It’s been a busy year for cryptos, Bitcoin (BTC) miners and regulators around the world. As regulators, including the Bank of England, seek a unified drive to create a global regulatory framework, Bitcoin mining has also grabbed headlines.
Bitcoin mining and regulatory activity
Earlier this year, the government of Kosovo banned all crypto mining due to an ongoing energy crisis. Moreover, at the beginning of the year, the news of an internet blackout in Kazakhstan, 2ndn/a the largest Bitcoin mining nation.
The news coincided with news of a U.S. Congressional subcommittee preparing for a hearing to assess the impact of crypto mining and cryptos on the environment.
Last summer, the Chinese government banned Bitcoin mining due to the impact of mining on the environment. At that time, China was the largest Bitcoin mining nation, with China accounting for up to 75% of the global Bitcoin hashrate. China aims to become carbon neutral by 2060.
Following the ban, the United States became the largest Bitcoin mining nation. According to the Cambridge Center for Alternative Finance, the United States accounted for 35.4% of global hashrate in August 2021. Prior to the Chinese government’s ban on Bitcoin mining, the United States accounted for just 16.8 % of global mining in April 2021.
Bitcoin Mining and the Numbers
With cryptos already in the sights of the US government, it was only a matter of time before Bitcoin mining became an area of focus.
As we’ve already covered, there are some key mining stats worth considering:
- According to Columbia Climate School, Bitcoin (BTC) consumes 707 kWh per transaction. Additionally, there are also mining computers that get hot and need to be cooled down.
- The University of Cambridge has estimated that Bitcoin (BTC) mining consumes 121.36 terawatt hours (TWh) per year. Based on this estimate, if Bitcoin were a country, it would be one of the top 30 energy consumers.
- Bitcoin (BTC) mining is estimated to produce 22-22.9 million metric tons of CO2 emissions each year.
- In terms of global warming, Bitcoin (BTC) mining could push global warming above 2 degrees Centigrade in less than 3 decades.
House Committee on Energy and Commerce
Following the December Stablecoins Committee hearing, the Oversight and Investigations Subcommittee of the Energy and Commerce Committee announced a hearing titled “Cleansing Cryptocurrency: The Energy Impacts of Blockchains”.
The hearing is set for Thursday 20and January at 10:30 a.m. With China banning Bitcoin mining in an effort to meet its carbon neutral aspirations, the focus will likely be on the environmental impact. However, the regulatory aspects of cryptos will also likely be discussed.
A general ban on crypto mining would have a material impact on Bitcoin. More importantly, however, would be whether a ban is immediate or gradual. A phased ban would give miners the ability to move mining resources. Last week, we explored Russia and the CIS as a possible alternative to the US, with Kazakhstan already accounting for 18.1% of global Bitcoin mining.
Bitcoin (BTC) price
With Bitcoin and the broader crypto market under pressure since November, we can expect markets to be sensitive to audience updates.
An outright ban would certainly be negative for Bitcoin. However, much will depend on how quickly Bitcoin miners can redirect mining resources.
At the time of writing, Bitcoin was down 0.49% at $42,888. A return to the $45,000 levels would put the January high of $47,979 into play. Failure to return to the $45,000 levels will likely leave Bitcoin under pressure. A negative outcome from the subcommittee hearing could see Bitcoin fall back to levels below $40,000 and revisit the current month’s low of $39,668.
