Coal versus Bitcoin: Setback for China’s mining industry
No time right now?
Inner Mongolia is one of the most important mining hotspots in China. Now the industry is to be pulled the plug – new coal-fired power plants, however, are welcome.
In China, the global heavyweight in Bitcoin mining, the Chinese government’s 14th five-year plan came into force this year. One of the goals: The “Middle Kingdom” is to become completely CO2-neutral by 2060. For the Bitcoin miners in the Chinese autonomous region of Inner Mongolia, which is one of the largest mining centers in China, this now has severe consequences. The region is not only regarded as a hotspot for crypto mining, but also as particularly energy-hungry.
The regional government has now announced measures to help reduce energy consumption in Inner Mongolia. This is the death knell for the local Bitcoin mining industry. By the end of April, all mining projects are to be “comprehensively cleaned up and shut down,” says the announcement.
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Bitcoin mining? No thanks! Coal power? Yes, please!
Paradoxically, the five-year plan does provide for a drastic reduction in CO2 emissions, which is to be achieved primarily through lowering energy consumption and expanding “renewables”. However, more coal-fired power plants are to be built in Mongolia, such as the Tagesschau at the end of January reported. The new coal-fired power plants are to achieve a total output of ten gigawatts. In the future, as much coal is to be burned in the region with its 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 the Bitcoin Energy Consumption Index by Digiconomist The Bitcoin network currently consumes 77.78 terawatt hours a year. That corresponds to the annual energy consumption of Chile. Bitcoin’s energy consumption is currently 689 kilowatt hours per transaction – as much as a US household consumes in 23 days.
However, that does not make Bitcoin a climate killer. After all, you have to put energy expenditure in relation to various factors. 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 electricity in Bitcoin mining to be at least 77 percent. Of course, you have to keep in mind that Coinshares, as a provider of digital assets, has no interest in putting Bitcoin in the dirty corner, so the number may have been calculated a bit.
However, Bitcoin can also help to make sensible use of excess electricity from renewable and fossil sources. Of course, those who call Bitcoin a climate killer will not be convinced. However, the question that arises here is whether one really sees maintaining a freely accessible, global, decentralized and therefore uncensored store of value as a “waste of energy”.
In any case, one thing is certain: The Bitcoin miner in Iran should welcome it when the third largest mining region in China throws the gun in the grain. The Iranian government recently gave the go-ahead for Bitcoin mining.
author of the article is Christopher Klee.
