The US is now leading the world in Bitcoin mining, according to data from the Cambridge Bitcoin Electricity Consumption Index CBECI, which tracks Bitcoin's energy consumption by geography.
According to the data added to the index, the United States currently composes 42.7% of Bitcoin network hashrate, a metric unit that measures how much power the Bitcoin network consumes Up 14%, the growth in American's hashrate — also known as hashpower – reflects the changing geopolitical environment of Bitcoin mining, at a time when rising concerns about the environmental impact of such activity are dogging the industry.
The industry shift follows the Chinese government s crypto mining ban back in May, which sent shockwaves across cryptocurrency industry and had temporarily pressure on Bitcoin BTC-USD mining operators located in China being forced to exit the country as a consequence.
For relative crypto veterans like Josh Goodbody, the move of Bitcoin miner operators from China to the U.S. is an overwhelmingly positive development for the future of Bitcoins. A year ago, mainland China dominated Bitcoin's total value, making up 89% according to CBECI figures. That proved a concern for Bitcoin companies and investors according to Goodbody, a decentralized market and derivatives lawyer who serves as COO of the financial institution DeFi infrastructure protocol Qredo.
In many ways this has been a swift resolution to the long-standing concern that China contains an excessively large concentration of Bitcoins hashpower that is fully exposed to national and local governments with hostile attitudes towards crypto assets, said Goodbody who has worked for crypto exchanges like Huobi and Binance in the past.
Within China, Bitcoin mining a year ago relied on a mix of fossil fuels available below hydroelectric dams — especially in its Northern Province — in addition to renewable power available in Sichuan province. That proved problematic, when the country s dry season caused hydroelectricity to operate less profitably.
Also measured by the hashprice, profitability can be measured for a bitcoin miner by the Hashprice Index, a formula measured by the cryptocurrency mining pool and analytics firm Luxor Mining. While the metric cut off in September, it has since rebounded as Bitcoin inches closer to its 2021 Highs near $75,000.
Since Bitcoin's price recovered from its mid-July bottom, less intense competition meant greater profitability for remaining miners, due mainly to the slow relocation of Chinese mining operators. In North America, industry professionals dubbed this period as the golden age of Bitcoin mining.
But energy consumption remains one of the most sensitive issues surrounding Bitcoin, a highly volatile cryptocurrency with a market capitalization of more than $1 trillion.
The currency's current total energy consumption is 99 TeraWatt hours TWh per year, equivalent to gold mining 131 TWh per year. By comparison, refrigerators consume 104 TWh in one year and TVs in the U.S. consume 60 TWh every year.
With the world becoming more environmentally conscious owing to climate change, Bitcoin's energy consumption has come under more scrutiny.
Earlier this year, billionaire entrepreneur and Tesla TSLA CEO Elon Musk momentarily sparked a furor after he reversed a decision to let his electric vehicle company accept BTC as payment. At the time, Musk cited environmental concerns over the amount of fossil fuels the Bitcoin mining industry uses. In the same month, China also used environmental fears to ban crypto mining.
A September 2020 survey from the University of Cambridge found that 39% of Bitcoin mining is powered by renewable energy — significantly better than the 12% of renewable energy that makes up the total energy use in U.S. for the same period, according to data collected by the U.S. Energy Administration (Nominal Deposit)
But the specialized nature of mining, in addition to a valid demand for more transparent data, has made the discussions about Bitcoin's climate impact both opaque and polarizing.
Observers say that because miners compete for profit, they are incentivized to seek the cheapest and most reliable energy source available. The contingent point is whether the energy source available to mining operators comes from fossil fuels, or renewables.
Over the past two years, a number of energy producers with slowing profitability struck deals with Bitcoin mining companies to burn fossil fuels.
These include Greenridge generation, a power plant in New York's Finger Lake region that emits methane as a part of natural gas and now hosts more than 15,000 Bitcoin mining computers, also called ASICs. Like other low carbon producers, the plant purchases carbon credits to offset its emissions.
However, the marketers with positiona in the market like Ayesha Kiani, vice president of business development at the crypto-focused quant investment company, LedgerPrime, told Yahoo Finance that more mining is coming to the U.S. now that the crypto mining industry is eminating it right for free." For comparison, Kiani pointed out that other countries may not have the technology and existing infrastructure to make Bitcoin mining more renewable.
The US government is also actively working on the climate crisis, and this also helps in coming up with a renewable solution sooner than later, according Kiani.
BlackRock BLK the world s largest asset manager, which also has taken a proactive move into making ESG investments a critical part of its $9 trillion portfolio, invested $44 million into publicly traded crypto mining companies Marathon Digital Holdings MARA and RIOT Blockchain RIOT The crypto sector has also initiated two U.S. focused initiativesM the Bitcoin Mining Council and Crypto Climate Accords, which aim to improve transparency and environmental impact from crypto mining.