Cryptocurrency mining is slightly getting out of hand. First, we had websites, ad campaigns and Wi-Fi networks using visitors' devices for mining but now the whole electricity network in some regions is in question. Are we going to see nomad miners? There are signs they already migrate in search of areas with cheaper electricity.
Cryptocurrency mining is slightly getting out of hand. First, we had websites, ad campaigns and Wi-Fi networks using visitors’ devices for mining but now the whole electricity network in some regions is in question. Are we going to see nomad miners? There are signs they already migrate in search of areas with cheaper electricity.
The largest crypto markets are the USA and China and their electricity grids experience the weight of crypto mining. Even though these countries have similar problems, they have different approaches towards them.
The cryptocurrency market is growing rapidly and the demand for digital currencies has increased in the last year. Cryptocurrency mining requires enormous computing power which on the other hand consumes a lot of electricity. The excessive electricity consumptions attracted the attention of the authorities, which admit that the networks are on the verge of a breakdown.
The most problematic areas are those where electricity is cheaper. Such is the case of Port Douglas, Washington State. Ron Cridlebaugh, the county’s development manager told CNBC that the infrastructure is overloaded. The county is said to add megawatts to its network, which will hopefully supply the demand.
On the other side of the globe, Chinese authorities are looking to take more strict actions towards the overconsumption. Actually, they tend to get rid of mining machines, to be more precise. It is hardly surprising to anyone since the Chinese government has long been notorious for its despite towards digital money. The state’s reluctance is backed by the high risks involved in crypto trade.
According to the Financial Times, Beijing has instructed provincial governments to enforce severe rules in crypto miners with the idea of potentially discouraging them from mining. Such regulations include taxes on electricity overconsumption, tax on land use and tax on mining, to name a few.
Bank of China has concerns that miner communities are established in remote areas close to power stations where the power is cheap. The central bank goes a step further assuming that miners might be interrogating with electricity producers directly rather than providers. For the uninitiated, China mines approximately three-quarters of world’s cryptocurrencies.
At the same time, China wishes to establish itself as a leading nation in technology. Somehow, however, it fails to see the potential of digital currencies and their core technologies. The country’s authorities regard cryptos as not meeting the real needs of the economy.
If China manages to get rid of miners, we might possibly see large groups of crypto enthusiasts migrating to other countries. According to the Financial Times, their potential destinations include Russia, Eastern Europe, Iceland, and Canada. However, if this is to happen we should expect another short-term downfall of prices.