Crypto mining local evidence from china and the us

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Next month, the protocol will carry out its first end-to-end transaction from distribution of SBCs to a miner, to those being sold on to an ESG-focused investor, van Voorhees said. The system is modeled on the renewable energy certificate RECs market in the U. However, quantifying or auditing carbon offsetting and accounting for a possible variation in or duplication of renewable energy certification opens a whole new can of worms, such that the Bitcoin Mining Council BMC , has removed RECs from its attempts to calculate how green the industry is.

The problem with not counting RECs is that some Bitcoin miners want to get credit for relocating to another, greener power grid, according to Doug Miller the co-founder of clean energy platform Zero Labs.

He also adds his role is not to become an arbiter of what constitutes green or sustainable energy use; for instance, if methane miners, which burn flare gas at drill heads to power electricity generators, are actually helping to mitigate CO2 equivalents, then perhaps they should be included in the protocol as being sustainable, van Voorhees said. Please note that our privacy policy , terms of use , cookies , and do not sell my personal information has been updated.

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Cities across the U. Plattsburgh, N. This piece is part of CoinDesk's Mining Week. As clean energy gradually gets cheaper, mining operations will help subsidize green projects, writes the CEO of mining firm CleanSpark. Read more about. Mining Environment China US. Email address. Sign Up. Glicksman, пїЅ Brittany Whited. Mercure, P. Salas, пїЅ J. This paper provides economic estimates of the energy-related climate damages of mining Bitcoin BTC , the dominant proof-of-work cryptocurrency.

We provide three sustainability criteria for signaling when the climate damages may be unsustainable. BTC mining fails all three. Taken together, these results represent a set of sustainability red flags. This digital economy includes nonfungible assets like tokens for various digital media 2 , as well as fungible, divisible assets like the several thousand cryptocurrencies supported by hundreds of exchange platforms 3.

Select digitally scarce goods use production schemes with intensive energy use 4 , 5. These include several prominent cryptocurrencies e. POW-based cryptocurrencies are a slice of the larger set of blockchain technologies that have disruptively entered global marketplaces over the last decade or more 8.

The production of cryptocurrencies has been relatively decentralized and largely unregulated as they have first gained a foothold and then occupied a larger space 9. Cryptocurrencies are priced and traded in markets, but often exhibit considerable volatility 10 , and financial anomalies like speculative bubbles 11 , or evidence of price manipulation 12 , Yet, various proponents argue that such innovations provide significant value or are especially needed in the developing world e.

Others question the benefit of such disruptions, and especially so if the new technologies e. Potentially, there may be significant room for learning 19 and moving to alternative production pathways that use significantly less energy, while still providing the purported benefits However, achieving net reductions in energy use is inherently challenging, due to redundancies e.

Against this backdrop and within broader efforts to mitigate climate change, the policy challenge is creating governance mechanisms for an emergent, decentralized industry, which includes energy-intensive POW cryptocurrencies 22 , Such efforts would be aided by measurable, empirical signals concerning potentially unsustainable climate damages. Taking Bitcoin BTC as our focus, this analysis estimates climate damages of mining coins and explores several criteria for signaling when these damages might be unsustainable.

First, the trend of estimated climate damages per BTC mined should not be increasing, as the industry matures. Second, per BTC mined, its market price should always exceed its estimated climate damages; i. Third, to contextualize the sustainability of BTC over some chosen time frame, estimated climate damages per coin mined should favorably compare to some reference percentage benchmark of the climate damages per unit market value of other sectors and commodities; e.

They signal the need for change e. For context, BTC is a cryptocurrency with a decentralized open-source blockchain whose public ledger began in 25 and is transacted peer-to-peer without any central authority e.

Miners who are first to verify a given number of transactions and to provide the correct hash identifier are rewarded with new cryptocurrency and a new block is added to the chain As miners across the globe compete, as quickly as possible, to add new blocks to the chain i.

As miners compete with ever more computing power e. Using network hash rate data from January through December and data on mining equipment power consumption and efficiency 5 , 30 , Fig. On the basis of these estimates, in BTC mining used There is a general upward time trend in BTC electricity use and a close correlation between BTC prices and mining energy usage.

Data from January 1, to December 31, shown. Prices downloaded from Yahoo! All network hash rate and price data are supplied in the Supplementary Data. Estimates from Cambridge University suggest the majority of electricity used to mine POW cryptocurrencies comes from coal and natural gas, though hydropower use was likely prominent in China until cryptocurrency mining was banned there 32 , Due to its considerable fossil fuel energy use, cryptocurrency mining contributes to global carbon emissions 30 , 34 with associated environmental damages Goodkind et al.

For comparison, in , similar amounts of CO 2 were emitted from Afghanistan 7. As mining efforts have increased over time, we estimate steeply increasing CO 2 e carbon dioxide equivalent emissions per coin created. Using a global estimate of the location of BTC miners and the local electricity mix, and regional CO 2 e emission coefficients by generation type 37 , a BTC mined in is responsible for emitting times the CO 2 e as a BTC mined in пїЅincreasing from 0.

A non-linear trend line has been fit to the damages per coin data to illustrate time trends dotted line. Values displayed are the 7-days running average. Climate damages per coin mined in A were divided by the daily market price of the coin and multiplied by to put into percentage terms for calculation in B.

Estimates span January 1, to December 31, See the Supplementary Data for emissions factors used and the climate damages data. This percentage is useful to normalize the scale of externalities to the market price of the product. We offer two potential ranges of concern in Fig. The former would be above those found on average in Goodkind et al. For more than one-third of the days in , BTC climate damages exceeded the price of the coins sold.

There is a clear upward trajectory in per coin estimated climate damages, as seen from the non-linear trend line in Fig. Rather than declining as the industry matures, each new BTC coin mined is, on average, associated with increasing climate damages. Over пїЅ, BTC was underwater on 6. One key parameter where we assume a range of values from available evidence is the SCC.

SCC is the estimated present value of monetary damages from emitting an additional tonne of carbon today and monetizes the negative social externalities of carbon emissions From a policy and regulatory perspective, SCC is a key parameter for evaluating the social costs i.

SCC estimation has extensive history in economics 40 , 41 , 42 , and such values are widely used However, while analyses that use SCC estimates must make assumptions on its value or range, there is no consensus Even a select review of recent SCC estimation studies encompasses a broad range of values 38 , 40 , Regardless of SCC value, climate damages of BTC mining increased substantially from to , with a continuing upward trajectory.

The CO 2 e emission estimates and climate damages depend, critically, on assumptions of the share of renewable electricity sources used in cryptocurrency mining. Due to the decentralized and anonymized nature of cryptocurrency mining, determining actual energy sources is a challenge and no primary data sources exist This has led to a range of estimates in the literature. Prior work suggests the share of renewables e. Some of the differences in estimates are due to the time periods studied. China, once a large source of global Bitcoin mining that likely used significant amounts of renewable hydropower 30 , banned all cryptocurrency mining in This appears to have drastically altered the global share of renewables used by Bitcoin miners, resulting in an increased use of fossil fuels Thus, renewable share estimates before and after the China ban would be expected to be different, and perhaps considerably so.

Other differences, such as the methods used to locate miners, assumptions on mining rig efficiency and cooling needs, and assumptions on electricity sources can also drive differences in the range of estimates found in prior work 30 , Given the large ranges found, we expand our analysis with an alternative higher renewable electricity scenario.

In this scenario, we increase the share of renewable generation used to mine cryptocurrencies from the baseline of Compared to the baseline renewable share, increasing use of renewables in BTC mining reduces associated climate damages per coin mined Supplementary Table 2.

Thus, even if BTC miners obtained the majority of their electricity from renewables and directly carbon free sources, there are still large and growing climate damages. Recall from Fig. This does not necessarily imply that the POW mining process is sustainable. To contextualize these ratios, we make climate damage comparisons against some other relevant commodities and economic products: i electricity generation by source hydropower, wind, solar, nuclear, natural gas, and coal , ii crude oil processed and burned as gasoline, iii automobile use and manufacturing sport utility vehicles SUVs and mid-sized sedans , iv agricultural meat production chicken, pork, and beef , and; v precious metals mining rare earth oxides REOs , copper, platinum group metals PGMs , and gold.

BTC climate damages only include energy use and emissions from running mining rigs, and do not include climate damages associated with cooling and manufacturing of mining rigs or other potential sources of carbon equivalent emissions.

This makes estimated BTC damages a lower bound compared to the full lifecycle damages for the other commodities shown. Climate damages for the other commodities and economic products shown are calculated using lifecycle estimates from the peer-reviewed literature and US government agencies combined with publicly available price data.

All commodity prices and lifecycle climate damage data are in the Supplementary Data. This places BTC in the category of other energy intensive or heavily-polluting commodities such as beef production, natural gas electricity generation, or gasoline from crude oil, and substantially more damaging than what we might consider to be more sustainable commodities like chicken and pork production and renewable electricity sources like solar and wind.

For solar and wind specifically, their full lifecycle climate damages as a share of their market prices are an order-of-magnitude below those of BTC over пїЅ Digitally scarce goods are likely here to stay, and will bring innovation to a variety of economic dimensions generating value to people.

Our focus is on the dominant cryptocurrency, BTC, which uses a highly energy-intensive, competitive POW mining scheme. While society and nations weigh the benefits and costs of various digitally scarce goods, we provide an empirical approach for evaluating BTC sustainability concerns.

We find that for пїЅ i per coin climate damages from BTC were increasing; ii as a share of its market price, BTC climate damages were underwater 6. Taken together, the results represent a set of red flags for any consideration as a sustainable sector investment or otherwise. There are a number of important caveats about our offered criteria. This exceedance occurs 6. While this might be a clear alarm threshold, might it be too weak?

To help consider this, we turn to our third criterion, where we make comparisons to other commodities and sectors. We highlight that for our comparison commodities, the shares all represent full lifecycle damage estimates, but not for BTC. Thus, BTC shares are deflated in this initial research, ignoring carbon emissions from cooling of mining rigs, rig manufacturing, electronic waste, building construction, etc. Naturally, an inflated price will artificially decrease the estimated climate damages to price ratio.

To the extent that artificial price inflation is occurring, the damage ratio with a not-manipulated price may be higher than those presented here.

Finally, we have focused strictly on climate damages, but many technology assessments also include health damages from emissions. Thus, for several reasons our sustainability evaluations for BTC are highly conservative. While not the focus of this paper, an alternative cryptocurrency production process to POW, known as proof-of-stake POS , could be used to lower the energy use of cryptocurrency mining. POS works by requiring validators to hold and stake coins, with the next block writer on the blockchain being selected at random, with higher odds being assigned to those with larger stake positions POS, by relying on randomization and validation sharing, does not require significant computational power and therefore uses a fraction of the electricity as POW mining.

Ethereum, the second largest cryptocurrency by market capitalization 26 , is scheduled to switch from POW to POS sometime in , lowering its estimated energy use by If Bitcoin, the dominant global cryptocurrency, could also switch from POW to POS, its energy use, and, by extension, its climate damages estimated in this work, would likely become negligible. There is no shortage of advocates for digitally scarce goods, and the innovation they offer.

Our counterfactuals show that extreme changes would be required to make BTC sustainable e. POW-based cryptocurrencies are on an unsustainable path. Estimates of climate damages from Bitcoin mining follow methods described in the existing literature in this space 5 , We calculated total BTC coins mined per day in Eq.

Dividing electricity consumption of the network by the number of coins yields the electricity per coin in Eq. The emission factors used are provided in the Supplementary Data.

Damages as a share of coin price takes the damages per coin and divides by the daily market price of BTC All estimates of annual or multi-year damages per coin or damages per share of coin price take a daily-coin-generated weighted average across days i.

Mining rigs improved the efficiency of hash calculations per unit of energy over our study period. For BTC, we calculated annual average rig efficiency from sales data in 30 for пїЅ, and then used the efficiency of the popular ANTminer s15 for rig efficiency for We fit a non-linear relationship Eq. Greenhouse gas emissions of electricity generation of the BTC network of miners comes from The emission factors in 37 are based on mining pool locations and country and sub-country China and US electricity mixes and generation-source-specific emission factors.

As sensitivity analyses, we used emission factors from two other sources: i from 30 , and; ii the US average electricity mix by year using electricity source and generation mix estimates from various US government agencies 61 , Results from these analyses are provided Supplementary Table 3 and are qualitatively similar to our baseline results.

Climate damages from 16 comparison commodities are calculated: electricity generation by source hydropower, wind, solar, nuclear power, natural gas, and coal ; crude oil processed and burned as gasoline; automobile use and manufacturing sport utility vehicles SUVs and mid-sized sedans ; agricultural meat production chicken, pork, and beef , and; precious metals mining rare earth oxides REOs , copper, platinum group metals PGMs , and gold.

For each commodity we use estimates of full lifecycle CO 2 e emissions per unit of production, and multiply this by the SCC to obtain climate damages per unit. Climate damages per unit are divided by market price to get damages as a share of commodity value.

All commodity price and CO 2 e emissions data per unit production are provided in the Supplemental Data. For the market price of electricity, we use the пїЅ average retail price across the residential, commercial, industrial, and transportation sectors from the US EIA For gasoline from crude oil, we use an estimate of the well-to-wheel lifecycle emissions from the literature 69 and the пїЅ average retail price of gasoline from the US EIA For vehicles, over a years lifetime, we use estimates of the total cost of ownership and vehicle operation emissions, assuming 14, miles annually 71 based on a Ford Explorer for a sport utility vehicle SUV and a Toyota Camry for a mid-sized sedan.

We add vehicle emissions from fabrication and materials production and extraction using data from the peer-reviewed literature All data used in this paper are included in the article and in the Supplementary I nformation file or are publicly available online as noted.

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Consider, that crypto coins value list accept. opinion

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Governor of Texas Greg Abbott has been a vocal supporter for cryptocurrency. Texas will be the crypto leader," he tweeted in June. In the same month, the Lone Star State became the second US state after Wyoming to recognise blockchain and cryptocurrency in its commercial law, paving the way for crypto businesses to operate in the state. Many Chinese bitcoin companies have looked to Texas for stability and opportunity. This small town with around 5, residents once housed one of the world's largest aluminium plants, and now it's emerging as the next global hub for bitcoin mining.

There might be another underlying connection between the industry and the state, as De La Torre says that bitcoiners and Texans share the same values. Experts believe China's bitcoin crackdown was motivated by having greater control over the financial markets, and it may become a boon for America.

In return, the bitcoin miners get access to a thriving and innovative community, as well as more diverse sources of capital, according to Prof Desouza. Other than a stable regulatory environment, the energy-hungry industry is hunting for cheap electricity in Texas.

Texas has some of the cheapest energy prices in the world, due to its deregulated power grid. Consumers enjoy more choices of electricity providers, which encourage providers to lower prices to stay competitive. During peaks of electricity demand, bitcoin farms can even sell unused power back to the grid. Although El Salvador is set to become the first country to adopt bitcoin as a national currency, bitcoin miners prefer the US because of its well-developed electrical infrastructure, says Mr De La Torre.

But some analysts warn that the "Great Mining Migration" may lead to serious repercussions, as cities and towns struggle to meet the huge energy appetite. In February, blackouts following a deadly snowstorm left millions of homes and businesses in Texas without power for days.

More than people died. During the power outage, bitcoin farms were compensated to stay offline. The increased scrutiny of Chinese companies in America may also lead to more attention on these mining newcomers. Texas recently passed a law that prevents "hostile foreign actors" from accessing critical infrastructure, including its power grid. The new law was reportedly prompted by a Chinese billionaire's plan to build a wind farm in southwest Texas. Critics allege that the project could be used to hack into the Texas energy grid and to gather intelligence from a nearby US military base.

Prof Desouza says that while access to electricity grids is unlikely to be an issue for bitcoin miners in the short term, political risk will continue to evolve. The bitcoin miners do miss something in China - cheap labour cost and speedy construction. According to Mr Pan, while a new bitcoin farm takes up to five months to build in China, it could take as long as 18 months in Texas. Global shipping prices have also skyrocketed during the pandemic, making it significantly more expensive to ship mining machines from China to the US.

Despite the costly and time-consuming efforts, Mr Pan says his company is committed to settle in Texas, "It's a free land, and a lot of bitcoiners are here," he says, "so we feel: 'whoa, family reunion. How cow poo is powering crypto mining. More Filters. Benetton , Giovanni Compiani Economics. We find that younger individuals with lower income and education are more пїЅ Expand.

View 2 excerpts, cites background. This paper provides empirical evidence on the effect of high-speed internet on financial technology and banking in Africa. Our test combines data on banks and 28, firms with the staggered пїЅ Expand. Back , A. Kakhbod Economics. We study the competition among segmented trading venues in which the venues differ in technology fast vs.

Technological differentiation leads to higher trading fees, but increases trading пїЅ Expand. Decentralized Mining in Centralized Pools L. The Review of Financial Studies.

Management Science. Exploiting the staggered arrival of fiber-optic submarine cables, we show that high-speed internet promotes the role of banks and credit in Africa. Variation within country and across multicountry пїЅ Expand. View 1 excerpt, cites background. Pagnotta Economics, Computer Science. A Survey G. Initial coin offerings ICOs are a new financing source for startups based on the pillars of the blockchain ecosystem.

ICOs are regarded as a disruptive way to raise funds digitally, ensuring speed, пїЅ Expand. Gardner-Stephen , K. Nabben Business. View 2 excerpts, references methods and background.

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In the same month, the Lone Star State became the second US state after Wyoming to recognise blockchain and cryptocurrency in its commercial law, paving the way for crypto businesses to operate in the state. Many Chinese bitcoin companies have looked to Texas for stability and opportunity. This small town with around 5, residents once housed one of the world's largest aluminium plants, and now it's emerging as the next global hub for bitcoin mining. There might be another underlying connection between the industry and the state, as De La Torre says that bitcoiners and Texans share the same values.

Experts believe China's bitcoin crackdown was motivated by having greater control over the financial markets, and it may become a boon for America. In return, the bitcoin miners get access to a thriving and innovative community, as well as more diverse sources of capital, according to Prof Desouza. Other than a stable regulatory environment, the energy-hungry industry is hunting for cheap electricity in Texas. Texas has some of the cheapest energy prices in the world, due to its deregulated power grid.

Consumers enjoy more choices of electricity providers, which encourage providers to lower prices to stay competitive. During peaks of electricity demand, bitcoin farms can even sell unused power back to the grid.

Although El Salvador is set to become the first country to adopt bitcoin as a national currency, bitcoin miners prefer the US because of its well-developed electrical infrastructure, says Mr De La Torre. But some analysts warn that the "Great Mining Migration" may lead to serious repercussions, as cities and towns struggle to meet the huge energy appetite.

In February, blackouts following a deadly snowstorm left millions of homes and businesses in Texas without power for days. More than people died. During the power outage, bitcoin farms were compensated to stay offline. The increased scrutiny of Chinese companies in America may also lead to more attention on these mining newcomers. Texas recently passed a law that prevents "hostile foreign actors" from accessing critical infrastructure, including its power grid.

The new law was reportedly prompted by a Chinese billionaire's plan to build a wind farm in southwest Texas. Critics allege that the project could be used to hack into the Texas energy grid and to gather intelligence from a nearby US military base. Prof Desouza says that while access to electricity grids is unlikely to be an issue for bitcoin miners in the short term, political risk will continue to evolve.

The bitcoin miners do miss something in China - cheap labour cost and speedy construction. According to Mr Pan, while a new bitcoin farm takes up to five months to build in China, it could take as long as 18 months in Texas. Global shipping prices have also skyrocketed during the pandemic, making it significantly more expensive to ship mining machines from China to the US.

Despite the costly and time-consuming efforts, Mr Pan says his company is committed to settle in Texas, "It's a free land, and a lot of bitcoiners are here," he says, "so we feel: 'whoa, family reunion.

How cow poo is powering crypto mining. Cambridge data shows Bitcoin mining on the move. El Salvador makes Bitcoin legal tender. Create Alert Alert. Share This Paper. Background Citations. Methods Citations. Figures and Tables from this paper. Citation Type. Has PDF. More Filters. Benetton , Giovanni Compiani Economics. We find that younger individuals with lower income and education are more пїЅ Expand. View 2 excerpts, cites background. This paper provides empirical evidence on the effect of high-speed internet on financial technology and banking in Africa.

Our test combines data on banks and 28, firms with the staggered пїЅ Expand. Back , A. Kakhbod Economics. We study the competition among segmented trading venues in which the venues differ in technology fast vs. Technological differentiation leads to higher trading fees, but increases trading пїЅ Expand.

Decentralized Mining in Centralized Pools L. The Review of Financial Studies. Management Science. Exploiting the staggered arrival of fiber-optic submarine cables, we show that high-speed internet promotes the role of banks and credit in Africa. Variation within country and across multicountry пїЅ Expand.