Is the United States the new bitcoin paradise?

Is the United States the new bitcoin paradise?

by Marco Dell’Aguzzo

After China’s squeeze, the United States has become the nation where the most bitcoins are “mined”. Here because
Between April and August last, the share of computing power destined for the “extraction” of bitcoin in the United States doubled, from 17 to 35 percent of the global total.

THE CLOSE OF CHINA

The reason – explains Quartz – lies in the grip of China, the country where the production of this cryptocurrency was concentrated, on mining and on bitcoin exchanges. The Chinese authorities want both to reduce the levels of energy consumption and greenhouse gas emissions related to extraction (the data centers must be powered by a lot of electricity), and to control cryptocurrency exchanges to avoid disruption to the financial system.

WHERE BITCOINS ARE MINING

Unable to operate freely in China, miners are looking for new destinations. It is no coincidence – according to data from the Cambridge Center on Alternative Finance – from April to August 2021 China’s share in bitcoin mining went from 46 percent to almost zero.
Thus, the country in which the most bitcoins are mined has become (at least from April to August) the United States, followed by Kazakhstan and Russia.

WHY MINERS GO TO AMERICA

In the United States, bitcoin miners find a transparent regulatory environment and states – such as Wyoming and Texas, for example – are eager to welcome the cryptocurrency industry.
Electricity prices are not as low as in Kazakhstan, but the time of high bitcoin prices makes it easier for “miners” to pay their electricity bills later this month.

THE CONSUMPTION OF ENERGY

Parallel to the doubling of the United States’ share in the global mining market, the consumption of electricity by the extractors on its territory has also grown by approximately twice as much. The Cambridge Center on Alternative Finance estimates that, globally, the bitcoin network used nearly 8 terawatt hours of electricity in September. It means that, in the United States, miners consumed about 35 TWh per year: that is three times as much as Sri Lanka’s annual electricity consumption.

BITCOIN ISSUES

According to estimates reported by Quartz, in 2021 the extraction of bitcoins will cause carbon dioxide emissions of 50 million tons. Miners in the United States will release nearly 18 million tons of CO2 into the atmosphere – the equivalent of adding 3.7 million cars on the road.
This is a problem for the climate agenda of President Joe Biden, who will shortly participate in COP26 in Glasgow and who has made a commitment to zero the net emissions of the United States by 2060. Some American states are developing legislation to hoc: the one in New York, for example, is working on a law to prevent fossil fuel power plants from supplying electricity to cryptocurrency mining centers.

WHAT MINERS DO

But the increase in the value of bitcoins will incentivize the “miners” to expand: they could, for example, have their own power plants, to be self-sufficient (a company, Greenidge, is doing this); or collaborate with fracking companies to draw on waste gas from the fields; or, again, to use nuclear energy, which does not release emissions.

FORECASTS

In the near future, the bitcoin network’s annual electricity consumption is expected to reach 200 TWh and emit more CO2 emissions than London.

STRAT MAG ARTICLE