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China’s crackdown on energy-guzzling crypto industry has sparked the ‘great mining migration’

On April 14, the price of a single Bitcoin reached a then-high of around $64,870. Just over a month later, it had tumbled to $34,259.

A significant driver behind this sudden drop was news that China had begun a sweeping crackdown on the cryptocurrency industry, due to concerns about financial risk and excessive energy consumption. The extreme energy intensity of Bitcoin “mining” – by which transactions are verified and new coins are created – has led to criticism of the currency’s oversized carbon footprint.

Before the clampdown, China accounted for two-thirds of Bitcoin mining worldwide. In the months since, mining companies have been quick to move their operations overseas. Recent data suggests that energy consumed by Bitcoin has increased in the United States, Canada and Kazakhstan, and with it, pressure to address the currency’s soaring electricity appetite.

Power-hungry Bitcoin

Bitcoin is a decentralised digital currency, meaning that each time money is sent or received, the transaction is kept on a public record, rather than with a bank. But in the absence of a trusted authority to verify each transaction, the responsibility falls to participants known as “miners” in the Bitcoin network.

To verify transactions, miners connect computers to the network and use them to solve incredibly complex, randomly generated mathematical puzzles. Not…

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