China's Bitcoin ban "drains" the United States! US media: Chinese mining companies consume huge amounts of energy...

FX168 Financial News Agency (Asia Pacific) News: Business Insider in the United States talked about Bitcoin in a long topic article, pointing out that cryptocurrency miners were driven out of China under China's Bitcoin ban, and now they are "draining" the United States. The content mentioned that the huge energy consumption caused by the large-scale entry has exacerbated domestic concerns about the entry of Chinese mining companies in the United States.

China was once the world's cryptocurrency capital. Thanks to cheap energy and friendly regulations, cryptocurrency mining companies have flocked to this country that is reluctant to undertake energy-intensive currency creation and transaction verification processes. In 2019, despite some regulatory provisions and bans on initial coin offerings (ICOs) a few years ago, China's leadership called for widespread implementation of blockchain technology to support the country's pursuit of secure and reliable data systems, promote blockchain research, and further promote China's lead over the United States. At its peak in 2021, China accounted for nearly 70% of global cryptocurrency mining.

But in May of the same year, China changed its course. Due to concerns that cryptocurrencies were used for illegal activities, the Chinese government actually banned cryptocurrency mining and trading. "The ban stems from the risks that cryptocurrencies pose to China's financial system through activities such as money laundering, which has caused the industry to struggle," wrote Taylor Dorrell, a senior fellow at the Council on Foreign Relations, who was not involved in the study.

Cryptocurrency mining companies immediately fled the country, with many relocating to nearby Kazakhstan, where coal power is plentiful. Because minting bitcoins requires solving increasingly complex math problems, the hundreds of specialized machines used in the process, as well as cooling equipment, require vast amounts of electricity.

Kazakhstan went from accounting for 7% of the world’s “hashrate” — the computing power needed to create new bitcoins — in May 2021 to nearly 20% just three months later, according to the Cambridge Bitcoin Electricity Consumption Index. The influx of cryptocurrency miners began to consume 7% of the country’s electricity generation, sending fuel prices soaring and causing widespread power outages. After massive public protests in late 2021, mining companies in Kazakhstan were effectively cut off from the grid.

So they came to the United States.

Today, the United States accounts for about 40% of the world’s hash rate, up from 17% in China at its 2021 peak, making it the largest bitcoin mining hub. The country’s 52 cryptocurrency mining operations consume about 2% of the country’s energy, enough to power the entire state of Utah or West Virginia. While it has not sparked the same crisis as in Kazakhstan, the huge energy consumption has still sparked opposition from locals and heightened concerns about Chinese companies moving in. It is just the latest example of China expelling burdensome industries, only to end up in the United States.

Source: Business Insider

One of the big Chinese-owned crypto mining companies that has relocated to the U.S. is Bit Mining, which in May 2021 owned the world’s largest data center and crypto mining facility in China. By September of that year, after a brief stint in Kazakhstan, the company had set up shop in Akron, Ohio, in a building that once belonged to tire giant Goodyear. Other bitcoin mining companies have settled in rural parts of the U.S., where cheap electricity, favorable regulations and ample warehouse space are available. But these noisy facilities typically employ only a few dozen people and have troubled relations with their neighbors.

“The amount of energy these companies use is staggering,” said Jeremy Fisher, senior strategic advisor for the Sierra Club’s environmental law program. In Rockdale, Texas, for example, a Riot Platforms mining facility uses 450 terawatts of energy, the equivalent of the energy needed to power about 300,000 homes. Electricity has also become an increasingly pressing issue in the climate crisis. Since the early 2000s, power outages have increased 64% nationwide, and weather-related outages have increased 78%.

“Proof-of-work cryptocurrencies are moving in the wrong direction at a time when we need to rapidly increase renewable energy generation and shut down fossil fuel plants,” Fisher said.

The resistance to bitcoin mining is largely at the local level, where frustrated locals in places like Murphy, North Carolina, and Massillon, Ohio, are signing petitions, forming coalitions, and creating YouTube channels to fight back against mines in their towns. Gladys Anderson lives next to a mining facility in Bono, Arkansas. In the summer of 2023, she recounted her experience at a town council meeting at a proposed facility in Vilonia, Arkansas. “It’s causing me a lot of trouble,” she said. Her son has autism and has trouble tolerating loud noises. “My son is going crazy in the backyard right now,” she said.

Countering local resistance is a powerful, rising new force: the bitcoin lobby.

Tech companies and bitcoin investors have already had an impact on legislation in states like California. In September 2023, California Governor Gavin Newsom vetoed a bill that would have established a licensing and regulatory framework for “digital financial assets.” His veto came after the cryptocurrency industry spent more than $400,000 on lobbying. That influence has also extended to the federal level. Bitcoin lobbying groups spent more than $20 million to ensure that Congress blocked the SEC from federally regulating cryptocurrencies, which it did in May.

“Bitcoin represents freedom, sovereignty, and independence from government coercion and control,” Trump told cryptocurrency enthusiasts at the Bitcoin 2024 conference in Nashville in July, reversing his previous opposition to Bitcoin, calling it a scam during his presidency. To thunderous applause, Trump promised to fire SEC Chairman Gary Gensler and position the United States as the “cryptocurrency capital of the world.” In response, cryptocurrency investors and super PACs poured millions of dollars into Trump’s campaign.

In 2008, Satoshi Nakamoto, known as the "father of Bitcoin," described Bitcoin as "very attractive to libertarians." The so-called decentralized nature of blockchain has attracted supporters who believe in free-market economics and technological utopianism. Cryptocurrency enthusiasts dream of a world where financial institutions are replaced by decentralized cryptocurrencies, which they say can protect against inflation.

However, in recent years, Bitcoin mining has become increasingly concentrated in the hands of a few private companies. In 2021, the National Bureau of Economic Research found that 10% of miners control 90% of Bitcoin mining power. “Concentrating currency holdings, processing power, and programming skills in the hands of a group of people who are effectively partners in a joint venture defeats the entire purpose of adopting a blockchain structure,” economist Saifedean Ammous wrote in his book Bitcoin Standard.

“Given the vast amounts of energy consumed by Bitcoin mining, it is worth questioning whether Bitcoin’s presence in the United States is really worth the cost. The Bitcoin lobby’s rosy vision of the future has so far been limited to the realm of utopianism and, if left unchecked, could accelerate a climate dystopia for all of us,” Dorrell concluded.