China Weakens on Global Bitcoin Mining Map, Kazakhstan Soars
Kazakhstan is a country that still relies heavily on fossil fuels, including coal. As much as 90 percent of its electricity needs are still met by supplies from the fossil fuel-using power plants.
Meanwhile, bitcoin mining activities need a large computer network for them to be able to solve mathematical problems in every attempt to mine the digital currency. And, that large computer network is also a very large electricity eater to be able to carry out its functions.
Data from the Cambridge Center for Alternative Finance (CCAF) shows that a brake has been put on rapid investment in new bitcoin mines in China from September 2019 to April 2021. Until last May, the cryptocurrency ban was implemented. The global bitcoin mining map also changed because China, which originally controlled 75.5 percent, immediately fell to 46.0 percent during the braking period.
In the same period, Kazakhstan's bitcoin mining increased from just 1.4 to 8.2 percent on the world map. His position jumped to number three under America.
Bitcoin has been hit by a wave of criticism for its contribution to climate change on Earth. Its increased mining activity in Kazakhstan is likely to add to criticism as the country still relies heavily on fossil fuels.
According to data from the International Energy Agency, Kazakhstan was the ninth largest coal producer in the world in 2018. In the same year, 70 percent of its electricity supply came from coal-fired plants and 20 percent from natural gas. Renewable energy accounts for only 1.4 percent of the country's electricity supply.
Kazakhstan's national energy company, KEGOC, has yet to provide details on how it plans to increase its electricity supply to meet the additional demand due to increased bitcoin mining activity. Its 2013 statement stated a deadline of 2050 for the production of 50 percent of energy from sources other than coal or oil, including from gas and nuclear and renewable energy.
CCAF data shows that bitcoin mining in the United States is also growing alongside Kazakhstan, from 4.1 percent to 16.8 percent of the total global mining map. Meanwhile, only 11 percent of the country's national electricity supply comes from renewable sources.
The ban in China has rattled the entire sector, with CCAF data showing more than half of the world's miners have ceased operations. The entire grid was estimated to use 132 terawatt-hours of energy in mid-May but plummeted to 59 tWh in early July.
"It's pretty safe to say that there is still little activity left in China," said Michel Rauchs of CCAF. “Now the big question is where is it that is still running?”
Peter Wall of bitcoin mining company Argo said he saw a 'gold rush' of Chinese miners looking to relocate their facilities and set them up in the US. They also mentioned that they were looking for renewable energy sources.
Wall says miners are leaving China in part because they are linked to using coal or dirty electricity. They, according to Wall, realize that the most sustainable form of mining in the long term is to use renewable energy.
“If you're a bitcoin miner, the thing that wakes you up every night, that's a nightmare every night, is having machines that just jiggle—not mine.”
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