There are growing concerns in the People’s Republic about the effect Bitcoin mining has on power consumption. So much so that the government has outlined proposals this week to restrict mining operations. The move has spurred a digital exodus as mining conglomerates seek friendlier lands.
China’s crackdown on cryptocurrencies has widened to miners, according to a Bloomberg report. Officials plan to limit the power consumption to the industry and have asked local governments to guide miners out of the business. The People’s Bank of China (PBOC) intends to enforce local regulators to monitor and restrict the power use of miners, which are often located near hydroelectric power plants.
MINER EXODUS
Bitmain, which runs China’s two largest Bitcoin mining collectives, is relocating its headquarters to Singapore, according to the report. Company co-founder Wu Jihan said that they already have mining operations in the US and Canada. Bitmain is not the only mining operation to leave Chinese shores. The third largest, BTC.Top, is opening a factory in Canada, and the fourth biggest mining operation, ViaBTC, has facilities in Iceland and the US.
BTC.Top founder Jiang Zhuoer said that they chose Canada because of the relatively cheap cost and the stability of the country and its policies. Locations in Russia and Iran were also considered.
POWER HUNGRY
China has long been a haven for crypto mining due to its low cost of energy. It also has the advantage of cheap labor and local chip manufacturing. Bitcoin mining uses a lot of energy; it has been estimated by Digiconomist’s Bitcoin Energy Consumption Index that the current estimated annual electricity consumption is 37.8 TWh.
It was also estimated that 3.5 million households in the US could be powered by Bitcoin mining, which equates to an annualized estimated global mining cost of $1.89 billion. Bitcoin currently uses more energy per year than several countries, including Bulgaria and Denmark. According to the report, the problems do not end there as Bitcoin’s biggest problem is not just its massive energy consumption, but that the network is mostly fueled by coal-fired power plants in China, resulting in a large carbon footprint.
At the time of writing, the market remains unaffected by China’s latest anti-crypto sentiments. According to Coinmarketcap, it is trading at $17,100, which is up 28% from January 1st.