The US has become the world鈥檚 largest bitcoin-mining nation after a regulatory crackdown in China earlier this year saw the country plummet from a dominant 38 per cent of global market share to zero.
Analysis from the (CBECI), published by researchers at the University of Cambridge, shows that the US more than doubled its own global market share, from 16.8 per cent in April to 35.4 per cent at the end of August, as Chinese miners moved their operations abroad.
Bitcoin relies on a network of miners who use powerful computers to solve mathematical problems to mint new currency, consuming vast amounts of electricity in the process. Chinese bitcoin mining almost entirely ceased when the government restricted cryptocurrency use in May.
Advertisement
The previously rapid investment in new bitcoin mining plants in China stopped in September 2019 in anticipation of the ban, and remaining miners have now moved legacy operations to new countries. China鈥檚 share of global bitcoin mining power had been as high as 75.5 per cent previously.
Currently, the next nations behind the US are Kazakhstan with 18.1 per cent of global share (up from 8.2 per cent) and Russia with 11 per cent (up from 6.8 per cent).
at the Cambridge Centre for Alternative Finance in the UK says that Chinese miners have taken their specially designed mining hardware and redeployed it in other countries with preferable policies on cryptocurrencies and cheap energy.
Bitcoin is already notoriously resource-hungry. Only 11 per cent of the US electricity supply comes from renewable sources, and electricity from coal-fired power plants may be helping to meet the demands of this increased mining sector in the country, says at Global Energy Monitor, a California-based non-governmental organisation. If so, this would increase bitcoin鈥檚 already large carbon footprint.
On the flip side, wind and hydroelectric are the cheapest power sources on the US grid, says Nace, so there is potential for bitcoin mining to be powered renewably.
鈥淚t鈥檚 a pretty disturbing industry, though, because it doesn鈥檛 produce anything but it uses as much electricity as entire countries,鈥� he says. 鈥淏itcoin is notoriously inefficient.鈥�
Gene Hoffman, president of cryptocurrency company Chia Network, warns that the growth of mining operations in the US could threaten power supplies.
鈥淭he US is attractive as it鈥檚 a business-friendly environment with certain regions that have low electricity costs,鈥� he says. 鈥淗owever, proof-of-work mining is a [24-hour-a-day operation] as no miner wants to stop mining for hours a day. As such, this is likely to lead to further energy shortages in places like Texas which already appear to be on the edge of electrical grid stability.鈥�
