The United States is now the world’s largest bitcoin miner. Should we be happy?

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The United States is now home to more than 35% of global Bitcoin mining, according to recent data from the Cambridge Bitcoin Electricity Consumption Index. Research shows that the United States has now overtaken countries like China and Kazakhstan to become the world leader in Bitcoin (BTC) mining.

But is it a good thing? Bitcoin mining may offer economic benefits such as tax revenue and job creation, but states will also have to compromise to accommodate the industry’s high levels of energy consumption and electrical waste.

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Bitcoin mining: concerns about energy consumption and carbon emissions

One of the reasons China cracked down on Bitcoin mining is that the industry has a huge carbon footprint. It’s also why Elon Musk’s Tesla stopped taking Bitcoin payments earlier this year.

Now the move from China – which is too reliant on coal generators – could be a good thing for crypto. Renewable energies account for 39% of Bitcoin’s energy consumption worldwide, according to a study from the University of Cambridge. In contrast, the median percentage of renewables in crypto mining in North America is 66%.

Some even argue that Bitcoin mining can help boost the development of the renewable energy industry. But even though two-thirds of Bitcoin’s consumption comes from renewable sources, mining still gobbles up large amounts of non-renewable energy.

In addition, there is only a limited amount of renewable energy available. If the overall energy use increases in a particular state due to mining, it could cause other industries to use more non-renewable energy.

The bigger question is whether individual states are producing enough electricity to support the Bitcoin mining industry without causing blackouts or spikes in energy prices.

Keep in mind that we are talking about an industry that consumes roughly the same amount of electricity as a country the size of Poland (which has almost 40 million people), according to Digiconomist. If 35% of this consumption is now in the United States, that’s a lot of additional electricity.

Which states are the most attractive to Bitcoin miners?

Bitcoin miners who were forced out of China have scattered across the world in search of crypto-friendly regulations and cheap electricity costs. The following US states have proven to be attractive to Bitcoin miners. Some states claim a high percentage of renewable energy production:

New York: The Empire State generates a third of its energy from nuclear sources and is the third largest producer of hydroelectric power in the country, according to the Energy Information Administration (EIA). Kentucky: The nation’s fifth-largest coal producer has offered tax breaks to attract Bitcoin miners Georgia: In 2019, natural gas and nuclear accounted for nearly three-quarters of the state’s energy use. The state that consumes and produces the most electricity in America has cheap electricity and various friendly laws. The EIA claims to have produced nearly a third of the country’s wind power in 2020.

Another aspect of this influx of Bitcoin miners is that old fossil fuel factories are being reopened to fuel crypto mining. For example, in Montana, a struggling coal-fired power plant was bought by Bitcoin miner Marathon Digital. In Pennsylvania, a crypto mining company recently bought another power plant. It will use waste coal to fuel its mining operations and hopes to increase production in the years to come.

The Benefits of Bitcoin Mining May Be Overestimated

One of the concerns of residents of these new Bitcoin mining states is the possibility of blackouts. It sounds dramatic, but a global energy crisis is already raising fears of fuel shortages in the United States. unlikely.

Residents of New York, who are said to be home to the highest percentage of Bitcoin miners in America, are campaigning for tougher rules. The concern is that reopening coal-fired power plants across the state could be damaging to the environment and prevent the state from meeting its greenhouse gas reduction targets.

The state has already seen its fair share of the crypto mining controversy. In 2018, Plattsburgh, New York, became the first US city to ban mining. Its low-cost hydroelectric power had attracted Bitcoin miners en masse. But when local residents saw their electricity bills increase by $ 100 or $ 200, authorities intervened.

Crypto farms used the city’s cheaper electricity allocation, so it had to buy more expensive electricity on the open market. Plattsburgh’s moratorium on new crypto operations ended in 2019. Its former mayor, Colin Read, told CNBC the benefits to locals – like job creation – had not materialized. He said states need good planning and strict rules to control the activity of miners.

Good for crypto, but not necessarily so good for locals

For the cryptocurrency industry, it’s almost certainly a good thing if more mining companies are moving to the United States. Since the use of renewable energy is higher, it could reduce Bitcoin’s carbon footprint. It would be good for Bitcoin investors.

For example, Elon Musk said that Tesla would resume accepting Bitcoin payments if there is evidence that renewables account for 50% of its energy use. Institutional investors concerned about their environmental, social and governance (ESG) obligations would be more likely to get involved.

But some states may need to exercise caution to avoid any unintended consequences of opening the doors to Chinese minors in exile. And unfortunately, Bitcoin’s carbon issues aren’t going away anytime soon.

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