More than a decade after the advent of Bitcoin, encrypted digital currency mining has gradually become an industry that consumes hundreds of thousands of kilowatt-hours of electricity. Retail home workshops have been replaced by large-scale mines. In addition to impacting the financial investment circle, the environmental cost of mining has also changed from It’s so trivial that it can’t be ignored.
Some scholars suggested that in the year of the second UN Global Climate Summit, the ban on encrypted digital currency trading, mining, and import and export of mining machines should be promoted.
The mining system includes millions of mining machines, 70% of which are in China, and most of them belong to mines of different sizes.
In recent years, while promoting digital currency, China has introduced a number of policies to curb Bitcoin, including that financial and payment institutions must not accept cryptocurrency as a payment and settlement tool; must not provide services and products related to cryptocurrency; and crack down on Bitcoin mining and trading Behaviors, etc., have severely inflicted Bitcoin, and also made encrypted digital currency mining more liquid.
Peter Howson, a senior lecturer in international development at Northumbria University in the United Kingdom, believes that the environmental destruction and social impact of encrypted digital currencies such as Bitcoin is a global problem that needs to be resolved globally.
What does Bitcoin mining mean?
Simply put, it is to use a computer with a specific chip and software installed to do function questions, hash functions, and calculate the correct answer to get bitcoin. This process is a bit like panning for gold in a gold mine, so tags such as mining, mining machines, and miners are borrowed.
Problem solving requires a computer to operate day and night. Generally speaking, the more advanced the hardware and software configuration, the higher the benefit of mining and harvesting Bitcoin. Ordinary computers can also be used for mining, but the chance of “winning the lottery” is very low, the cost is high, and it is not cost-effective.
Home workshop-style mining is to solve problems and find coins on your home computer. Even if the mining card consumes a lot of power, it is still within the acceptable range.
From 2009, Satoshi Nakamoto launched the “Genesis Block”, announcing the advent of Bitcoin. In the early days, it was a household workshop-style retail operation. You can dig it by installing special chip software on your computer at home.
With the multiple iterations of mining machines, the wealth value endowed by encrypted digital coins has expanded, family workshops have been replaced by large-scale mining farms, and mining for Bitcoin (and other encrypted digital coins such as Ether) has gradually become a huge scale. Industry.
The so-called mining farm refers to a company that operates many mining machines in a business model, and now also includes the business of renting out mining capabilities by providing cloud computing services.
The mine can be understood as a low-profile version of the Internet Data Center (IDC). In addition to mining with their own equipment, the miner also provides custody services and the price difference in the special area.
Although the Chinese government closed the encrypted digital currency trading market in 2017, there is a strong global demand for virtual currencies such as Bitcoin and Ethereum, and most of the mining machines and miners are located in China.
21st Century Business Network reported that the current mainstream of China’s mining industry is large-scale mines, which consume tens of thousands or hundreds of thousands of kilowatt-hours of electricity.
How does “clean industry” destroy the environment?
The total amount of Bitcoin is as limited as the total reserves of gold. After the large-scale and industrialization of mining activities, there are now at least two million mining machines in the world at the same time. The probability of mining cryptocurrencies is reduced, and the benefits are reduced. Turning into hardware, equipment update iteration is like an out-of-control arms race.
The consumption of electricity and other resources by mining industry expands accordingly, and the impact on the environment is hard to ignore.
Mining’s demand for some important and scarce resources will lead to an imbalance of market supply and demand, such as the shortage of computer chips and the increase in prices. In the first half of 2021, the price of patented chips from brands such as Intel and Apple has risen by about 70%, indirectly increasing the pressure on the environment and resources.
Because hardware updates are not controlled, it is similar to an arms race, and a large amount of mining machine/electrical waste is destroyed and discarded every year.
Another more insidious consequence is to stimulate the intensification of cyber hacker attacks and extortion. Citing data from the insurance company Hiscox, Howson pointed out that in 2018, 4,500 institutions in the UK were attacked by cyber hackers every day, and 98% of the ransom amount was paid in Bitcoin.
The most important mining cost of a large mine is not the purchase and update of hardware, but the electricity bill, which is also an important consideration in the site selection of the mine.
In order to maximize profits, some mine owners adopt mobile operations and install mining machines in containers or large trucks. Once they find places with lower electricity costs, they can move at any time.
For example, the southwestern region of China is rainy in summer, hydropower is abundant, and there is more surplus electricity. Bitcoin mining can easily digest the surplus electricity. In the winter dry season, they move to the coal provinces of North China and Northwest China to use the thermal power grid there.
The industry calls it the search for electricity bills.
Some miners with outdated equipment and low efficiency were unable to compete with wealthy mines and mining pools, and even started to start abandoned and idle coal power plants.
It is difficult to accurately calculate the power consumption of global encrypted digital currency mining. One estimate is that it currently reaches 125 MW, which is equivalent to the carbon footprint of Poland.
Policies on cryptocurrency mining vary across China. For example, Sichuan Province encourages high-power industries to help digest excess water and electricity during periods of high water, which is regarded as encouragement by miners in the currency circle.
The government of the Inner Mongolia Autonomous Region ordered the “comprehensive clean-up and shutdown of virtual currency mining projects, and all exit before the end of April 2021,” with the purpose of “speeding up the elimination of backward and excess production capacity” and also set up a hotline for reporting.
However, some large mines have moved to other regions or overseas in advance. According to the 21st Century Business Herald, some of China’s large-scale mining companies consider globalization and transfer, and are more optimistic about Central Asia and North America.
However, these countries are already prepared.
For example, Azerbaijan has begun to impose restrictions on Bitcoin miners/mining farms from abroad.
The country’s power shortages in the Black Sea coast region are so severe that power cuts must be rotated in turn. The local government believes that the power grid is overloaded and the power supply system is damaged, which should be blamed on Bitcoin mining.
Iran’s electricity bills are relatively low and mainly use oil for power generation. Iran’s power supply is tight in the spring and summer of 2021. The power department believes that the main reason is the illegal mining of encrypted digital coins.
The country’s electric power officials quoted a Cambridge University study that since October 2020, Iran’s virtual currency miners’ electricity consumption has increased 4.5 times, and it is estimated that these mining machines consume at least 2,000 megawatts of electricity.
Although the United Kingdom has not yet discovered the migration of Chinese miners, it cannot stay out of the matter. In May 2021, a police raid on a farm with abnormally high electricity consumption in the Midwest of England. They thought it was illegal marijuana cultivation, but unexpectedly, they seized more than 100 Bitcoin mining machines and passed a modification. The line is connected to the local grid to steal electricity.
What are the countermeasures?
The international community has different attitudes towards the encrypted digital currency industry.
The cryptocurrency climate agreement supported by the United Nations and the Bitcoin Miners Council were born with the purpose of cleaning up chaos and regulating the industry.
This type of self-regulatory organization can only urge, suggest-call on U.S. cryptocurrency miners to use only the remaining renewable energy, but in reality, doing so is detrimental to profits; if there is no renewable energy in the mine site, then they have to add mining machines. It will also increase carbon emissions.
Howson believes that the existence of a huge virtual currency mining industry means that it is almost impossible for China to achieve the goal of reducing carbon emissions by 65% by 2030.
His policy recommendations are to crack down on cryptocurrency transactions, or ban the import and use of mining equipment.
However, the currency circle, network technology and energy industry have no shortage of power to support mining.
People in China’s Bitcoin mining industry believe that the high energy consumption is a fact, but there is still much room for improvement in the rational use of energy in the power system, including the use of currently wasted electricity.
In some economically underdeveloped areas, this means creating employment opportunities.
At the same time, new energy technology also provides another option.
A farm in Wales is trying to use cow dung biogas to power Ethereum mining.
The cattle herd of the farm provides cow dung, which is used to generate biogas through anaerobic decomposition for thermal power generation. Two thirds are used to supplement the power supply of the farm itself and the vacation RV camps operated by the farm, and the remaining third is encrypted digital currency mining. powered by.
The mine located in the carriage of a freight truck currently only mines Ether, and the farmer/miner plans to expand the mining currency in the future.
The attitude of the Internet and the financial technology industry towards encrypted digital currencies directly affects mining activities.
The world‘s major Internet antivirus software company Norton announced in June 2021 that it is preparing to add Ethereum mining to the list of Norton 360 software features.