The US unseats China as world’s biggest bitcoin miner, accounting for a third of the global hash rate after Beijing’s crackdown

Bitcoin mining is viewed at BitFarms in Saint Hyacinthe, Quebe
Bitcoin mining rigs.

The US unseated China as the world’s biggest bitcoin miner, accounting for a third of the global hash rate, after Beijing banned all cryptocurrency transactions, data from a new report showed.

The US share of the global rate has more than doubled to 35.4% from 17% in April, according to a report from the Cambridge Center for Alternative Finance published on Wednesday. China’s global hash rate, meanwhile, plunged to zero from 44% in that time.

Hash rate is a key measure of how much computing power is required to support the network and to create bitcoin. It is also important to the bitcoin security protocol that prevents any double-spending of bitcoin.

The increase in the US hash-rate share came after China in September banned all cryptocurrency transactions. The People’s Bank of China said virtual currencies “are not legal and should not and cannot be used as currency in the market.”

Leading up to the ban, Beijing had been steadily tightening the screws on cryptocurrency operators. China in June ordered bitcoin miners operating in the country to shut down, citing environmental concerns. Right after that, nearly half of the bitcoin network went dark as miners immediately looked to where to migrate.

The overall crackdown has eliminated China as a bitcoin superpower. In September 2019, the earliest data Cambridge collected, China accounted for as much as 75% of the global hash rate thanks to an abundance of coal and hydro plants that kept electricity prices low.

Meanwhile, bitcoin miners outside China see tremendous opportunities for growth, including those in the US. October data from Foundry USA, a digital currency group, showed 19.9% of bitcoin’s hash rate is in New York, 18.7% in Kentucky, 17.3% is in Georgia, and 14% in Texas, as first reported by CNBC.

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A single bitcoin transaction creates as much waste as throwing out two iPhones, economists find

bitcoin mining
Bitcoin mining is hugely energy intensive.

  • Each bitcoin transaction creates at least 272g of e-waste, the weight of two iPhone 12 minis, a new paper says.
  • This is because “bitcoin miners cycle through a growing amount of short-lived hardware,” the authors said.
  • They found that the average lifespan of bitcoin mining devices is just 1.29 years.
  • See more stories on Insider’s business page.

One bitcoin transaction creates the same amount of electronic waste as throwing away two iPhones, economists have found, because of the short lifespan of “mining” computers.

The bitcoin network annually generates 30.7 metric kilotons of waste as mining equipment is thrown away, according to a study by economists Alex de Vries and Christian Stoll.

There were 112.5 million transactions in 2020, so that “equates to at least 272 g of e-waste per bitcoin transaction,” they said in a paper published this week.

That is equivalent in weight to two iPhone 12 minis, as The Guardian pointed out, or to 0.5 of an iPad, according to Digiconomist.

Critics have long focused on bitcoin’s enormous electricity consumption, but De Vries and Stoll said people have “thus far ignored that bitcoin miners cycle through a growing amount of short-lived hardware.”

Bitcoin mining is the process whereby computers solve complex puzzles to verify transactions and are rewarded with new coins. It is very energy intensive, and most miners use specialist computer chips known as ASICs.

The computers are competing against each other, meaning miners are driven to use the newest and most powerful devices. And because mining computers often only serve one purpose, they’re quickly rendered obsolete.

“The lifespan of bitcoin mining devices remains limited to just 1.29 years,” De Vries and Stoll wrote.

Read more: An ex-Goldman exec turned crypto trading head explains why he thinks bitcoin can still reach $70,000 by the end of the year – and shares ‘a safe play’ that’s off the beaten track

They said the 30.7 kilotons of waste bitcoin produces each year is comparable to the amount of small IT and telecommunication equipment waste produced by a country like the Netherlands.

The ethereum network is trying to tackle the problem of waste from crypto mining by changing to a so-called “proof of stake” network. In that system, users put forward a stake to gain the right to verify transactions, rather than use vast amounts of computing power.

However, De Vries and Stoll, from the Dutch central bank and MIT respectively, noted that the traditional financial system also generates huge amounts of waste, from servers in bank branches to old ATMs.

“The six billion payment cards that are produced annually – with a lifetime of three to four years – illustrate the large scale,” they said in the paper, published in the Resources, Conservation & Recycling journal.

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A Canadian bitcoin ETF aims to offset its climate impact by planting trees to become the 1st carbon-negative investment fund

In this photo illustration, a visual representation of Bitcoin cryptocurrency is pictured on May 30, 2021 in London, England.
  • A Canadian bitcoin ETF aims to offset its negative climate impact by planting trees.
  • The ETF, Accelerate Financial Technologies, looks to become the world’s first carbon-negative investment fund.
  • The fund will launch on August 31 on the Toronto Stock Exchange under the ticker symbol ABTC.
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A Canadian bitcoin exchange-traded fund aims to offset its climate impact by planting trees to become the world’s first carbon-negative investment fund.

Accelerate Financial Technologies will plant approximately 3,450 trees for every $792,655 (or C$1 million) invested in the fund, its founder and CEO Julian Klymochko told Insider.

This figure reflects 10% of the 69 basis point management fee the fund is pledging for its tree-planting initiative.

The Calgary-based fund will launch on August 31 on the Toronto Stock Exchange under the ticker symbol ABTC. It aims to give investors exposure to the performance of bitcoin by investing in derivatives.

The carbon offset effort, the company said, will first be focused on planting mangrove trees in Madagascar.

The announcement from the firm comes as crypto mining faces intense scrutiny for its immense energy consumption. Recent estimates show that the cryptocurrency space uses more energy than entire nations like Sweden and Malaysia, according to the Cambridge Bitcoin Electricity Consumption Index.

Accelerate is trying to show that bitcoin can meet the environmental, social, and governance standards many investors have begun to prioritize.

The fund will also be available for purchase in US dollars under the ticker symbol ABTC.U. The US has yet to approve its own bitcoin ETF.

“I am pleased to announce another true innovation,” Klymochko, who also launched Canada’s first bitcoin ETF in July 2017, said in a statement. “We are launching what we believe to be the world’s first carbon-negative investment fund.”

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Bitcoin is speculative, bad for the planet, and often used for crime, the Bank for International Settlements says

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Central banks are keeping a close eye on bitcoin.

  • Bitcoin is a speculative asset that is used for crime and is bad for the planet, the BIS has said.
  • The international organization said bitcoin has “few redeeming public-interest attributes.”
  • Regulators and central banks are paying increasing attention to bitcoin and cryptocurrencies.
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Crypto tokens such as bitcoin are speculative assets rather than currencies, are often used for crimes such as money laundering, and waste energy, the Bank for International Settlements has said.

Bitcoin “has few redeeming public interest attributes,” the BIS said on Wednesday, in a chapter of its annual economic report. The BIS is an international organization that acts as a central bank for central banks and aims to foster global financial cooperation.

“By now, it is clear that cryptocurrencies are speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes.”

The report continued: “Bitcoin in particular has few redeeming public interest attributes when also considering its wasteful energy footprint.”

Research by Cambridge University has found the bitcoin network – which is secured by vast amounts of computing power – uses around the same amount of energy each year as the Netherlands.

Regulators and central banks are paying more and more attention to cryptocurrencies, which they broadly see as dangerously volatile. Earlier in June, a top banking regulator, based at the BIS, advocated for the toughest possible rules for banks holding crypto.

Wednesday’s BIS report looked at the case for central bank digital currencies, and also took aim at stablecoins and the growing dominance of a select few tech firms over digital payments.

“Innovations such as cryptocurrencies, stablecoins and the walled garden ecosystems of big techs all tend to work against the public good element that underpins the payment system,” it said.

The report said stablecoins – crypto tokens that are backed by reserve assets – “have the potential to fragment the liquidity of the monetary system.” But it said their reliance on traditional assets means they’re “not a game changer.”

The BIS said the growing dominance of a few tech firms is perhaps the biggest danger to the safety and smooth functioning of global payment systems. It said the firms’ rising market power could keep costs high, cause data protection issues, and freeze some people out.

Central banks are increasingly working on their own digital currencies. Although these projects have coincided with the crypto boom, central bankers say they are more concerned about private payment systems becoming too big to fail.

Huw van Steenis, chief advisor to the CEO of Swiss bank UBS, told Insider in May: “If you think about the pandemic, it’s probably fast-forwarded the shift away from cash to digital by about three to five years.”

He added: “No central banker ever wants to feel they might lose control of their currency.”

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Meet the company mining bitcoin using the flare gas from oil drilling – and drawing investment from Coinbase and the Winklevii

Bitcoin mining flare gas
One of Crusoe Energy’s flare-mitigation centres in Montana.

  • Crusoe Energy captures the energy from flare gas at oil patches and uses it to “mine” bitcoin.
  • The company is now one of the US’s biggest miners and has attracted investment from Coinbase.
  • The crypto world is increasingly focused on the climate, particularly after Elon Musk’s criticisms.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Hunter Lowe, a 27-year-old electrician from Tennessee, was working for around $10 an hour in his home state and supporting a family of three when he decided to move to North Dakota and look for a new job.

He never expected to end up working in the bitcoin business.

But Lowe is now an electrician at Crusoe Energy, a company that captures the flare gas from oil patches and uses the energy to “mine” for bitcoin. It says its systems slash CO2-equivalent emissions from gas flaring by up to 63% and that each one has the equivalent effect of taking around 1,700 cars off the road.

Lowe describes it as “the best job I’ve ever had,” which pays “way more than fair.” And he says business has been good during 2021’s crypto boom. “We’re getting busier and busier every time another company finds out about us,” he told Insider.

Crusoe isn’t the only company in the business, with others including EZ Blockchain doing similar things. Yet it’s one of the biggest, and has attracted investment from the listed crypto exchange Coinbase and the Winklevii twins‘ Winklevoss Capital.

Crusoe mines bitcoin directly on site

So how does it work? When oil companies drill for the black stuff, they often hit natural gas too. Yet, most drillers lack the infrastructure to sell the gas and so burn it off in a process called flaring, creating the distinctive flames above oil sites.

This is where Crusoe comes in. It installs a piping system to divert the natural gas away from the flares and into generators. They produce electricity which is then used to power computers directly at the oil site.

The computers “mine” bitcoin – that is, they solve complex puzzles which help to secure the bitcoin network and create new coins. One bitcoin was worth around $39,000 on Thursday.

“We pay the operator for the gas that we use in our generators, providing them with an incremental revenue stream where they were previously flaring the gas for zero,” Crusoe’s president Cully Cavness told Insider.

He said Crusoe, which has deployed units in North Dakota, Colorado, and Montana among other states, is now one of the biggest bitcoin miners in North America.

The focus on bitcoin’s energy use has intensified

Yet, for some people, paying oil companies for their byproducts is simply propping up the fossil fuels industry. Others argue that bitcoin is socially useless and there are much better uses for energy.

New York University economist Nouriel Roubini has slammed cryptocurrencies as pointless and inefficient, for instance, saying that “the Flintstones had a better monetary system.”

Elon Musk, once the most prominent bitcoin evangelist, has halted payments for Tesla cars in the token and attacked its “insane” energy use. Bank of America analysts have estimated that each $1 billion of inflows into bitcoin uses the same amount of energy as 1.2 million cars.

Yet, Cavness says Crusoe “maintains an internal [environmental] standard to select projects only if they’re net reducers of greenhouse gasses.”

He also said Crusoe’s prices are such that “we don’t create an economic incentive to opt out of traditional midstream gas capture systems.”

And he says the company’s generators aren’t only focused on bitcoin, but are increasingly powering other energy-intensive processes such as cloud computing.

Investors are keen on the technology

Musk’s attacks on bitcoin’s energy consumption have shone a light on the issue and crypto companies are paying more attention to the climate than ever.

The green focus appears to be helping Crusoe, which recently raised $128 million to help expand its flare capture technology to more than 100 units, from around 40 currently. Investors included Valor Equity Partners, Bain Capital, and the Agnelli family’s Exor.

As someone who’s worked for Halliburton and natural gas companies, Lowe admits he was skeptical about “the whole green thing” in the past. Being at Crusoe has changed his mind, however, and he argues its work is “definitely for the better.”

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Crypto billionaire Sam Bankman-Fried says bitcoin could switch to green energy with little fuss – and reveals SPACs are lining up to take his FTX exchange public

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Sam Bankman-Fried co-founded and runs crypto exchange FTX.

Sam Bankman-Fried, the 29-year-old crypto billionaire, has said that bitcoin could dramatically cut down on its energy use without killing off the cryptocurrency or setting back the industry.

He also revealed that special purpose acquisition companies, or SPACs, have been queuing up to take his FTX crypto exchange public, speaking in an interview with Bloomberg.

The computing process that secures and “mines” bitcoin has been criticized for using vast amounts of energy. Bitcoin enthusiasts have pushed back hard, saying detractors are blowing the problem out of proportion.

But Bankman-Fried told Bloomberg that bitcoiners need to take the issue seriously. “It’s not at all reasonable for bitcoin forces to decry it as sort of a witch hunt to bring up this question, because there is substantial energy usage happening because of bitcoin mining right now,” he said.

Read more: A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities

Yet he said there are a number of solutions that wouldn’t be too burdensome, such as switching to green energy or using carbon offsets to lower the industry’s impact on the environment.

“The answer is that it’s not free to mitigate, but it’s not that expensive,” he told Bloomberg. “It’s something the industry could pay without really setting itself back that much.”

Many bitcoiners argue that the industry will soon use predominantly renewable energy, given that it’s becoming cheaper and cheaper in advanced economies.

Bankman-Fried, who founded and is now chief executive of FTX, said he’s been approached by a number of SPACs about taking the crypto derivatives exchange public. SPACs are blank-check companies that raise money on the stock market and then find a target company to merge with.

He said FTX was one of the few “plausible exciting targets” for SPACs in the crypto world.

Bankman-Fried said the exchange does not have concrete plans, but said: “If we did want to go public via [a] SPAC, I don’t think finding the SPAC would be the limiting factor.”

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NY Senate approves lighter version of bill targeting emissions from bitcoin mining operations in the state

A view shows the data centre of BitRiver company providing services for cryptocurrency mining in the city of Bratsk in Irkutsk Region, Russia on March 2, 2021.

  • The New York Senate has passed a bill that will target crypto mining operations that use the proof-of-work method.
  • Proof-of-work is an energy-intensive method of validating transactions to mine new tokens.
  • The approved bill is the result of a watered-down version of an earlier that sought a total ban on mining in the state for three years.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The New York Senate passed a bill on Tuesday that will target large-scale cryptocurrency mining operations.

The legislation would seek to ban the state from granting permits to new bitcoin mining operations that plug directly into the state’s carbon-emitting power plants. It now heads to the state Assembly for approval.

The bill singled out the magnitude of computing power required by the proof-of-work method, which it claimed consumes as much energy as an average American household uses in a month.

“The annual global energy use for proof-of-work authentication is equivalent to that of the country of Sweden and exceeds the energy consumption of all the global activity of major tech companies like Amazon, Google, and Facebook combined,” the bill said.

Proof-of-work is the foundation many cryptocurrencies are built on. The method is used to validate transactions and mine new tokens.

“Given that there are at least 15 other methods to validate transaction it is simultaneously completely unnecessary,” Assemblymember Anna Kelles said.

The bill is a watered-down version of an earlier proposal that aimed to halt bitcoin mining for three years until the state could assess its impact on the environment.

The senators also narrowed the scope to new projects and existing operations.

The bitcoin mining industry, the bill said, is expanding in the state of New York. Most of these operations are concentrated in retired fossil fuel power stations, including dormant peaker plants.

Among the mining centers active in the state is Greenidge Generation Holdings, a natural gas power plant in the Finger Lakes region, which can mine an average of 5.5 bitcoins every day, according to CoinDesk.

The facility was previously a coal-fired power plant but was converted to natural gas in 2017 and then to a bitcoin mining center in January 2020, according to its website.

Bitcoin mining has long been criticized due to its heavy energy use and environmental impact. Recently, Tesla CEO Elon Musk publicly expressed his concern about the rapidly increasing use of fossil fuels for bitcoin mining and transactions, sending shockwaves across the digital asset ecosystem.

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An EV company is planning a crypto-mining car that will dig for bitcoin and dogecoin while parked

A pile of bitcoin cryptocurrencies is seen.
Bitcoin mining is highly energy intensive.

  • Canadian electric-vehicle maker Daymak is planning a car that will mine bitcoin while charging.
  • It is intended to launch in 2023, and Daymak is accepting pre-order payments in cryptocurrencies.
  • Critics have slammed bitcoin mining, however, as very energy intensive and bad for the environment.
  • Sign up here our daily newsletter, 10 Things Before the Opening Bell.

Forget Tesla, there’s a new electric carmaker on the cryptocurrency block. Maybe.

Canadian light-electric-vehicle manufacturer Daymak said on Tuesday that its new Avvenire Spiritus model will be able to mine cryptocurrencies, including bitcoin and dogecoin.

However, the technology – which Daymak calls the Nebula Miner – is yet to secure a patent. And the Avvenire range is yet to begin production, although Daymak has received more than $350 million of pre-orders, with the bitcoin-mining Spiritus three-wheeler set to launch in 2023.

Nonetheless, Daymak is bullish about the future. “Whereas most vehicles are depreciating while they sit in your garage, the Nebula Miner will make you money while your Spiritus is parked,” said Aldo Baiocchi, president of Daymak, cited in a press release.

“Daymak has been a champion for disruptive technologies since its inception, and the current crypto movement is a clear indication that by the 2023 Spiritus release date, we will be in the midst of the blockchain revolution.”

Daymak – which specializes in electric scooters but is planning a major move into cars – said the Nebula Miner will go to work whenever the vehicle is charging.

Cryptocurrency mining is the energy-intensive process through which computers solve complex puzzles to secure crypto networks and create coins. Critics – now including bitcoin evangelist and Tesla boss Elon Musk – have slammed it as extremely bad for the environment.

Daymak is planning to link the car to a Nebula Wallet that will allow owners to collect, store and transact with the cryptocurrencies their car has mined.

The company is accepting pre-order payments in cryptocurrencies including dogecoin, ethereum, bitcoin and cardano, it said in its statement.

Bobby Ong, cofounder of crypto data platform Coingecko, said there are a number of problems with Daymak’s idea.

“Embedding a bitcoin mining chip into a machine that is supposed to last for several years assumes that bitcoin’s difficulty will not increase over time,” he said. “Bitcoin’s difficulty will increase over time, making old mining chips inefficient and obsolete.”

He added that the car would need to be constantly connected to the internet to mine, “not to mention draining electricity from the car too.”

At least one amateur crypto fan has already had a crack at mining bitcoin with a car. Simon Byrne decked out a BMW i8 hybrid with a small crypto mining rig in January, according to the Hardware Times.

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A massive cannabis farm raided by UK police turned out to be a bitcoin mine

Crypto mine WM
The bitcoin ‘mine’ uncovered during industrial unit raid in UK.

  • When UK police were getting ready to raid what they suspected was a cannabis farm, they discovered a crypto mine instead.
  • Police said the mine said was stealing thousands of pounds worth of electricity from the main supply.
  • “It’s certainly not what we were expecting,” the police said in a statement.
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When police in West Midlands, UK were getting ready to raid what they suspected was a cannabis farm on May 18, they instead discovered a cryptocurrency mine that was stealing thousands of pounds worth of electricity from the main supply.

“It’s certainly not what we were expecting,” Sandwell Police Sergeant Jennifer Griffin, said in a statement.

British police were alerted of numerous people visiting the location at different times of the day. Wiring and ventilation ducts that were visible and voluminous also raised concerns. Following these suspicions, the police flew a drone above the location, which picked up a considerable heat source from above.

“It had all the hallmarks of a cannabis cultivation set-up,” Griffin said.

But upon entry, they discovered a bank of around 100 computer units as part of what’s understood to be a bitcoin mining operation. Griffin said this is believed to be the only second such crypto mine British police have encountered in the region.

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The bitcoin ‘mine’ uncovered during industrial unit raid in UK.

“We’ve seized the equipment and will be looking into permanently seizing it under the Proceeds of Crime Act,” Griffin said. “No one was at the unit at the time of the warrant and no arrests have been made – but we’ll be making enquiries with the unit’s owner.”

Cryptocurrency mining has long been criticized due to its heavy energy use and environmental impact. Various research, including a study from Cambridge University, has shown that bitcoin mining around the world uses more energy each year than some entire nations.

“My understanding is that mining for cryptocurrency is not itself illegal but clearly extracting electricity from the mains supply to power it is,” Griffin said.

Western Power, the electricity distribution operator for the Midlands, revealed that thousands of pounds worth of energy had been stolen to power the mine, bypassing the normal electric supply.

More and more governing bodies have raised concerns about the massive energy consumption needed to mine cryptocurrencies.

On May 26, Iran has banned cryptocurrency mining over the summer ahead of an anticipated surge in electricity demand.

China’s Inner Mongolia Autonomous Region on May 19 doubled down on its crypto-mining ban by setting up a hotline for the general public to report suspected activity.

In New York, a bill introduced in the State Senate is seeking to halt bitcoin mining for three years until the state has assessed its impact on the environment.

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Iran bans crypto mining for the summer ahead of peak electricity demand

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Bitcoin mining uses vast amounts of electricity

Iran has banned cryptocurrency mining over the summer ahead of an anticipated surge in electricity demand, Bloomberg first reported. The country the past few days has experienced widespread blackouts due to higher than usual energy consumption, compounded by drought and high temperatures, according to Arab News.

While cryptocurrency mining was highlighted, other electricity-intensive activities were also prohibited, President Hassan Rouhani announced on state television Wednesday.

“The ban on the mining of cryptocurrencies is effective immediately until September 22,” Rouhani said as Reuters reported. “Some 85% of the current mining in Iran is unlicensed.”

Cryptocurrency mining has long been criticized due to its heavy energy use and environmental impact. Various research, including a study from Cambridge University, has shown that bitcoin mining around the world uses more energy each year than some entire nations.

Mining cryptocurrencies, a complex process that includes validating data blocks to include in the public ledger, is power-intensive and often relies on fossil fuels.

Approximately 4.5% of all bitcoin mining occurs in Iran, according to blockchain analytics firm Elliptic.

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The fact that the country has restricted access to foreign currencies also makes cryptocurrency mining more attractive.

The ban however raises concerns about pushing the practice -including those licensed-into the black market. Iran in the past has launched a crackdown on illegal miners, accordin to Bloomberg.

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