Bitcoin mining globe
R egulators across the globe are getting more serious about crypto this year, as concerns grow about the environmental impact of crypto-mining and the use of digital assets for illicit activities. A Bloomberg report on Wednesday said governments are grappling with balancing the need for more oversight and investor protections with their desire to cash in on the burgeoning industry. On Monday, Daily Trust reported that crypto accounts operated by Nigerians on the platform of Binance Holdings Ltd were restricted on security concerns and money laundering. In Russia, Vladimir Putin has indicated he supports a plan to tax and regulate crypto-mining, rather than ban it as was proposed by his central bank. The United Kingdom and Spain are taking steps to tighten rules around misleading crypto advertising, with a British watchdog proposing to restrict industry marketing to wealthy and experienced investors. With so much activity in this space last month alone, the rest of is sure to be interesting when it comes to regulation.
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- So You Think Bitcoin Mining is Wasteful?
- Bitcoin 101: Back to Basics
- How cryptocurrencies are taxed around the globe
- The bigger picture: What does El Salvador’s Bitcoin city mean for the global crypto market?
- History of bitcoin across the globe and how have countries accepted it
- Prosperous Canadian bitcoin miners buying up land in U.S. for farm expansion
- Why Quebec is betting big on Bitcoin
So You Think Bitcoin Mining is Wasteful?
Today, Bitcoin consumes as much energy as a small country. This certainly sounds alarming — but the reality is a little more complicated. How much energy does an industry deserve to consume? Right now, organizations around the world are facing pressure to limit the consumption of non-renewable energy sources and the emission of carbon into the atmosphere.
As cryptocurrencies, and Bitcoin in particular, have grown in prominence, energy use has become the latest flashpoint in the larger conversation about what, and who, digital currencies are really good for. On the face of it, the question about energy use is a fair one. This certainly sounds like a lot of energy. But how much energy should a monetary system consume?
How you answer that likely depends on how you feel about Bitcoin. If you believe that Bitcoin offers no utility beyond serving as a ponzi scheme or a device for money laundering , then it would only be logical to conclude that consuming any amount of energy is wasteful. If you are one of the tens of millions of individuals worldwide using it as a tool to escape monetary repression , inflation , or capital controls , you most likely think that the energy is extremely well spent.
Specifically, there are a few key misconceptions worth addressing. While determining energy consumption is relatively straightforward, you cannot extrapolate the associated carbon emissions without knowing the precise energy mix — that is, the makeup of different energy sources used by the computers mining Bitcoin. For example, one unit of hydro energy will have much less environmental impact than the same unit of coal-powered energy. But its carbon emissions are much harder to ascertain.
Mining is an intensely competitive business, and miners tend not to be particularly forthcoming around the details of their operations. The best estimates of energy production geolocation from which an energy mix can be inferred come from the CCAF, which has worked with major mining pools to put together an anonymized dataset of miner locations.
Based on this data, the CCAF can guess about the energy sources miners were using by country, and in some cases, by province. Furthermore, many high profile analyses generalize energy mix at the country level, leading to an inaccurate portrait of countries such as China, which has an extremely diverse energy landscape.
As a result, estimates for what percentage of Bitcoin mining uses renewable energy vary widely. Almost all of the energy used worldwide must be produced relatively close to its end users — but Bitcoin has no such limitation, enabling miners to utilize power sources that are inaccessible for most other applications.
Hydro is the most well-known example of this. In the wet season in Sichuan and Yunnan, enormous quantities of renewable hydro energy are wasted every year. In these areas, production capacity massively outpaces local demand, and battery technology is far from advanced enough to make it worthwhile to store and transport energy from these rural regions into the urban centers that need it. Another promising avenue for carbon neutral mining is flared natural gas.
The process of oil extraction today releases significant amount of natural gas as a byproduct — energy that pollutes the environment without ever making it to the grid. But Bitcoin miners from North Dakota to Siberia have seized the opportunity to monetize this otherwise-wasted resource, and some companies are even exploring ways to further reduce emissions by combusting the gas in a more controlled manner.
To be fair, the monetization of excess natural gas with Bitcoin does still create emissions, and some have argued that the practice even acts as a subsidy to the fossil fuel industry, incentivizing energy companies to invest more in oil extraction than they otherwise might. But income from Bitcoin miners is a drop in the bucket compared to demand from other industries that rely on fossil fuels — and that external demand is unlikely to disappear anytime soon. Given the reality that oil is and will continue to be extracted for the foreseeable future, exploiting a natural byproduct of the process and potentially even reducing its environmental impact is a net positive.
Interestingly, the aluminum smelting industry offers a surprisingly relevant parallel. Regions with the capacity to produce more energy than could be consumed locally, such as Iceland , Sichuan, and Yunnan, became net energy exporters through aluminum — and today, the same conditions that incentivized their investment in smelting have made those locations prime options for mining Bitcoin. There are even a number of former aluminum smelters, such as the hydro Alcoa plant in Massena, NY, that have been directly repurposed as Bitcoin mines.
How energy is produced is one piece of the equation. Once coins have been issued, the energy required to validate transactions is minimal. And that leads us to the final critical misconception: that the energy costs associated with mining Bitcoin will continue to grow exponentially. This was the premise of a widely-reported study that was recently cited in the New York Times , making the shocking claim that Bitcoin could warm the earth by two degrees Celcius.
First, as has become common in many industries, the energy mix of Bitcoin grows less reliant on carbon every year. In the U. And of course, as renewable options such as solar grow more efficient and thus more viable for mining, Bitcoin could end up serving as a serious incentive for miners to build out these technologies.
In addition, miners are unlikely to continue expanding their mining operations at the current rates indefinitely. The Bitcoin protocol subsidizes mining, but those subsidies have built-in checks on their growth. However, the protocol is built to halve the issuance-driven component of miner revenue every four years — so unless the price of Bitcoin doubles every four years in perpetuity which economics suggests is essentially impossible for any currency , that share of miner revenue will eventually decay to zero.
We can expect some miners to continue operating regardless, in exchange for these transaction fees alone — and in fact, the network depends on that to keep functioning — but if profit margins fall, the financial incentive to invest in mining will naturally decrease. You have 1 free article s left this month. You are reading your last free article for this month.
Subscribe for unlimited access. Create an account to read 2 more. Technology and analytics. Read more on Technology and analytics or related topics Economics and Sustainable business practices. Nic Carter is a general partner at Castle Island Ventures, a Cambridge, MA-based venture firm investing in public blockchain startups, and the cofounder of Coin Metrics, a blockchain analytics firm.
Bitcoin 101: Back to Basics
Bitcoin , Dogecoin , Ethereum and every cryptocurrency available had a terrible week. Prices began falling Wednesday following the news of China reaffirming its ban on the crypto services for its financial institutions. Then, after a brief rebound Thursday, prices fell again Friday when a statement from a meeting among top Chinese officials called for what could be disastrous actions against cryptocurrency. The cryptocurrency industry had its first gut punch come Tuesday, as the China Internet Finance Association said it won't allow the country's financial institutions to partake in any business related to cryptocurrency, due to the volatile nature of the digital coins, according to a Chinese media report spotted by Coindesk on Wednesday. This position isn't new. China took a similar stance back in , which also resulted in a massive Bitcoin selloff.
How cryptocurrencies are taxed around the globe
The province courted crypto miners with affordable energy. Will they stick around when the digital gold rush ends? Saint-Hyacinth, one of several small Quebec cities with a Bitfarms mining facility Guillaume Simoneau. In places like Saint-Hyacinthe, Quebec, in the bowels of long-abandoned warehouses, there is the sound of money being made. This literal wall of sound is looped with wires and pulsing with green lights—some near-future set piece plunked into the industrial scrapes of a Montreal exurb. The noise and heat—the room feels like a Florida tarmac—is the by-product of 6, computers. Each one is roughly the size of a loaf of bread and is doing the same thing as its many neighbours: cracking mathematical equations. It then moves on to another equation. Then another.
The bigger picture: What does El Salvador’s Bitcoin city mean for the global crypto market?
Every blocks, or about every two weeks, bitcoin resets how tough it is for miners to mine. Early Friday morning, as expected, the bitcoin code automatically made it about 7. Historically speaking, this spike in difficulty is on the larger side, but it isn't surprising, nor is it alarming. But it marks the first sizable increase since the Chinese mining ban took effect and serves as confirmation of a trend we already knew was underway: Some of the miners that used to be in China are finding new homes elsewhere.
History of bitcoin across the globe and how have countries accepted it
This way they secure the network and discover new Bitcoins. Not only do they make Bitcoins available , but they also check the overall security of the network. For this job done, they get a block reward with every new transaction added to the network. Unfortunately, this is not that easy for individual miners. Bitcoin halving is an event that happens after , Bitcoins are mined.
Prosperous Canadian bitcoin miners buying up land in U.S. for farm expansion
Estimates suggest bitcoin mining uses approximately 0. Miners which successfully guess the number validate the transactions on the blockchain, and receive an amount of new bitcoin as an incentive. The rewards for those at the forefront of bitcoin mining are vast. Not a bad investment. Watts the problem with bitcoin Across the globe, bitcoin farms accrue considerable consumption. At 2pm on February 19 , the total global energy consumption of Bitcoin is For context, at the same time, electricity generation from gas in the UK was 9. However, the environmental footprint due to bitcoin mining is a nuanced topic.
Why Quebec is betting big on Bitcoin
Minister of Trade Muhammad Luthfi. B1 Photo. Indonesia will not follow China's footsteps in banning all cryptocurrencies transactions outright but looking into ways to make them less prone to be used in illegal financial activities, a top official said late on Friday.
Bache Capital Management. ITS Financial Group. Our primary focus is Bitcoin. We have gathered plenty of naming ideas here. Bitcoin price today is , Private Company.
Tesla boss Elon Musk's sudden u-turn over accepting bitcoin to buy his electric vehicles has thrust the cryptocurrency's energy usage into the headlights. Some Tesla investors, along with environmentalists, have been increasingly critical about the way bitcoin is "mined" using vast amounts of electricity generated with fossil fuels. Musk said on Wednesday he backed that concern, especially the use of "coal, which has the worst emissions of any fuel. Unlike mainstream traditional currencies, bitcoin is virtual and not made from paper or plastic, or even metal. Bitcoin is virtual but power-hungry as it is created using high-powered computers around the globe. At current rates, such bitcoin "mining" devours about the same amount of energy annually as the Netherlands did in , data from the University of Cambridge and the International Energy Agency shows. Some bitcoin proponents note that the existing financial system with its millions of employees and computers in air-conditioned offices uses large amounts of energy too.
San Francisco, Jan 29 IANS : Eight US lawmakers have come forward to push Bitcoin mining companies into revealing how much electricity they use for crypto mining, as cryptocurrency mining's impact on energy is being felt across the globe. The US Senators have sent letters to six companies that mine Bitcoin in the US, asking them about how much electricity they use, where it comes from, and how they plan to grow. Cryptocurrency mining threatens targets to limit global warming to 1. The most common method for producing crypto-assets requires enormous amounts of electricity and generates large CO2 emissions.