Plan-₿ economy: setback for China’s bitcoin mining industry
Inner Mongolia is one of China’s most important mining hotspots. Now the plug is to be pulled on the industry – new coal-fired power plants, on the other hand, are welcome.
In China, the global heavyweight in bitcoin mining, the 14th Five-Year Plan of the Chinese government came into force this year. One of the goals: The „Middle Kingdom“ is to become completely CO2-neutral by 2060. For Bitcoin miners in the Chinese autonomous region of Inner Mongolia, which Bitcoin Trader is one of the largest mining centres in China, this has harsh consequences. The region is not only considered a hot spot for crypto mining, but also particularly energy-hungry.
The regional government has now announced measures to help reduce energy consumption in Inner Mongolia. For the local Bitcoin mining industry, this means the death blow. By the end of April, all mining projects are to be „comprehensively cleaned up and shut down“, the announcement says.
Bitcoin mining no thank you, coal power yes please
Paradoxically, the five-year plan does envisage a drastic reduction in CO2 emissions, which is to be achieved primarily by lowering energy consumption and expanding „renewables“. However, further coal-fired power plants are to be built in Mongolia, as the Tagesschau reported at the end of January. The new coal-fired power plants are to have a total capacity of 10 gigawatts. In the future, as much coal will be burned in the region of 25 million inhabitants as in the whole of Germany. How this is compatible with the Communist Party’s CO2 savings plan remains a mystery.
The old song: Bitcoin and the energy question
There is no question that with the Bitcoin network, the energy demand for mining has also increased significantly. According to Digiconomist’s Bitcoin Energy Consumption Index, the Bitcoin network currently consumes 77.78 terawatt hours per year. This is equivalent to the annual energy consumption of Chile. Currently, Bitcoin’s energy consumption hits 689 kilowatt-hours per transaction – as much as a US household uses in 23 days.
However, this does not make Bitcoin a climate killer. After all, you have to put energy expenditure into relation with various factors. For example, there are a large number of Bitcoin miners who rely on renewable energies. A study by Coinshares at the end of 2018 estimated the share of green energy in Bitcoin mining at at least 77 percent. Of course, one has to bear in mind that Coinshares, as a provider of digital assets, has no interest in putting Bitcoin in the dirty corner, so the figure may have been somewhat glossed over.
However, Bitcoin can also help to put surplus electricity from renewable and fossil sources to good use. Of course, those who call Bitcoin a climate killer will not be convinced by this. However, the question here is whether one really sees the maintenance of a freely accessible, global, decentralised and therefore uncensorable store of value as a „waste of energy“.
In any case, one thing is certain: Bitcoin miners in Iran will probably welcome it if China’s third-largest mining region throws in the towel. The Iranian government recently gave the green light for Bitcoin mining.