Explained : The Environmental Impact of Cryptocurrency Mining

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The providences that host most crypto-mining facilities correlate with providences that produce their energy from renewable resources. In 2017, 80% of China’s Bitcoin mining operations were based in Sichuan – a province that generates approximately 90% of its energy production from renewable resources, thereby accounting for 43% of global Bitcoin mining operations.

New Delhi (ABC Live India): In the era of economic slowdown due to COVDI-19 pandemic, the craze for cryptocurrencies is increasing in India among young investors; the absence of statutory provisions for its regulations in India always raises the security of investment made by retails investors in cryptocurrencies.

ABC Research Team working on “Cryptocurrencies and its Future” while doing research has referred as a research for all those who have interest in investing money cryptocurrencies market.

The research titled “The Political Geography and Environmental Impacts of Cryptocurrency Mining” authored by Heidi Samford and Lovely-Frances Doming of Washington based Henry M. Jackson School of International Studies.

The Research says, “Since Bitcoin’s founding in 2009, thousands of Bitcoins have entered circulation. A popular conception of the “virtual” nature of cryptocurrency dominates, but cryptocurrency is deeply embedded in policy and physical environments. And, while most analysis of the phenomenon focuses on the disruptive impact of cryptocurrency on financial markets, cryptocurrency also negatively impacts the communities and the environment.”

Further study confirmed that “To maximize profits, cryptocurrency miners seek low-cost electricity and permissive policy environments, creating environmental hazards and impacting local consumers without producing any benefit for communities. Cryptocurrency “miners” produce currency through energy-intensive “mining” processes, requiring extensive computing resources.

A website namely Cointelegraph dedicatedly reporting blockchain technology, crypto assets, and emerging fintech trends on May 17, 2018 reported that “Economist Alex de Vries, who published an article on “Bitcoin’s Growing Energy Problem,” yesterday, May 16, in a scientific journal Joule told the Independent that Bitcoin (BTC) mining will use 0.5 percent of the world’s energy by 2018.”

Also, The Cell Press, A scientific journal reported that  the Bitcoin network consumes at least 2.55 GW of electricity currently, and that it could reach a consumption of 7.67 GW in the future, making it comparable with countries such as Ireland (3.1 GW) and Austria (8.2 GW).

The Environmental Impact of Cryptocurrency Mining

The Report confirmed that the public narrative surrounding Bitcoin’s impact on the environment has been predominately negative, with conflicting accounts debating the level of cryptocurrencies’ footprint. Indeed, anywhere that cryptocurrency mining is dependent on dirty energy sources, such as coal, the environmental impacts are markedly negative, such as near the coal-fueled cryptocurrency mines in Mongolia. However, most crypto-mining occurs in areas with renewable energy sources because costs are lower.

Depending on the energy source, researchers estimate that crypto-mining can produce 3-15 million tons of global carbon emissions.

China is one of the world’s largest producers, and consumers, of coal energy with mines in the Xinjiang and Inner Mongolian provinces heavily reliant on coal energy sources to provide crypto-mining companies with cheap energy prices. Coal energy sources offer prices up to 30% cheaper than the average energy consumption prices for industrial firms. However, when compared to the amount generated by renewable energy sources in Canada, any cryptocurrency mined in China would generate four times the amount of CO2 emissions.

Recent figures indicate crypto-mining facilities may subsidize the development of renewable energy resources by seeking the cheapest resource, optimizing consumption value. Bitcoin mining operations in China illustrate the relationship between renewable energy and crypto-mining. The providences that host most crypto-mining facilities correlate with providences that produce their energy from renewable resources.

In 2017, 80% of China’s Bitcoin mining operations were based in Sichuan – a province that generates approximately 90% of its energy production from renewable resources, thereby accounting for 43% of global Bitcoin mining operations.

A report by CoinShares Research estimates that approximately 77.6% of crypto-mining facilities are consuming electricity derived from renewable resources, while the other 22.4% are obtained from fossil and nuclear producers.

Additionally, large-scale mines in other popular locations are primarily located in the Pacific Northwest, Upstate New York, Northern Scandinavia, Iceland, and Georgia – regions that extensively use renewable energy.

The profitability of cryptocurrency mining is dependent on the currency’s market value in concurrence with the price of electricity. If the value of a cryptocurrency depreciates below its cost of production, mining becomes unprofitable due to large energy expenditure.

The most prosperous crypto-mines are facilities that can operate at the lowest cost by obtaining the cheapest electricity capable of supporting extreme consumption, supporting enormous cryptocurrency mining farms across the world with easy access to cheap energy, or access to surplus energy stores.

As a result, miners seek cheap electricity markets while benefiting from policy environments that do not regulate the ways in which electricity can be consumed.

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