Bitcoin: China’ s crackdown isn’ t enough only a global effort can stop crypto’ s monstrous energy demand

(MENAFN – The Conversation) Huge concrete data centres, permanently plugged into power plants and telephone exchanges, maintain much of online life. But the infrastructure behind internet-based cryptocurrencies such as bitcoin, dogecoin and ethereum is more like a rusty travelling circus. And right now, that circus is on the road.

Bitcoin relies on a network of millions of specialist machines, known as miners, around 70% of which are . Like a never-ending game of , each player hammers their mining machines 24/7 to try and scoop up as many bitcoins as possible. With only a few hippos, its easy for everyone to be a winner. But with miners chasing an ever-shrinking number of prizes, the game is becoming increasingly difficult.

Bitcoin’s booming popularity has caused its . With no central planning, a perpetual arms race for equipment continues, creating of burned out electronic waste annually.

To maximise profits, mining machines are often , with operators ready to up sticks at a moment’s notice to find the cheapest sources of energy. During China’s summer rain season, hydro power plants in the south-western provinces generate so much energy that miners can mop up the leftovers. But in the winter dry season, many miners unplug and , heading for the coal-fired power plants scattered across China’s vast northern territories.

have encouraged some Chinese bitcoiners to mine coal and , endangering lives and threatening .

Bitcoin’s energy in a year from 55 terawatt-hours (TWh) to 125 TWh. The network now has a carbon footprint similar to the whole of Poland. Chinese regulators closed down all the country’s crypto exchanges . Even so, rocketing demand for bitcoin elsewhere means the network’s energy use in China is predicted to peak by 2024 . That’s equivalent to the total energy demand of the UK. With a crypto circus in tow, Beijing’s commitments to before 2030 .

Bitcoin is not just China’s problem

In an attempt to reduce bitcoin’s , the coal-dependent province of Inner Mongolia recently banned bitcoin mining and to report suspected transgressors. But on average, mining just one bitcoin per day (£1.3 million) investment in specialist equipment. Expulsions from the province could force some highly invested bitcoiners underground, while forcing others to find new places to park up in neighbouring countries which don”t have China’s seasonal glut of renewable energy.

To prevent an chasing cheaper electricity, Iran’s President recently on new oil-fuelled mining, which authorities . The Black Sea territory of Abkhazia is foreign miners as officials there are forced to introduce rolling blackouts due to energy shortages. for overloaded electricity lines and power station fires, leaving some areas without power for days.

UK authorities have also paid the price for bitcoin’s boom. In May 2021, officers from West Midlands Police in the UK, believing they were raiding an illegal cannabis farm in Sandwell, instead discovered around running off an improvised connection to the electricity supply. The outdated machines were so inefficient that they could only turn a profit with stolen energy. These thefts , causing fuel poverty and risking public safety.

Antisocial side effects

Demand for mining machines has caused computer chip shortages, struggling back to work post-COVID. while smartphone companies have . The price of specialist chips used by the likes of Intel and Apple have increased by , with knock-on effects for UK consumers.

Even and are affected by bitcoin’s second-order effects. , around 4,500 organisations fell victim to cyber attacks every day in the UK in 2018. Many of these involve , 98% of which are .

Some argue that to slow the increase in ransomware attacks, authorities need to that enable bitcoin ransoms to be paid. that cryptocurrencies and ransomware are now so entwined that the only way to fight the latter is to ban cryptocurrencies altogether.

To clean up the crypto industry, a UN-backed and the were established. These groups urge bitcoin miners in the US to only use leftover renewable energy. But it’s not possible to give a higher price to bitcoins produced using only renewables, because bitcoins are designed to be fully interchangable. that new miners joining the competition in North America have encouraged miners where there are no renewables to use more machines and work harder, increasing the network’s .

A global response

For regulatory purposes, bitcoin should be considered similar to the global trade in Chinese tiger parts. Banning tiger hunting in the UK is pointless, but banning the sale of tiger parts is useful. Likewise, when UK-based investors are allowed to speculate on bitcoin, they encourage an environmentally disastrous global industry that has so far failed to benefit anyone .

Cracking down on crypto exchanges or banning the import and use of mining equipment could be a relatively easy win for the UK as it prepares to host the 2021 UN climate summit. Doing nothing about the problem would negate the UK’s progress in other areas. Thanks to tax relief schemes and infrastructure investment, electric car registrations , preventing the release of of CO₂ a year. Meanwhile, bitcoin mining causes nearly of CO₂ annually.

to putting its own house in order, but bitcoin’s urgently need a global response.

The__Conversation

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