The World is Switching to Green Energy for Mining While China Bans it
Energy consumption in mining cryptocurrencies is a problem for most countries in the world. Countries are looking for energy efficient ways to produce cryptocurrency. However, some of them are doing the opposite and cracking down on miners of digital currencies.
According to Digiconomist’s Bitcoin Energy Consumption Index, released in June 2021, it is stated that one Bitcoin transaction consumes about 1,544 kWh to be completed, and this output is equivalent to about 53 days of electricity consumption by an average US household.
When the energy is converted into money, the total amount needed to mine 1 Bitcoin is 20,072 cents (about $200.72), as the average cost per kWh in the US is 13 cents. According to the Cambridge Index, one day of Bitcoin mining in the US is equivalent to about 231,726,027 kWh (231.7 GWh), or about $16.977T per year.
During the last year, when Covid-19 was at its peak, China managed to mine about 2/3 of the world’s bitcoin, and this consumed about 86 TWh of electricity. However, according to Rystad Energy findings, about 63% of this electricity came from coal-fired power plants.
The average electricity price for industrial users in China Mainland is 0.635 yuan per kWh. This means that bitcoin mining cost about 54.61 billion yuan (which is about $8.433 billion) in 2020.
Crypto miners are going green
Some cryptocurrency miners are looking at green energy sources as a possible solution. Due to the high cost of electricity for mining bitcoin, some countries have encouraged their companies to use cheaper energy sources. In early July, US energy company Energy Harbor Corp announced that it plans to power Standard Power ‘s new bitcoin blockchain mining center in Ohio with nuclear electricity by the end of 2021.
In addition, Bitcoin miners in China are known to use both fossil fuels and HEP (hydropower, the most popular renewable energy among crypto miners).
While other countries like the US, UK, Germany, etc. are fighting for green energy, China is blocking its resources for mining. Since the Communist Republic banned mining and trading of BTC, it has been going hard on most cryptocurrency related activities and businesses.
China’s crackdown on cryptocurrencies could take burgeoning industry south
In an effort to further tighten oversight of cryptocurrency mining, the People’s Government Office Yingjiang County, Yunnan Province, has now issued a notice on the strict cleanup of violations of hydroelectricity supplies to Bitcoin mining companies.
The announcement instructed hydropower plants to stop illegally supplying electricity to cryptocurrency mining companies and disconnect them from the power grid by August 24, 2021. Currently, authorities in the province are forcing miners to disconnect and report the matter to the State Energy Bureau. Otherwise, the hydroelectric stations may be shut down or lose their license. However, so far none of the stations are being inspected, which means that the Chinese miners have already shut down or fled to other, cheaper countries.
It is clear that the Yunnan Provincial Energy Bureau has previously revealed that cryptocurrency mining companies depend on power generation enterprises, unauthorized private access to electricity, evasion of government transmission and distribution fees, funds, and other profit-making violations.
This is not the first region in China to crack down on bitcoin mining companies. Some provinces such as Anhui, Beijing, Inner Mongolia, Sichuan and many others have continuously warned mining companies to stop their crypto mining activities with immediate effect, or they will face serious penalties.
However, all of these actions against BTC mining were likely carried out as part of the country’s general ban on cryptocurrency mining. In 2013, China waged a war on Bitcoin by banning all of its banks from cryptocurrency businesses or transactions, according to CoinIdol, a world blockchain news outlet. The Xi Jinping government poured more fuel on the fire and a blanket ban on cryptocurrencies was announced.
Additionally, in May 2021, the Chinese government vowed to crack down harder on Bitcoin and cryptocurrency mining and trading, so it’s no surprise that several regions in mainland China are implementing this decision. But where will these efforts take the cryptocurrency mining industry?
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