As bitcoin miners go green, China’s ban could be a ‘trillion-dollar’ present to US
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
A mining executive told CoinDesk that China’s ban on crypto mining was a “trillion-dollar present” to the US. This view was mirrored by Michael Saylor, CEO of MicroStrategy, a software analytics company that has been accumulating bitcoin in bulk since last year.
China was once a powerhouse for bitcoin mining, contributing to much of the global mining hashrate. However, Chinese lawmakers banned crypto mining in May 2021 over environmental concerns. This led to a mass exodus of the crypto mining industry, which began to look for other countries to set up operations.
Enter the United States.
Studies show that in August 2021, roughly 35 percent of the global mining hashrate took place in the US. Just one year before this, it was 4 percent.
A trillion-dollar present?
A mining executive told CoinDesk that China’s ban on crypto mining was a “trillion-dollar present” to the US. This view was mirrored by Michael Saylor, CEO of MicroStrategy, a software analytics company that has been accumulating bitcoin in bulk since last year.
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Saylor called China’s ban a trillion-dollar mistake in an interview with Bloomberg in June 2021. He further explained that China was cracking down on an asset generating $10 billion yearly, and it had the potential to have 100 percent year over year growth.
As states like Texas and Miami welcome miners with open arms and the crypto mining industry transitions to green energy solutions, the ban on crypto mining looks more and more like a blunder on the part of China. And unless the Asian superpower rethinks its stance, the prospects of crypto mining in the US look even more promising.
The mining industry’s transition to green energy
The mining industry has been mostly met with hostility and labelled as an undesirable element by many entities and governments worldwide. To rehabilitate its image, the mining industry has taken some substantial steps.
Many mining endeavours have taken the approach of carbon offsetting, which usually involves planting trees. However, while planting trees is not a bad approach, the focus should be on creating a marketplace for established mining organisations to buy clean power.
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This is something the recently formed Bitcoin Mining Council (BMC) is trying to do. It is a conglomeration of various mining companies that include heavy hitters like MicroStrategy, which is helping companies move towards greener energy sources. It is also trying to spread awareness and accurately represent the realities of the mining industry to the general populace.
The BMC released a report which showed that the use of sustainable energy in Bitcoin mining went from 37 percent to 59 percent in 2021. The report does not account for any carbon offsetting activities, which means that this has been a pure shift towards using green energy.
TeraWulf, a bitcoin mining firm and a member of the BMC, has pledged to carry out its mining activities using 90 percent zero-carbon energy. For this, they are developing two non-carbon energy sources, a hydropower plant in New York and a nuclear power plant in Pennsylvania. Argo, another prominent name in the bitcoin mining industry, is also constructing a 126,000-square-foot wind and solar energy facility to power its mining activities.
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Also, last year, a blockchain-based system that decarbonises power grids called Energy Web, established the Crypto Climate Accord. The accord is similar to the Paris Climate Accord of 2015 and consists of 200 crypto firms, non-governmental organisations (NGOs) and technology providers.
In conclusion
China’s ban on crypto mining has resulted in multi-billion-dollar operations shifting base to the US. It has led to significant revenue generation for the nation and created jobs in several states as well. And with the industry moving to clean, green, carbon-free energy sources, the basis for the ban could also become obsolete.
It’s a view that the co-founder of Core Scientific, a mining giant in the U.S., Darin Feinstein, resonates with. In an interview with CoinDesk, he said, “I am certain that the people in China will question the wisdom of banning one of the largest innovations in financial, economic, and accounting history.”
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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow
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