Outside of China
While a high, perhaps unhealthy, amount of bitcoin mining takes place in China, the report from Coinshares also touched on other parts of the world where efficient bitcoin mining can take place. Specifically, the report mentions relevant large-scale bitcoin mining operations in Washington State, Oregon, British Columbia, Quebec, upstate New York, Norway, Sweden, Iceland, and Georgia (the country not the U.S. state).
The report notes that there has recently been heavy interest in moving into these sorts of locations outside of China.
“Another interesting observation is the trend of miners leaving China,” says the report. “When surveying the combination of publicly available literature and insight from industry insiders, it is clear to us that miners are, in significant numbers, leaving China, or choosing not to reinvest within China. Instead, they are setting up operations in certain regions of Scandinavia, Russia, Canada and the United States where the combination of cheap abundant electricity, friendlier regulation, fast internet connections and, to a lesser degree, cooler climates can be attained.”
The report adds that almost all of these regions, with the exceptions of New York and Russia, are dominated by the use of renewable energy sources, according to publicly available data. Additionally, Europe and North America are said to have the lowest hydropower utilization factors in the world at less than 40% of the installed capacity.
Much like in China, it’s clear that bitcoin miners in pretty much every other area of the world are also gravitating towards areas with a known overabundance of cheap, renewable energy sources. While it’s likely that miners who decided to move to New York and Russia are mainly focused on the areas of those regions with cheap renewable energy sources as well, the report stuck with the publicly available data for the entire regions as to remain as conservative as possible and not go too far with any assumptions.
“These locations are not chosen at random,” states the report. “The key consideration driving the location decision for these miners is the presence of low-cost electricity, high-speed internet, and in the case of the Northern regions, low temperatures that reduce the need for the additional cost of cooling.”
The report estimates 35% of global bitcoin mining takes place in these specifically mentioned areas outside of China, leaving 5% of the network hashrate for the rest of the world.
Bitcoin is Not an Environmental Evil
Based on all of the publicly-available information the authors of the report were able to attain, they came to the conclusion that much of the concerns regarding Bitcoin’s potential to severely impact the environment in a negative manner are overblown.
“It is, therefore, our belief that the claims around the environmental damage caused by cryptocurrency mining fundamentally miss out on the fact that many miners, in their self-serving search for the most cost-efficient form of electricity, have zoomed in on global regions with a glut of renewable electricity as prime locations for mining,” says the report.
The authors of the report go on to add that cryptocurrency mining is “likely to actually be consuming excess capacity on the grid, and even supporting the profitability and as a consequence the development of renewable energy generation capacity.”
Additionally, the report mentions that the fact that the bitcoin mining process is what secures consensus on the order of transactions for a network containing around $80 billion worth of assets simply cannot be ignored as part of the overall considerations, while also pointing out that the Bitcoin network’s overall energy consumption is around the same as all of the Xbox One, Playstation 4, and Nintendo Switch video game consoles in the world.