Bitcoin Mining is Not Hazardous to Environment Anymore

According to CoinShares, cryptocurrency investment products and research firm, besides being moneymaking bitcoin mining is environment-friendly as well. The company published a report that explains that about 74.1% of bitcoin mining is powered by renewable energy and mostly these bitcoin mining companies were located in areas with ample renewable energy supply.

It is a well-established fact that bitcoin, which is a very volatile asset, has been attracting investors from all over the world. The insane gains offered by bitcoin account for its popularity. Besides the bear market, bitcoin mining has also proved to be profitable for many companies.

Bitcoin mining is very important for maintaining the health of the bitcoin network. During mining, miners confirm bitcoin transactions and provide security to the bitcoin network. If there are no miners, the bitcoin network can be easily attacked and intruders can comfortably change the transaction details on the bitcoin’s blockchain. In return for processing bitcoin transactions and providing security, miners are awarded bitcoins created every 10 minutes. Apart from bitcoin, miners also get shares of transactions fees.

The process of mining is dedicated as it requires specialized hardware and electric supply. Moreover, miners have to compete with other miners to ensure that they get the awards because only the first one to complete the task receives the accolade i.e., newly generated bitcoin.

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The report suggests that among several miners utilizing various consensus mechanisms, PoW (Proof of Work) miners dominated all other miners in terms of total revenue. In 2018, bitcoin miners generated about $5.5 billion worth of rewards. As of now, the report suggested that an increase in the ratio of mining fees was welcomed by miners. Particularly directing towards profitability in mining bitcoin at current prices, the report reveals:

On 1 May 2019, prices and 30d average fees per block, Bitcoin miners are earning an estimated total annualized return of $6.2bn per year, 94% of which come from new coins and 6% from fees.

Elaborating on the jurisdictional developments in North America, the report unveiled that miners in Oregon were facing problems as neither the government and nor the electricity providers showed a welcoming attitude. However, on the other side of the US-Canada border, things changed substantially for miners.

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The report suggests that the government and Hydro Quebec, a public utility that manages the electric supply in the Canadian province of Quebec, were, unlike in the past, less hostile to miners. The report also mentioned that China wasn’t as dominating in gaining the attention of bitcoin miners as it used to. However, dominance in manufacturing hardware of mining bitcoin still rested with China.

The report also clarified that while China’s policies seemed to alarm western media, in reality, they had an insignificant impact on the local miners because most of them were already operating in a legal grey area. Furthermore, differences between local and national treatments of the mining industry were outlined in the report.

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As local governments viewed mining positively due to its capability of generating revenue, they were detected to be more inclined in the favor of bitcoin mining than the national government. Overall, worldwide major mining centers revealed by the report were:

Washington and New York States in the United States; British Columbia, Alberta, Newfoundland and Labrador, and Quebec Provinces of Canada; Iceland; Northern Scandinavia (Norway and Sweden); The Caucasus (Georgia and Armenia); Yunnan and most importantly of all regions, Sichuan, provinces of China.

Although the bitcoin mining industry that consumes electric power of about 4.7 GW is 74.1% dependent on renewable energy, the percentage has dropped down from the previously estimated threshold of 77.8%. This is partly due to bitcoin mining companies shifting toward fossil dependent areas such as Iran and moving away from Oregan, a hydro-dependant region. Still, the report concluded:

Overall, our findings reaffirm our view that Bitcoin mining is acting as a global electricity buyer of last resort and therefore tends to cluster around comparatively under-utilised renewables infrastructure.

The expansion of bitcoin mining companies is a sign that the pace of mass adoption is going in the right direction. Bitcoin enthusiasts and crypto supporters are welcoming all the latest mining developments in crypto space. A few months ago, the mining giant, Bitmain announced to set up 200,000 units of mining equipment in China and SBI Group based in Japan created a subsidiary that will manufacture cryptocurrency mining chips.

As more and more economical electricity generating regions are explored by the miners, we expect to see the geographical change in the concentrations of miners but with the green flushing market, an ongoing increase in people participating in bitcoin mining is strongly expected.

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Fatir Malik

Electrical engineer by profession, turned into blockchain developer. Fatir contributes regularly with his insights about latest developments in fintech sector. Contact the editor at editor.opinions@blockpublisher.com

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