China's share of global bitcoin mining plummets as Kazakhstan climbs to third place

China’s share of global bitcoin mining plummets as Kazakhstan climbs to third place

International News

In this photographic illustration, the Bitcoin logo is seen on a mobile device with the flag of the People’s Republic of China in the background.

LONDONChina’s share of global bitcoin mining plummeted this year, while Kazakhstan became the world’s third-largest player in the industry, according to research from the University of Cambridge.

The research, published Thursday by the Cambridge Center for Alternative Finance, shows that China accounted for less than half (46%) of the energy used for bitcoin mining in April, a sharp drop from 75.5% in September. 2019. That is before the authorities ordered a crackdown. about cryptocurrency mining.

Kazakhstan saw a nearly six-fold increase in its share of global bitcoin mining in the same period, rising to 8.2% from 1.4%. Meanwhile, the US rose to 16.8% from 4.1% to rank second, while Russia and Iran were the fourth and fifth largest countries for bitcoin mining, respectively.

Bitcoin mining, where transactions are validated and new units are produced, is an energy-intensive process. Computers around the world compete to solve complex mathematical puzzles in order to make a transaction go through. Whoever wins this race is rewarded in bitcoin.

The rise in the price of bitcoin over the years has incentivized more people to mine the cryptocurrency, leading to the creation of an entire industry focused on the manufacture and sale of cryptocurrency mining equipment. The more people mine bitcoins, the more energy is consumed.

That has raised concerns about bitcoin’s potential impact on the environment, especially since most of the mining was done in China, which relies heavily on coal power. Authorities in several prominent Chinese regions, including Sichuan, Xinjiang, and Inner Mongolia, have cracked down on crypto mining in recent months.

But Cambridge researcher Michel Rauchs says that bitcoin’s energy mix is ​​difficult to determine. In the rainy season, Chinese miners often flocked to Sichuan, a hydropower-rich province in the southwest.

Rauchs data shows that Sichuan’s share of China’s total bitcoin mining power increased to 61.1% from 14.9% at the beginning of the rainy season to the peak, while Xinjiang’s share decreased to 9. , 6% to 55.1% during the same period.

He also suggests that many bitcoin miners had fled China for neighboring Kazakhstan, a former Soviet republic, prior to its crypto crackdown in June. According to Bloomberg, Kazakhstan has more than 22 gigawatts of electrical power capacity, most of which comes from coal and gasoline stations.

Rauchs, who is a digital asset leader at the Cambridge Center for Alternative Finance, created an index in 2019 to show how much energy bitcoin consumes. The academic said that he is working on a new model that illustrates the environmental impact of bitcoin mining.

Bitcoin’s poor environmental credentials have made it a controversial asset at a time when social and environmental responsibility has become a priority for investors. In May, Tesla CEO Elon Musk said he would stop accepting bitcoin for vehicle purchases unless mining switched to more sustainable energy.

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