Many aspects of online life are maintained by massive concrete data centers that are continuously connected to power plants and telephone connections. However, the infrastructure that supports internet-based cryptocurrencies like bitcoin, dogecoin, and ethereum resembles a rusted traveling circus. And that circus is currently on the move. Bitcoin is supported by a network of millions of specialized devices known as miners, with roughly 70% of them headquartered in China. Each participant cranks their mining devices around the clock, like in a never-ending game of Hungry Hippos, to attempt and scoop up as many bitcoins as possible. It's simple for everyone to win when there are only a few hippos. However, with over 2.5 million miners chasing an ever-dwindling number of gold nuggets.
Bitcoin's soaring popularity has resulted in a surge in electricity demand. A continual arms race for equipment continues without central planning, resulting in 15,000 tonnes of burned out electronic garbage each year.
Mining machines are frequently crowded inside shipping containers to maximize profitability, with operators ready to shift gears at a moment's notice to discover the cheapest sources of energy. Hydro power facilities in China's south-western regions create so much energy during the summer rainy season that miners may scoop up the leftovers. During the dry winter season, though, many miners unplug and hit the road, headed for the mountains.
Some Chinese bitcoiners have been inspired by recent crypto price spikes to mine coal and restart idle power plants without permission, putting lives in peril and jeopardizing President Xi Jinping's climate ambitions.
Bitcoin's energy usage has increased by more than a year, from 55 to 125 terawatt-hours (TWh). The network currently has a carbon footprint comparable to that of Poland as a whole. In 2017, Chinese regulators shut down all of the country's cryptocurrency exchanges. Despite this, the network's energy use in China is expected to peak around 300 TWh by 2024, owing to soaring demand for bitcoin abroad. This is the same as the UK's overall energy demand. Beijing's plans to curb carbon emissions by 65 percent by 2030 would be nearly hard to accomplish with a crypto circus in tow.
The coal-dependent province of Inner Mongolia recently outlawed bitcoin mining and established a hotline to report suspected transgressors in an effort to mitigate bitcoin's environmental repercussions in China. However, mining only one bitcoin each day needs an investment of US$1.8 million (£1.3 million) in specialized equipment. Expulsions from the province could drive some of the province's most valuable bitcoiners underground, while others will be forced to look for new homes in neighboring nations that don't have China's seasonal renewable energy surplus.
Iran's President recently imposed a ban on new oil-fueled mining, which authorities blame for growing urban smog, in order to avoid an inflow of Chinese miners seeking cheaper energy. Abkhazia, a Black Sea region, is attempting to deter foreign miners, as officials are forced to implement rolling blackouts owing to energy constraints. Overloaded energy grids have been blamed on bitcoin mining.
The UK government has also paid a price for bitcoin's rise. Officers from the West Midlands Police in the United Kingdom thought they were raiding an illegal cannabis plantation in Sandwell in May 2021, but instead discovered about 100 bitcoin mining devices powered by an improvised electricity source. Because the old machines were so inefficient, they could only make money by stealing energy.
Computer chip shortages have resulted from the high demand for mining machines, which has harmed other companies that are still trying to get back on their feet post-COVID. Automobile manufacturers in the United Kingdom have reduced output, while smartphone manufacturers have postponed new product introductions. So far in 2021, the price of specialty semiconductors used by companies like Intel and Apple has risen by roughly 70%, with knock-on repercussions for UK consumers.
The second-order consequences of bitcoin have an impact on universities and hospitals as well. According to Hiscox, over 4,500 businesses in the UK were victims of cyber attacks per day in 2018. Many of these include ransomware payments, with bitcoin accounting for 98 percent of all payments.
Some suggest that authorities should crack down on cryptocurrency exchanges that allow bitcoin ransomware to be paid in order to limit the rise in ransomware assaults. Others argue that cryptocurrencies and ransomware have become so inextricably linked that the only way to combat the latter is to outlaw cryptocurrencies entirely.
A UN-backed Crypto Climate Accord and the Bitcoin Miners Council were founded to clean up the crypto economy. These organizations are urging bitcoin miners in the United States to only use sustainable energy that has been left over. However, because bitcoins are supposed to be fully interchangeable, it is not possible to assign a greater price to bitcoins produced entirely from renewable resources. According to research, new miners are joining the competition.
Bitcoin should be compared to the global trade in Chinese tiger parts for regulatory purposes. It is meaningless to prohibit tiger hunting in the United Kingdom, however it is useful to prohibit the selling of tiger components. Similarly, allowing UK-based investors to speculate on bitcoin encourages an environmentally destructive global sector that has benefited no one except criminals and a few eagles.