Unchecked mining in China of crypto currencies including Bitcoins is challenging the global efforts towards protecting the environment and tackling global warming. During the past decade, the unregulated growth in China of this so far under the wraps kind of industry points towards the country’s complete disregard for shared international concerns. Ironically, China banned trading in crypto currencies in 2019 to prevent money laundering, but mining remain permitted. As per a study published in the journal Nature in April 2021, current level of mining activity in the country accounts for about 80% of the global trade in crypto currencies. The study also estimates that mining in China would generate 130.5m metric tons of carbon emissions by 2024, close to the annual greenhouse gas emissions of Italy or oil-rich Saudi Arabia. Pointing towards the environmental threat, it further states that
“The intensive Bitcoin block chain operation in China can quickly grow as a threat that could potentially undermine the emission reduction effort.” According to Cambridge University’s Bitcoin Electricity Consumption Index, this year the crypto-mining industry is expected to use 0.6% of the world’s total electricity production, or more than the annual use of Norway.
Riding on the crypto wave, the Chinese mining industry has been further aided by rapid increase in production of Application Specific Integrated Circuit (ASIC) chips; these chips are specifically designed to excel at only one given task – mining bitcoins. However, more machines mean that more electricity is needed to run and cool the equipment, translating into higher costs for the miner. Thus, there is a constant search for abundant electricity
sources at the lowest possible price.
Traditionally, thermal based energy has been the main source of power for crypto generation in China with around 40% of the mining activity relying on this source. Though the country has been slowly moving towards renewable energy, about two-thirds of its electricity still comes from coal. As there is no government body or organization that officially tracks where Bitcoin is mined and what type of electricity miners are using, there is no way of knowing whether miners are using electricity that is fuelled by renewable energy or fossil fuels. However irrespective of the source, it is apparent that carbon emission per GDP of the Bitcoin industry far exceeds the average industrial carbon intensity of China. This invariably validates the fact that Bitcoin blockchain operation is a highly carbon-intense industry.
Meanwhile, the Chinese mining community involved in the mining of Bitcoin and other crypto currencies look forward to a clear runway ahead of them with the government prioritizing renewal sources of power over fossil fuels. China’s plans for producing hydro power by damming the Yarlung Tsangpo River will lead these miners to a cheap source of energy, which has a vital cost component in the overall operations. In recent times, the exploitation of renewable sources has become more critical as Coal-rich regions are now pushing out Bitcoin miners as they struggle to curb emissions. Given these factors, the weight of the water that would be stored in the humungous dam on the Yarlung Tsangpo needs to be examined for environmental consequences. This is particularly significant as the exercise of storing massive amounts of water for generation of hydropower could have long term ecological implications as the region is a highly seismic zone, home to the most nascent and geologically active mountain ranges, the Himalayas.
Last month, Inner Mongolia announced plans to end the power-hungry practice of crypto currency mining by the end of April after the region failed to meet annual energy consumption targets. Also, Nasdaq-listed Bitmain, which operates one of the biggest crypto currency mining pools in the world, said it was shifting operations in Inner Mongolia to areas with more hydropower such as Yunnan. The region accounted for 8% of the computing power needed to run the global block chain – the set of online ledgers that record Bitcoin transactions. That is more than the amount of computing power dedicated
to block chain in the entire United States.
Going forward, the mining rigs can move to other places offering energy at a lesser cost such as Tibet, Sichuan and Yunnan owing to the abundant natural resources in these locales. The proportion of Chinese miners in the Bitcoin mining process is also contingent on the availability of resources at a cheaper cost. Bitcoin mining would gradually decrease
if it doesn’t remain a profitable enterprise. This explains why even at the expense of the environment these hydropower projects are being sanctioned and China is speedily aiming to becoming carbon free. It is in China’s interest and rise to power that Bitcoin mining is done with clean energy sources irrespective of the damage it may cause to the
environment, right now and for generations to come.
