Monday, May 16

The siege on bitcoin mining intensifies: Russia and the European Union are already considering banning it

How beautiful everything was for bitcoin miners. One would buy a few thousand machines, put them to work in some country —with energy for free or very cheap, eye—and that’s it. The invention worked until the governments realized that the miners were spending a lot of energy, and several were the ones that prohibited said activity. We have the fattest example in China, which for years was the Valhalla of the miners. The Asian giant ended up prohibiting this activity, which caused the miners to end up moving to other countries.

China has gone completely to nothing in bitcoin mining. Now the United States has taken the helm, with Kazakhstan and Russia trailing behind. Source: University of Cambridge.

Russia. the russian central bank has proposed ban cryptocurrency mining cold turkey. According to this organization, mining compromises environmental objectives and amplifies the negative effects of the spread of cryptocurrencies. It also makes it difficult to prevent citizen donations to “undesirable” organizations such as media critics of the government, although some of these organizations admit that such donations are practically insignificant. Russia is the third largest country in the world in terms of bitcoin mining, but it does not end there. Not much less.

Kazakhstan. Many of the Chinese miners ended up settling in Kazakhstan: it is very close (it has a border with China) and it offered very cheap energy. Or he offered it, because the government decided to raise prices. That caused riots and even nationwide internet outages. And if there is no internet, there is no mining, something that caused a significant impact on the crypto markets. The second country in relevance in bitcoin mining recovered its activity, but the Kazakh electricity network She has had troubles to keep demand strong, and some miners appear to be contemplating a new move.

I started mining bitcoins when they were only worth two dollars

Europe. It is not that the old continent stands out in this area, but it does have two leading countries: Germany has 4.48% of the world hashrate according to Cambridge University, and Ireland has 4.68% (Spain represents only 0.05% of global hasharte). Even so, the European body ESMA has proposed that mining be prohibited and that the Proof of Work (PoW) mechanism be stopped and that in any case the industry is betting on the Proof of Stake (PoS) mechanism that will be the basis of Ethereum 2.0. Some countries have already banned such mining: Kosovo it did so recently, again after seeing its energy demand skyrocket.

And meanwhile, the cryptos plummeting. All of these movements may have had something to do with the recent decline in bitcoin, ether, and many other cryptocurrencies, which have dropped between 7 and 8% in the last hours. The bad week on Wall Street – the Nasdaq is down almost 5% – may also have been one of the reasons for these moves, apparently aimed at avoiding further losses.

Dude, where am I now? This fence around the miners makes it impossible to predict where this segment will move in the coming months. The United States is now leading these operations, but a few days ago its congressmen announced a committee to study the impact of that mining on the environment. Taking into account that the bitcoin algorithm makes it increasingly difficult to mine this cryptocurrency (the next halving will arrive in 2024), the energy resources consumed will make this activity increasingly controversial. Of course: theoretically the value will rise and compensate the miners, as has happened so far.

Image: Marko Ahtisaari / Flickr