China’s Crypto Mining Ban Revisited as Similar Calls Grow Elsewhere
After about a year since China exited the Bitcoin mining scene, talk of its ban of related activities has resurfaced and become quite topical as the call for similar actions to be taken in different parts of the world rages on.
From Europe, where the deputy chief of the European Securities and Markets Authority, Erik Thedéen, called for the regional bloc to consider imposing an EU-level ban on the energy-intensive proof of work method of mining Bitcoin, to North America where many of China’s mining industry players headed after the ban, concerns have grown over the top cryptocurrency’s carbon footprint.
China in 2020 set a target to peak carbon dioxide emissions by 2030 and carbon neutrality by 2060. Bitcoin mining reportedly threatened this plan hence its decision to put a stop to it within its borders in May 2021 as a policy intervention that could have seen the annual energy consumption of mining in China reach 296.59 Twh by 2024 and generate 130.50 million metric tons of carbon emission correspondingly. Bitcoin’s computing power (hash rate) has since seen a great distribution as a result of the ban. From what used to be approximately 75% of the Bitcoin network’s hash rate coming from China and 4% from the U.S., China now has almost 0% due to the ban while the U.S. is at approximately 35%.
While the EU financial regulator’s Thedéen points out that there are other methods aside from proof of work (PoW) for mining cryptocurrencies like Bitcoin and Ethereum with reduced energy of up to 99.95% and functionality not affected, the U.S. Congress began investigating the energy demands and environmental impacts in January 2022 with a similar focus on PoW.
Their moves follow a January proposal by Russia central bank to ban crypto mining activities. Also in January, miners in Kazakhstan had to shut down after a chaotic internet shutdown rocked the nation where a similar call for crypto activities to be banned was made as Iran restricted Bitcoin mining operations for a second time in 2022 over concerns of blackouts forcing licensed miners to shut down until March.
What’s good for crypto mining though
Meanwhile, despite the call to avert the possible negative outcome based on the outlook of the industry, some insiders see something good coming out of the sector. In its new report on the role of Bitcoin mining in contributing to the global transition to a green renewable grid, regulated and compliant broker dealer, BitOoda, concludes that Bitcoin presents positive externalities in accelerating a green grid transition.
Luxor Mining, which provides analysis, data and hash rate insights, argues that the exact figure of how much energy Bitcoin mining consumes is unknown. In its latest Hashrate Index, it maintains that Bitcoin mining uses less energy than consumer electronics (TVs, laptops, video games, smart phones, etc) in the US alone and less energy than the world’s data centers and the global banking industry.
It adds: “Energy allocation, like value, is subjective and highly contingent on personal experience and preferences. Those who moralize Bitcoin’s energy use and call on it to be curtailed probably find no need to apologize for the energy they spend on streaming or tweeting or video gaming or whatever else. And they shouldn’t have to–that’s the point. But lest they be hypocrites, they should hold their tongues from critiquing someone else’s energy use just because they don’t find utility in it.”