China’s ban on Bitcoin mining favored the use of renewable energy

Bitcoin mining in China.

Key facts:
  • The use of renewable energy in Bitcoin mining has grown by more than 10%.

  • China still contributes more than 20% of the Bitcoin hashrate, but mostly with renewable energy.

Bitcoin mining took more environmentally friendly routes after the Chinese government’s ban on this activity. Although this may not have been a consequence foreseen by the authorities of the Asian giant, their punitive measures forced the miners to emigrate and seek greener alternatives in terms of energy consumption.

According to figures presented by the Bitcoin Mining Council last month, the efficiency of Bitcoin mining began to show a significant boost between the first and second quarter of 2021. The date coincides with the start of the exodus of Bitcoin miners outside China after the prohibition of this activity in the national territory.

Michael Saylor, former CEO of the MicroStrategy firm and one of the founders of the Bitcoin Mining Council, it states that Bitcoin hashrate grew by 137% between Q2 2021 and Q2 2022. During the same period of time, the increase in the use of electrical energy was only 63%. This implies an evident growth in the efficiency of Bitcoin mining.

The results presented by Saylor and the Bitcoin Mining Council are based on surveys conducted by members of this organization; which becomes an argument used by those who criticize mining, since they infer that the figures may have been manipulated.

Challenges to Bitcoin Mining Council reports

The investor and environmental activist Daniel Batten was in charge of investigating on his own how true and objective the report of the Bitcoin Mining Council was. Batten explains that he used publicly available reports and statistics for this mission.

The conclusion of the research of Batten is that, certainly, the use of renewable energy in Bitcoin mining has grown by 10.9%, As minimum; Well, he clarifies that he considered the result less favorable for the miners when the figures did not coincide or were inaccurate.

Underground Bitcoin mining in China

In favor of Bitcoin there is data such as the mining remnant in China. The Asian country still contributes more than 20% of the global Bitcoin hashrate, only clandestinely. Miners in Chinese territory are forced to use renewable energy sources (such as hydroelectric or solar) in remote places of the city, to avoid being easily tracked by the authorities. This information has been previously reported by CriptoNoticias, although it was also confirmed by anonymous sources cited by Batten.

Bitcoin mining in China.
Bitcoin mining in China is still relevant, despite its ban. Font: CBECI.

As for Bitcoin mining outside of China, one of the countries that was emerging as a mining powerhouse was Kazakhstan. The miners who emigrated to that nation saw how everything quickly became complicated for them. Since their arrival, they have been the target of dismantling by the authorities, electricity cuts and severe regulations, CriptoNoticias reported at the time.

Although the situation of Bitcoin mining in Kazakhstan is unfortunate to some extent, it also ends up being favorable for the environment, since most of the energy in this country is generated using fossil fuels.

Boosts to the use of renewable energy in Bitcoin mining

Uzbekistan, for its part, made the decision to allow Bitcoin mining on its territory and exempt it from taxes as long as it is powered by renewable energy sources. Canada also has an impact on promoting the use of clean energy, since 67% of the electricity generated in this country is renewable. Therefore, the recent increase in mining activity in this nation implies a growth of at least 3.3% in the use of this type of energy to mine Bitcoin.

Factors such as the energy crisis, which has pushed up electricity prices exorbitantly in many countries around the world, the war between Russia and Ukraine, and the crash of the cryptocurrency market have also pushed miners to use energy sources. renewable.

CriptoNoticias reported on Blockstream’s initiative to found a solar-powered farm in Texas, which would receive support from Tesla’s Elon Musk and former Twitter CEO Jack Dorsey. Other projects, such as Aspen Creek, in Colorado, United States; Anchor I, in El Salvador; Crypto Mining, in Argentina; among others, have resorted to the use of different sources ranging from solar energy to biodiesel (where the raw material is animal excrement) to fuel their Bitcoin mining farms.

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