The weakness of Kazakhstan’s bitcoin mining industry was exposed last week when the country’s internet was shut down amid anti-government protests over rising energy prices.
According to the Cambridge Center for Alternative Finance, the world’s second largest miner has significantly reduced its hash rate, or its computing power, to protect Bitcoin’s estimated contribution of 18.1%.
The turmoil showed a major setback for markets seeking to take advantage of the mining ban in neighboring China. Its hash rate has increased more than 10% since the ban imposed by China last June.
John Warren, CEO of GEM Mining, a US-based company, confirmed that “many of the old Chinese mining companies have relocated to Kazakhstan.” Warren told Yahoo Finance that he was approached by a promoter to promote the supply of “cheap electricity” in Kazakhstan before launching a GEM mining company in the United States.
Although the country’s electricity grid is cheap, it is not stable. In October, the Kazakh Power Grid Operator (KEGOC), which manages the national power grid, said it was supplying power due to “increasing emergencies at power plants” and “a rapid increase in consumption by digital miners”. Facing a crisis. ..”
Limited energy supplies could drive the transition to another mining industry – this time to the West.
In an interview with Yahoo Finance, Xive Mining co-founder Dibar Bekbauov increasingly focuses on the United States as one of the “top priorities” for expansion for many US mining companies, mainly due to the availability of cheap electricity. I said I do it.
“I think the United States is going to be the biggest mining hub in the world,” he said. “It will be more than 60% of total retail rates in the United States within two years.”
According to Colin Harper, director of content and research at Bitcoin mining aggregator and the shorter software company, such a move is neither cheap nor easy.
Currently, the United States is estimated to account for 35.4% of the Bitcoin hash rate. Harper told Yahoo Finance last year to build mining facilities and rental spaces where the state provides ample electricity and a stronger rule of law than other mining hotspots. He said competition for materials in Japan has intensified.
In addition to the tailings, Bitcoin miners are expanding in China who have moved to companies in the United States and North America. As a result, miners in Kazakhstan looking to relocate to the United States may have a significant impact on their bottom line.
According to Harper, it’s big enough and some people might “throw in the towels,” especially if they’ve just settled in the country soon after they migrated from China.
The preferred condition that the United States provides for bitcoin miners is high access to renewable energy sources.
The energy density of bitcoin mining is still a hotly debated topic among climate activists, scientists, and miners themselves. Miners are not necessarily incentivized to search for renewable energy, but renewable energy has become a major focus as Bitcoin prices soared in 2020 and 2021.
According to Luxor’s annual report, “List miners (and those looking to go public) ‘green’ work by seeking renewable energy outright or purchasing carbon credits/offsets for two main reasons. It will continue to change. Very spontaneously” to mitigate criticism.” Second, the ESG directives require US regulators to do so.
Alex de Vries, founder of the economics blog Digiconomist, is highly critical of industry energy consumption. And (obsolete) fossil fuels are simply better at providing both. “
On January 20, the House Energy and Commerce Committee will hold a hearing on the energy impact of cryptocurrencies, with bitcoin mining expected to be a central focus.
The Cambridge Center for Alternative Finance puts the industry total to consuming 126 terawatt-hours (TWh) per year. That’s more energy than Ukraine consumes and more energy than residential lighting and televisions in the United States. However, these comparisons are as follows: they are not individual.
David Hollerith describes cryptocurrency for Yahoo Finance. follow him Tweet embed..
Akiko Fujita is a broadcaster and reporter at Yahoo Finance. Follow her on Twitter Tweet embed
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