China has been working to reduce dirty carbon emissions by reducing dirty coal. However the explosion of Bitcoin mining in China has seen a huge unforseen demand for energy, dominated in coal by the Chinese.
China has been working to reduce dirty carbon emissions by reducing dirty coal. However the explosion of Bitcoin mining in China has seen a huge unforseen demand for energy, dominated in coal by the Chinese. China Mines 60% of the world’s Bitcoin at the same time China is the biggest producer and consumer of coal.
Map Source: University of Cambridge
The new clean energy policy combined with cold weather has already seen China natural gas consumption surge as coal is replaced. With the server farms in provinces such as Xinjiang, Inner Mongolia and Heilongjian that are heavily reliant upon coal there is now the unexpected consequence of coal use back on the rise. While the Chinese have been sort to fill the unforseen demand from Australia there is a gap and the poorer quality coal in China is being sort. Australia’s ports have seen huge backlogs of ship loadings through the unexpected demand.
Everything with Bitcoin seems to have varying opinions, what we do know is the increasing complex algoritms used to mine bitcoin as the price and demand goes higher require infintely more energy. Ironic given one of the reasons Bitcoin was championed was to be safer for the environment.
How much electricity goes into making cryptocurrencies? PwC Blockchain analyst and Digiconomist blogger Alex de Vries estimates that total electricity use in bitcoin mining has increased by 30 percent in December alone.
“The energy-consumption is insane, if we start using this on a global scale, it will kill the planet.”- de Vries says.
Whether that is an exaggeration we can’t be sure but we can be certain that the miners will be sourcing the cheapest energy source which at this time means the poorer Chinese provinces. All of a sudden those cheap coal fored generators come back into play.
The large energy footprint of PoW (Proof of Work) cryptocurrency systems has attracted criticism for ‘wasting’ electricity to perform ‘useless’ calculations. Proponents, however, argue that this is a necessary cost for maintaining a secure, distributed computer system. In fact, 39% of small miners and 73% of large miners state that the benefits of having a secure distributed computer network outweigh the environmental costs (Figure 91). Similarly, 44% of small miners and 64% of large miners believe that cryptocurrency mining represents a minor issue when compared to the environmental damage caused by the extraction of fossil fuels and the mining of precious metals. –
Another risk of Bitcoin, and Bitcoin mining is the cost of mining gets more expensive as the price rises and more tokens are required. Bloomberg reports that James Butterfill, head of research and investment strategy at London’s ETF Securities Ltd estimates the marginal costs of each bitcoin will more than double from $6,611 in the fourth quarter to $14,175 in the second quarter of 2018. At the start of 2017, the cost was $2,856.
You’d be hard-pressed to find anywhere where it isn’t profitable to mine, if you’re investing in a bitcoin rig, you have to look at the long term, and with the volatility as high as it is, it probably still doesn’t make sense to mine bitcoin in Europe.”
To be sure there does exist cleaner cryptocurrency mining, even in China where you have operations around hydroelectric facilities in Sichuan and Yunnan. The real risk to dirtier mining increases should cryptocurrencies slide. This is a real risk we have seen Bitcoin go from $12k to $20k and back under $11k in a matter of weeks.
Over in Iceland computers are poered by geothermal plants and in Austria Bloomberg reported that Hydrominer IT-Services GmbH put servers inside hydro-power plants. The cost in Europe is significantly more expensive than China and the beneift of cryptocurrencies is its nomadic abilities, givent hat who will take the expensive route over the cheaper?