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Why Bitcoin miners are flocking to the US and what this could mean for Australia

Bitcoin enthusiasts are hoping for a greener image.
The post Why Bitcoin miners are flocking to the US and what this could mean for Australia appeared first on The Motley Fool Australia. –

Bitcoin (CRYPTO: BTC) mining, as you may know, has come under fire for the massive amounts of energy required to run its vast arrays of computer networks.

By some estimates, Bitcoin mining in 2021 is using as much energy as all of Australia.

That’s of particular concern when the mining is done in regions reliant on high-emissions coal fired electricity, as was the case with China.

But China’s crackdown on crypto mining operations, driven more by regulatory concerns than environmental worries, looks to have succeeded in all but stamping out mining in the Middle Kingdom.

Although, as the Cambridge Centre for Alternative Finance pointed out in Wednesday’s data update from its Bitcoin Electricity Consumption Index (CBECI), a growing number of miners look to be rerouting through countries like Ireland and Germany using VPNs or proxy servers.

That’s one heck of a shell game.

United States takes lead in Bitcoin mining

Nonetheless, the CBECI data indicates that the “leading share of global Bitcoin network hashrate now sits in the US, followed by Kazakhstan and the Russian Federation”.

The hashrate refers to the computing speed and power involved.

The global hashrate share in the US has climbed to 35.4%, from 16.8% at the end of April. Meanwhile Kazakhstan has seen its share increase to 18.1%, up from 8.2%, and Russia now accounts for 11%, up from 6.8% at the end of April.

As for China, its share of the global network hashrate fell to 38% in June 2021 from a high of 76% in September 2019. In the most recent data, Cambridge notes the “declared mining operations in mainland China have effectively dropped to zero”.

Commenting on the Bitcoin mining migration to the US, Jonathon Miller, the managing director Australia of cryptocurrency exchange Kraken said:

The news that the US is now the epicentre for BTC Mining doesn’t come as a surprise given the ongoing crackdowns we’ve seen in China and July’s ban on mining. It was expected that migration would occur, particularly to locations where renewable energy is cheap and plentiful.

This is a positive thing for the cryptocurrency industry as many miners in North America rely on hydroelectric power, improving the overall energy consumption and impact of BTC.

What are the implications for Australia?

Australia, Miller said, has a global Bitcoin network hashrate share of just 0.19%. “There is a big missed opportunity here for us. But it isn’t too late to invest in more renewable energy and increase our own share of the BTC Mining pie.”

Milled added:

The US digital asset industry is likely to take advantage of this boom, attracting more talent and investment, leading to more jobs, business, income and tax revenue. If we want to see the same thing replicated here, we need to improve our own energy offering so we can also reap these benefits.

With electricity prices being what they are Down Under, Australia may have some way to go on improving its energy offerings before we see an influx of Bitcoin miners.

The post Why Bitcoin miners are flocking to the US and what this could mean for Australia appeared first on The Motley Fool Australia.

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More reading

Bitcoin price to US$500,000? Why ARK’s Cathie Woods is doubling down

ASX set to welcome first cryptocurrency ETF… but there’s a catch

What happened to the Bitcoin price in the FY22 first quarter?

Are NFTs a bubble awaiting a pin or the next big investment theme?

Here’s what happened to the Bitcoin price in September

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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