Return of the Banished
For years, China was home to roughly 70% of all Bitcoin mining. In the earlier days of crypto, mining was extremely popular and those who engaged in it accrued mass amounts of tokens now worth millions of dollars. In China, however, this lucrative source of income was cut short as a ban was placed on all cryptocurrency mining. China’s ability to empower mining for cheap came from the low energy costs associated with its monstrous coal-fuelled power plants. Indeed, these mining operations alone consumed more energy than the entire nation of Ireland and had been shown to have a significant impact on global emissions. In light of this, China banned crypto mining alongside a list of 450 other industrial activities earmarked for potential elimination.
Since its banning, however, Crypto seems to have slowly made a comeback in China. Several underground mining operations have since emerged, with miners working hard to get around Beijing’s ban. Indeed, new research from the Cambridge Centre for Alternative Finance shows that Chinese bitcoin mining activity has quickly rebounded with China making up just over 22% of the total bitcoin mining market in September of 2021. Although the mining industry may be helpful for crypto, it’s definitely not great for the environment. In fact, unless nearly all crypto switches off their proof of work consensus mechanisms to a more environmentally friendly consensus mechanism, the only option may be to reduce mining significantly. Even with China increasing investment in renewable energy in hopes to be carbon neutral by 2060, crypto mining may remind as a potential obstacle to that plan. What do you think of the return of Crypto mining to China? And how will it affect the environment?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
