Leaked Executive Order Sparks Fears of Computing Power Crackdown on Bitcoin Mining

A leaked draft of an upcoming executive order on artificial intelligence from President Joe Biden has sparked fears of a potential computing power crackdown that could severely impact Bitcoin mining operations in the United States.

The draft order, revealed by anonymous sources to Semafor, indicates the Biden administration may soon require companies like Microsoft, Google and Amazon to disclose when customers purchase computing resources beyond a certain threshold. The order frames computing power as a “national resource” that must be monitored and conserved, similar to other scarce commodities like water or energy.

This approach raises alarms for the energy-intensive Bitcoin network, which relies on miners worldwide competing to validate transactions using specialized hardware. By potentially treating computing power as a restricted resource, the order could choke out Bitcoin miners in the US.

So how could designating computing power as a “national resource” undermine the Bitcoin network's decentralization? What parallels exist between this situation and other government crackdowns? And what solutions can maintain Bitcoin's censorship resistance?

The Order's Threat to Bitcoin Mining

The executive order's philosophy views computing power as zero-sum, meaning Bitcoin miners supposedly rob computational resources from other needs deemed more essential. This thinking fails to understand the agnostic and decentralized nature of Bitcoin mining. Miners locate across the world wherever energy is cheapest, not depriving any locale of necessitated power.

Further, mining Difficulty automatically adjusts every 2016 blocks to maintain an average 10 minute validation time, ensuring stability independent of computing resources. Mining's flexible nature allows Bitcoin to thrive without top-down resource allocation.

But restricting computing power in the US could significantly disrupt the world's largest mining hub. Up to 35% of the Bitcoin hashrate resides stateside, producing geographic centralization. Loss of this hardware could destabilize mining pools and Difficulty adjustment. While Bitcoin's decentralized design ensures survival, dysfunction impedes market confidence.

Historical Precedents for Crackdowns

Government attempts to regulate decentralized technologies recur throughout history. Printing presses faced restrictions for enabling the mass distribution of revolutionary ideas. Ham radio's self-organized networks provoked lawmakers. The first cryptocurrency, e-Gold, met direct shutdown by the Feds.

This executive order represents another iteration of established power flailing against disruptive innovation. New technologies that decentralize control inherently erode incumbent hierarchies. But heavy-handed clampdowns only temporarily delay advancement while damagingAmerica's position as a leader in emerging sectors.

China's 2021 Bitcoin mining ban exemplifies the pitfalls of reactionary tech policy. Despite ejecting 50-75% of Bitcoin's hashrate, mining rapidly rebounded as operations relocated worldwide. China sacrificed self-interest for little discernable impact.

How Bitcoin's Decentralization Provides Censorship Resistance

Bitcoin's leaderless structure inherently resists centralized coercion. With no CEO to imprison, headquarters to raid, or kill switch to flip, governments can't easily disable Bitcoin. Its voluntary participant pool provides antifragility, rapidly absorbing disruptions and re-optimizing to sustain the network.

Mining bans demonstrate Bitcoin's adaptive capacity to seek out underutilized energy sources, from stranded gas in Texas to excess hydropower in the Pacific Northwest. Bitcoin mining even helps fund the building of new renewable energy plants. This flexible adoption of the world's cheapest power sources shows Bitcoin complementing, not usurping, other needs.

Most importantly, Bitcoin's transparent and predictable monetary policy cannot bend to political influence. The algorithmic emission schedule protects against inflationary debasement of holders' savings. This assurance of financial sovereignty empowers everyday people compared to untrustworthy fiat regimes.

Two Key Questions Raised by the Leaked Order

How can the US support energy-intensive industries like Bitcoin mining without compromising other needs?

The solution lies not in restricting usage of existing resources but expanding energy infrastructure, specifically harnessing underutilized renewables through smart grid technology. Bitcoin mining's role as an intermittent load balancer can even fortify green energy networks. Wise policy entails coordinating with miners to plan mutually beneficial ventures.

Instead of undermining Bitcoin, how can governments adopt its innovations to improve legacy systems?

Many of the breakthroughs underpinning Bitcoin hold revolutionary potential across industries when properly implemented. For example, decentralized identity systems can increase privacy and reduce fraud. Tokenized access to resources can improve transparency and efficiency. And programmable money enables automation of complex financial transactions. Integrating these technologies directly into outdated government systems would modernize them for the digital age.

Rather than instilling computing power limits that deteriorate Bitcoin's functionality, the Biden administration should recognize crypto's groundbreaking innovations and work alongside the ecosystem to propel America's leadership into the 21st century. The solutions lie not in attempting to control decentralized technology, but learning from it to evolve governance and infrastructure.

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