Bitcoin Mining Ban In China
You might be surprised to learn that 65-75 percent of the world’s cryptocurrency ‘mining’ (having computers solve complex but meaningless algorithms to be rewarded with a coin) takes place in China. As Bitcoin and other crypto values have soared, so too have the number of would-be ‘miners,’ so many that their furiously active processing engines are using up a significant part of China’s power supply, and greatly contributing to the global carbon dioxide emissions. Bitcoin ‘mining’ has a carbon footprint roughly comparable to the entire nation of New Zealand, and consumes more power than all the people and industries in the Netherlands.
Recently, the Chinese government has been cracking down on cryptocurrency ‘miners,’ cutting off access to hosting facilities as ‘miners’ strain electrical transformers and switches in the country’s energy grid. In the latest move, authorities in the Chinese province of Sichuan have ordered crypto ‘miners’ to shut down operations, which, combined with other provincial orders, means that more than 90% of China’s bitcoin mining capacity is now closed. Meanwhile, because the total number of coins is fixed, the amount of bitcoin awarded to ‘miners’ is halved every four years—meaning that more energy will be needed to produce fewer coins.
So all this means this incredible waste of energy is set to decrease, right? As it turns out, with so many bitcoin ‘miners’ going offline in China, the share of the network going to other ‘miners’ will increase, making mining more lucrative and attracting new players. Meanwhile, the price of a single bitcoin—which, remember, has nothing backing it except the idea that other people might be willing to pay or it—has fallen from over $65,000 in April to below $30,000 recently.