Bitcoin miners expelled from China are now exploiting America’s resources.
In May of the same year, China altered its stance due to concerns surrounding the illicit use of cryptocurrencies, resulting in a significant crackdown on crypto mining and transactions. Zongyuan Zoe Liu, a senior fellow at the Council on Foreign Relations, highlighted the ban’s origin in the potential threat posed by cryptocurrencies to China’s financial system, particularly through activities such as money laundering. This shift had a profound impact on the industry, leading to a chain reaction.
Following the ban, mining companies swiftly exited China, with many relocating to neighboring Kazakhstan, attracted by the abundance of coal power in the region. Bitcoin mining requires solving intricate mathematical problems, necessitating a substantial amount of electricity to power the specialized machines and cooling equipment involved in the process. The Cambridge Bitcoin Electricity Consumption Index reported that Kazakhstan’s share of the global hashrate surged from 7% in May 2021 to nearly 20% just three months later. The influx of crypto miners in Kazakhstan strained the country’s energy supply, causing fuel prices to surge and widespread power outages. Subsequently, in response to public outcry at the end of 2021, mining operations in Kazakhstan were effectively disconnected from the grid.
As a result, the United States emerged as a key player in the bitcoin mining landscape, now constituting approximately 40% of the global hashrate, a significant increase from the 17% during China’s peak in 2021. The US hosts 52 cryptocurrency mining operations, consuming around 2% of the country’s energy, equivalent to powering an entire state like Utah or West Virginia. While the situation in the US has not escalated to the level witnessed in Kazakhstan, the substantial energy consumption has raised concerns among locals, particularly regarding Chinese-owned mining operations moving into the country.
The migration of major Chinese-owned crypto mining companies to the US, such as Bit Mining, underscores the shifting landscape of the industry. Bit Mining, once home to the largest data center and crypto mining facility globally in China, swiftly transitioned its operations to Akron, Ohio, following the ban. Despite finding favorable conditions in rural areas of the US with affordable electricity and regulatory support, these mining facilities have faced challenges, including noise complaints and strained community relations.
The escalating energy consumption associated with bitcoin mining has drawn scrutiny from environmental advocates like Jeremy Fisher of the Sierra Club’s Environmental Law Program. Fisher emphasized the staggering energy usage of mining facilities and highlighted the increasing strain on electricity resources in the face of climate change and rising power outages nationwide. Fisher underscored the urgent need to shift towards renewable energy sources and consider imposing fees to ensure the sustainability of the grid and prevent electricity ratepayers from subsidizing bitcoin mining operations. Fisher’s ultimate recommendation called for a moratorium on the establishment of new mining facilities to address these pressing concerns.
Moreover, the rise of the bitcoin lobby, comprising tech companies and investors, has influenced legislative decisions at both state and federal levels, with significant financial resources being deployed to shape policies around digital financial assets. The evolving dynamics in the crypto mining industry, particularly concerning Chinese ownership and energy consumption, have drawn the attention of policymakers, reflecting broader economic tensions between the US and China. Amid these developments, the debate over the environmental impact and sustainability of bitcoin mining operations in the US continues to intensify, prompting calls for greater transparency, regulatory oversight, and a reevaluation of the industry’s long-term implications.
