Bitcoin (BTC) mining concentrated in areas with excess unused energy, says Coin Metric co-founder
Nic Carter published an article rebutting some of the claims made by those against Bitcoin mining.
Thu, 01 Apr 2021, 13:49 pm UTC
With the soaring prices of cryptos such as Bitcoin (BTC) and Ether (ETH), cryptocurrency mining has become a very profitable enterprise. This prompted some to raise their concerns over Bitcoin mining claiming that the power-intensive activity could cause an environmental disaster.
However, Coin Metrics co-founder Nic Carter expressed his disagreement over some of the claims made by those against Bitcoin mining, according to Cointelegraph. Carter challenged these claims in a well-researched article, which is also a response to a Bloomberg article titled “Bitcoin miners are on a path to self-destruction” by Noah Smith.
One claim that Carter countered was that Bitcoin is unique in that a rise in its price will result in a greater energy draw. “But Bitcoin’s high price may now be leading to new problems for the cryptocurrency, because, unlike other financial assets, Bitcoin uses more resources as its price goes up,” the Bloomberg article stated. However, Carter rebutted this claim by saying that BTC is just like gold where higher prices result in greater mining activity and energy consumption.
The Coin Metrics co-founder also addressed the claim that Bitcoin mining hogs local power resources which could affect local customers. Carter countered by producing figures that show Bitcoin mining is concentrated in locations that have excess unused electricity.
For example, most of China’s crypto mining activities occur in Xinjiang, Sichuan, Inner Mongolia, and Yunnan, which accounted for 63 percent of the total Bitcoin hashrate from the fourth quarter of 2019 to the second quarter of 2020. However, these four provinces produce electricity from a combination of solar, coal, wind, and hydro resulting to an oversupply of energy due to the low population density in these areas.
In fact, China had to curtail or remove an average of 100 TWh of excess energy from the grid in previous years just to maintain price levels. “Suffice to say, there’s enough nonviral energy out there to run Bitcoin many times over,” Carter pointed out. “It’s just a matter of deploying hashrate in the right locations, which miners are doing — aggressively.”
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