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Less than four months after China banned cryptocurrency mining and gave up its world dominance in the space, the U.S. is now the top Bitcoin mining market with 35 percent of the global hash rate, followed by Kazakhstan with 18.1 percent and Russia with 11.2 percent.
China in 2019 accounted for 75 percent of the global hash rate — the computational power needed to mine or create bitcoin. That fell to zero between May and July, according to data from the Cambridge Centre for Alternative Finance published Wednesday.
There are currently 18.8437 million Bitcoins in existence with a 21 million cap. The number of Bitcoins changes about every 10 minutes when new blocks are mined. More than 900 new Bitcoins are created per day on most days.
Cambridge University researchers created an online tool called the Cambridge Bitcoin Electricity Consumption Index (CBECI) which estimates Bitcoin electricity consumption. The index shows that bitcoin consumes about 124 terawatt-hours per year — about a half-percent of the world’s total electricity consumption and as much as Pakistan’s.
Most electricity used to mine bitcoin comes from fossil fuels. China’s subsidized coal-fired power plants produce some of the cheapest energy in the world, according to The Phoenix, a newsletter about radical change.
In May, China cracked down on Bitcoin mining citing environmental and financial concerns. Mining farms started shutting. Many miners sought to move to North America and Central Asia — an expensive undertaking that involved disassembling and moving massive server arrays. CBECI data suggests many have successfully transitioned to new locations, South China Morning Post reported.
China subsequently went further, banning all things crypto in September and declaring that all crypto-related transactions are illegal. That goes for foreign crypto exchange operators doing business in China as well.
“The effect of the Chinese crackdown is an increased geographic distribution of hash rate across the world,” noted Michel Rauchs, digital assets lead at the Cambridge tracker. It could be seen as “a positive development for network security and the decentralized principles of bitcoin”.
The Chinese central bank is developing its own digital yuan that could be tracked and controlled by the government. Authorities hope to trial it at the Beijing Winter Olympics in February 2022, Financial Times reported. More than 60 central banks are considering offering central bank digital currencies including the U.S., Russia, and the European Union.
The Cambridge University energy consumption model predicts that bitcoin miners will ultimately spend 60 percent of their revenues on electricity.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
