on the crypto
New data shows that Bitcoin mining in China was already in steep decline before the latest government crackdown. Research from the Cambridge Center for Alternative Finance (CCAF) found that China's share of mining fell from 75,5% in September 2019 to 46% in April 2021.
It also revealed that Kazakhstan is now the third most important Bitcoin mining nation in the world. Miners make money by creating new Bitcoins, but the computers used consume large amounts of energy.
They control Bitcoin transactions in exchange for the opportunity to acquire the digital currency. Global mining requires enormous computing power, which in turn uses huge amounts of electricity and consequently contributes significantly to global emissions.
The CCAF's Cambridge Bitcoin Electricity Consumption Index shows that at the time of writing, Bitcoin was consuming nearly the same amount of electricity per year as Colombia.
China is on the move
In June, Chinese authorities took a strong stance against Bitcoin (quotation BTC). Authorities told banks and payment platforms to stop supporting digital currency transactions causing prices to plummet.
The CCAF data spans a period before the crackdown, but shows that China's share in global mining power was already in significant decline before the Chinese authorities took action.
The Cambridge researchers noted that the crackdown, once implemented, effectively led to "the disappearance of all Chinese mining power overnight, suggesting that miners and their equipment are on the move."
Experts say the miners are highly mobile
"The miners pack the containers with mining platforms," said David Gerard, author of Attack Of The 50 Foot Blockchain, "so that they are in effect mobile computer data centers and are now trying to ship them out of China."
It is not clear where they will go, but even before the crackdown the geography of mining was changing. Kazakhstan, a country rich in fossil fuels, saw a nearly six-fold increase in mining activities, increasing its share from 1,4% in September 2019 to 8,2% in April 2021.
According to the US Department of Commerce, 87% of Kazakhstan's electricity "is generated from fossil fuels" with coal accounting for over 70% of generation.
The country is now the third largest Bitcoin miner, behind the United States, which has also seen its share of global mining power increase significantly, to 16,8%.
It's raining money
The data also revealed the close links between low-cost electricity sources and Bitcoin mining. The researchers discovered a seasonal movement of mining between Chinese provinces in response to, it has been suggested, the availability of hydroelectricity.
Mining has shifted from the northern coal-fired province of Xinjiang in the dry season to the southern hydrocarbon-rich province of Sichuan in the rainy season.
The researchers noted that "this seasonal migration has materially affected the energy profile of Bitcoin mining in China," adding that it illustrated "the complexity of assessing the environmental effects of mining." Sichuan banned Bitcoin mining in June.
