While many countries have shown a tendency to crack down on cryptocurrency mining, miners appear to be more resilient than many expected. According to indicators from various sources, over the past year and this month, cryptocurrency mining hashrate has reached record levels despite various crackdowns by the country.
Coins such as Bitcoin, Monero and Ethereum have recently hit record highs in terms of hashrates, according to Coinwarz, which tracks the hashrates of various cryptocurrencies. For example, on January 15, 2022, Bitcoin’s hashrate reached over 205 exahashes, but Litecoin, Ethereum, Monero and others showed the same trend.
Hashrate is the amount of computing power a miner puts into creating a new cryptocurrency. The more people mining a specific cryptocurrency, the higher the hashrate or mining difficulty of that cryptocurrency.
Such data is typically available in cryptocurrencies using Proof of Work (PoW) systems. In this system, miners are rewarded simply by spending their computing power on maintaining the token network.
High hash rates are also confirmed by data tracked by platforms such as Glassnode. According to the January 3 CoinDesk report, Bitcoin’s hash rate was above the previous highs recorded in mid-2021.
Mining crackdowns
This data confirms what the crypto community has been claiming for a long time. The cryptomining ecosystem is vast and resilient. The crackdown on the mining ecosystem began early last year when China pushed cryptocurrency miners outside its borders. The National Development and Reform Commission (NDRC) has added Bitcoin mining to its list of excluded industries.
Reasons for the China’s crackdowns included concerns about the country’s energy consumption and how the massive energy consumption of cryptocurrency mining could undermine its sustainability goals in the future.
The situation has been plagued in the last two months as the energy crisis that began in Europe is now a global problem. In response, sovereign states such as Kosovo and Iran cracked down on cryptocurrency mining, forcing Kazakhstan to consider nuclear power to deliver power to crypto miners.
However, as the data above shows, crypto miners remain resilient. According to data from the Cambridge Bitcoin Power Consumption Index (CBECI), which continuously tracks Bitcoin’s power consumption, mining the world’s most valuable cryptocurrencies consumes more energy than many small businesses consume. Approximately 135 TWh of power is used annually.
Green mining and repercussions
That said, the numbers might not inform the complete story. China`s crackdown ultimate yr led a lot of its biggest exchanges and crypto miners, inclusive of Huobi Global, OKEx and plenty of more, to shift their hardware outside the country, which is an indication that miners, too, are searching out beneficial locations.
According to data from the Cambridge Center for Alternative Finance (CCAF) published in October 2021 by The Guardian, the crackdown in China has made the United States (USA) the largest cryptocurrency mining base in the world. At that time, the country accounted for 35.4% of the total hashrate, followed by Kazakhstan and Russia.
At the same time, the mining ecosystem sought to switch to green energy when mining cryptocurrencies. A July 2021 report by the Bitcoin Mining Council (BMC), an open forum for Bitcoin miners, states that sustainable energy use more than doubled in the quarter ended June 2021. About 56% of the energy used for Bitcoin mining during the quarter came from Green Energy.
Such efforts could help alleviate some concerns, and the share of green energy should rise as more countries are already looking at green energy sources. Known to be the first country to accept Bitcoin as legal tender last year, El Salvador was looking for a way to power the Bitcoin mine from a volcano.
Smaller countries may need to avoid mining as an industry, but many other countries may be able to increase the hash rate that grows through green funds while keeping the lights on for other uses too.
