There are many mining farms in China that mine bitcoin and cryptocurrency. These farms consume a lot of electricity, which causes a sustainability problem to the country.
Indeed, according to a study published in Nature, CO2 emissions from the increased energy consumption of bitcoin mining can threaten climate change targets.
The study reveals that if policy action is not taken, the annual energy consumption of bitcoin mining in China is expected to peak at 296.59 Twh in 2024, creating 130.50 million tons of carbon emissions.
As the same study points out, the key is policy interventions that can reduce emissions precisely because Bitcoin’s operation doesn’t necessarily need that much energy.
However, in this context, the Chinese policy’s stance towards bitcoin mining is unclear.
Bitcoin mining in China
As Sky News reported, there are different policies in different regions of China.
The country consists of twenty-two states, five autonomous regions, four municipalities and two partially autonomous special administrative regions. Considering the absence of a national policy on this issue, each region behaves de facto autonomously.
In Inner Mongolia, for example, some farms have already been closed on their own initiative, while mining farms are welcomed and appropriate policies adopted in other places where hydropower is abundant, such as Sichuan.
The truth is that mining bitcoin can now be a very profitable business if done with cheap electricity, and local governments have something to do with collecting taxes on these profits.
On the other hand, local governments have their own carbon emission targets to meet, such that in this scenario there are those comparing the Chinese mining industry to the Wild West.
According to research by Cambridge University, 65% of the total Bitcoin hashrate is currently in China, making it the country most affected by this problem.
However, this is basically just a political issue, because even if they ban mining, only require zero-emission resources, or impose very high taxes on mining, the Bitcoin network will still run smoothly. Energy consumption is not due to the settings of the Bitcoin protocol, but to the free choice of miners: it will be enough to convince or force them to consume less and the problem can be solved.