In this photo illustration, the Bitcoin logo can be seen on a mobile device with the flag of the People’s Republic of China in the background. (Photo illustration by t / SOPA Images / LightRocket via Getty Images)
Budrul Chukrut | SOPA pictures | LightRakete | Getty Images
LONDON – China’s share of global bitcoin mining has fallen this year, while Kazakhstan has risen to become the third largest player in the industry, according to a study by Cambridge University.
The study released Thursday by the Cambridge Center for Alternative Finance shows that China accounted for less than half (46%) of the electricity used for Bitcoin mining in April, up from 75.5% in September 2019. That was before the authorities ordered a crackdown on the mining of cryptocurrencies.
Kazakhstan has almost sixfold its share of global bitcoin mining over the same period, increasing from 1.4% to 8.2%. The US, meanwhile, rose from 4.1% to 16.8%, taking second top spot, while Russia and Iran were fourth and fifth largest countries for bitcoin mining, respectively.
Bitcoin mining, which validates transactions and produces new units, is a very energy-intensive process. Computers all over the world try to solve complex mathematical puzzles in order to make a transaction. Whoever wins this race will be rewarded with Bitcoin.
The rising price of Bitcoin over the years has led more people to mine the cryptocurrency, which has led to the creation of an entire industry focused on the manufacture and sale of crypto mining devices. The more people mine Bitcoin, the more energy is consumed.
This has raised concerns about the potential impact of Bitcoin on the environment, especially since most of its mining has been in China, which is heavily dependent on coal power. Authorities in several prominent Chinese regions, including Sichuan, Xinjiang, and Inner Mongolia, have cracked down on crypto mining in recent months.
However, Cambridge researcher Michel Rauchs says Bitcoin’s energy mix is difficult to determine. During the rainy season, Chinese miners often flocked to Sichuan, a hydropower-rich province in the southwest.
Rauch’s data shows that Sichuan’s share of total bitcoin mining performance in China has increased from 14.9% at the beginning of the rainy season to its peak to 61.1%, while Xinjiang’s share of 55.1% has decreased to 9.6%.
It also suggests that many Bitcoin miners fled China to neighboring Kazakhstan, a former Soviet republic, before crackdown on the cryptocurrency in June. According to Bloomberg, Kazakhstan has more than 22 gigawatts of electricity capacity, most of which comes from coal and gas stations.
Rauchs, head of digital assets at the Cambridge Center for Alternative Finance, created an index in 2019 that shows how much energy Bitcoin uses. The academic said he was working on a new model that illustrates the environmental impact of Bitcoin mining.
Bitcoin’s poor environmental footprint has made it a controversial asset at a time when social and environmental responsibility for investors is paramount. In May, Tesla CEO Elon Musk said he would no longer accept bitcoins for vehicle purchases unless mining moves to a more sustainable energy.