
   • Reducing emissions from one of the most potent greenhouse gases
   • Making mitigation infrastructure economically viable for landfill operators and local authorities
2. Renewable grid stabilisation
   • Bitcoin miners as highly flexible electricity consumers
   • Acting as buyers of first and last resort for renewable generation
   • Supporting the economic viability of wind, solar, and other renewable projects

Policy implications

The paper argues that:

• Bitcoin mining should be assessed on evidence, not assumptions
• Regulation should recognise Bitcoin’s unique characteristics rather than treating it as a generic cryptoasset
• The UK has an opportunity to support innovation by aligning Bitcoin mining with renewable energy and methane reduction strategies

The submission concludes by encouraging HM Treasury to explore targeted incentives and further research into Bitcoin mining’s potential role in achieving the UK’s net-zero objectives.

📄 Read the full written paper here:
👉  Response to HM Treasury on Cryptoassets Regulation Part 2

To find out more about Bitcoin Policy UK's work and how you can get involved, visit:

https://bitcoinpolicy.uk/