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The global problem caused by bitcoin mining that hardly anyone talks about

Posted: 12 Nov 2021 08:26 GMT

More and more countries are struggling to meet the energy needs of their cryptocurrency mining industry.

The repression suffered by cryptocurrencies in China has forced bitcoin miners to look for other places for their production, such as Kazakhstanreports Fortune.

The Central Asian country has become a favorite haven for cryptocurrency mining, as evidenced by the fact that the sector soared 18.1% last August, more than double that of June.

However, difficulties meeting the energy needs of the cryptocurrency mining industry they are already evident in Kazakhstan, which in mid-October announced that it is reducing the amount of electricity miners can use by 95%, from about 2,000 gigawatt hours to 100 gigawatt hours.

This is because the energy reserves of each country are limited. In fact, the more electricity digital asset miners use, the less is left for families and businesses, to the point where blackouts translate into public protests, which forces governments to take action, says the media.

Fortune recalls that the Central Asian country is not the only one that is forced to cope with the growing flow of Bitcoin miners. Thus, the low cost of electricity in Abkhazia It put it in the crosshairs of miners, who continued their activity illegally after the government banned mining in 2018 after a series of blackouts.

On the other hand, Iran has decided to end cryptocurrency mining for the summer due to constant blackouts.

A similar situation occurs in the Canadian province of Quebec, powered by gigantic hydroelectric power supplies. The region became a big target for miners, but the authorities decided to limit the amount of power that the cryptocurrency industry can use. Currently, a single company absorbs most of that allocation.

The danger is that, as countries, one after another, continue to prohibit or restrict the exploitation of bitcoin, producers will move to new places, which will bring with it a overload of your energy capacity.

Economist Alex de Vries argues that miners spend a few $ 19,000 in electricity to produce a bitcoin, while the price of the cryptocurrency is much higher. In this way, producers make huge profits.

Energy Crisis and Green Transition Challenge Bitcoin's Growth and Mining

“This will end only when the cost of production of the bitcoin approaches the price of the same,” says the expert. That is, the people they will continue to produce the bitcoin until their energy bills are so large that the business is no longer profitable.

According to De Vries, it is logical to think that bitcoin miners will set their eyes on Russia, which already ranks third in the world with 11% of total global mining activity. However, as Russian President Vladimir Putin asserted, the use of cryptocurrencies carries serious risks, creating “the possibility of money laundering”, since this digital asset is “issued by an unlimited number of anonymous entities” and is not secure .

The economist recalls that the electricity consumption associated with bitcoin is already equivalent to more than half of the electricity consumption of the United Kingdom and that “it continues to grow”. In this sense, he explains that when miners “leave places where there is intensive extraction, such as Kazakhstan, they usually take with them the energy demand equivalent to the consumption of an entire country.”

For his part, the miner Alex Pickard considers that there is no danger for bitcoin. “Large mining companies will not take much risk“said Pickard, as” hopefully they will plan their electricity needs based on what is available at the time. ”

About the author

Donna Miller

Donna is one of the oldest contributors of Gruntstuff and she has a unique perspective with regards to Science which makes her write news from the Science field. She aims to empower the readers with the delivery of apt factual analysis of various news pieces from Science. Donna has 3.5 years of experience in news-based content creation, and she is now an expert at it. She loves journalism, and that is the reason, she moved from a web content writer to a News writer, and she is loving it. She is a fun-loving woman who has very good connections with every team member. She makes the working environment cheerful which improves the team’s work productivity.

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