Hashing it Out
Recently (Monday July 23rd), Bitcoin miners in the South Western province of Sinchuan had to cease mining operations or face strict punishment. This prompted a drop in the hash rate, therefore slowing down the networks of Bitcoin and some altcoins, whilst also increasing the fees for each transaction. The event itself sent a cautionary signal to traders, resulting in Bitcoin and other tokens retracing from the recent bull run.
Why? The official reason is China has decided to implement these regulations because of how much energy usage the mining farms use. Most of the mining is powered by illegally reopened coal-fueled power stations, and some operations get the energy from hydropower. The real reason is thought to be that China feels Bitcoin is a threat to their state control and wants to mandate their own digital currency to track citizens.
Still, Bitcoin and cryptocurrencies are not altogether outlawed in the country, but citizens are discouraged from trading.
Currently China is operating about 70% of Bitcoin’s hashrate, with Russia being second at around 6%, followed by the USA with 5%. The reason why the majority is mined in China is thanks to the combination of the cheap energy, and the proximity of cheap parts to build the mining farms with.
The new regulations in China have prompted miners to move operations outside of China, to jurisdictions with more accommodating mining regulations. This change is likely to be positive for the adoption of cryptocurrency moving forward, as when the hash rate is evenly spread across different parts of the world, it helps to retain the core ethos of cryptocurrencies – decentralization.
Ongoing Mining Concerns
Concerns regarding the energy consumption of Bitcoin mining operations have been floating around the news recently. Regulations surrounding mining, and concerns from industries adopting crypto as methods of payment has caused several ‘greener’ projects to emerge in a bid to make cryptocurrencies better for the environment. Recently, El Salvador, the first nation to adopt Bitcoin as legal tender, will be tapping into geothermal energy sources for their mining infrastructure.
Although these resources aren’t available to absolutely every nation on earth, greener mining companies are working hard to move that trend forward and ensure that the future of mining is green.