China’s share of bitcoin mining drops as Kazakhstan grows

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In this photo illustration, the Bitcoin logo is seen on a mobile device with the flag of the People’s Republic of China in the background. (Photo illustration by t / SOPA Images / LightRocket via Getty Images)

Budrul Chukrut | SOPA Pictures | LightRocket | Getty Images

LONDON China’s share of global bitcoin mining has plunged this year as Kazakhstan has become the world’s third largest player in the industry, according to a Cambridge University study.

The study, published Thursday by the Cambridge Center for Alternative Finance, shows that China accounted for less than half (46%) of the energy used for bitcoin mining in April, down sharply from 75.5 % in September 2019. That was before the authorities ordered a crackdown. on cryptocurrency mining.

Kazakhstan saw its share of global bitcoin mining almost six times larger over the same period, rising from 1.4% to 8.2%. The United States, meanwhile, fell from 4.1% to 16.8% to take second place, while Russia and Iran were fourth and fifth, respectively, for bitcoin mining.

Bitcoin mining, where transactions are validated and new units produced, is a very energy intensive process. Computers all over the world are trying to solve complex mathematical puzzles in order to complete a transaction. Whoever wins this race is rewarded with bitcoin.

The rise in the price of bitcoin over the years has prompted more and more people to mine cryptocurrency, which has led to the creation of an entire industry focused on the manufacture and sale of mining equipment. crypto. The more people who mine bitcoin, the more energy is consumed.

This has raised concerns about the potential impact of bitcoin on the environment, especially since most of the mining activity has been carried out in China, which relies heavily on coal-fired power. Authorities in several major Chinese regions, including Sichuan, Xinjiang and Inner Mongolia, have cracked down on cryptocurrency mining in recent months.

But Cambridge researcher Michel Rauchs says bitcoin’s energy mix is ​​difficult to determine. During the rainy season, Chinese miners often flocked to Sichuan, a province rich in hydropower in the southwest.

Rauchs’ data shows that Sichuan’s share in China’s total bitcoin mining power has increased to 61.1%, from 14.9% at the start of the peak rainy season, while Xinjiang’s share has increased. decreased from 9.6% to 55.1% over the same period.

It also suggests that many bitcoin miners fled China for neighboring Kazakhstan, a former Soviet republic, before its crypto crackdown in June. According to Bloomberg, Kazakhstan has more than 22 gigawatts of electrical capacity, most of which comes from coal and gas stations.

Rauchs, head of digital assets at Cambridge Center for Alternative Finance, created an index in 2019 to show how much energy bitcoin consumes. The scholar said he was working on a new model that illustrates the environmental impact of bitcoin mining.

Bitcoin’s poor environmental credentials have made it a controversial asset at a time when social and environmental responsibility has become a priority for investors. In May, Tesla CEO Elon Musk said he would stop accepting bitcoin for vehicle purchases unless mining shifts to more sustainable energy.

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