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Bitcoin is generated or mined by high-powered computers in various areas of the world, with each one contributing to the solution of complicated mathematical riddles in a process that requires extensive use of electricity. China’s sector, which previously accounted for up to 70% of global capacity, is currently in a frenzy following the announcement of a crackdown on Bitcoin trade and mining in late May due to financial risks (= Energy FUD).
Energy FUD: Is that the case though?
Miners in China are already closing operations or planning to relocate in search of forgiving authorities and inexpensive power — preferably from sustainable renewable resources.
Here’s an intriguing fact: mining Bitcoin has suddenly gotten a lot simpler and more profitable. Is this a revenue party for miners in light of the significant drop in hash rates, and hence the mining difficulty? Mining made simpler?
One to recently comment on the same was Kevin Zhang, Vice President for Business Development at the U.S.-based Foundry, a crypto-mining, financing, and advisory firm. On the latest edition of the Unchained podcast, he said,
“All Bitcoin miners share in the same economics and are mining on the same network, so miners both public and private will see the uplift in revenue.”
For #bitcoin miners, we’re about to see the largest difficulty drop EVER this upcoming week (Over 20%)!
Here’s a quick thread to get everyone up to speed!
— Kevin Zhang (@SinoCrypto) June 27, 2021
This paradigm shift assisted in the resolution of a few issues on the Bitcoin network – “Much more decentralisation across the entire network; great for Bitcoin’s security and longevity,” he said. Although local Bitcoin miners in China suffered, it resulted in a more secure and global distribution network in the long run.
Consider this: as of now, much of the southern hemisphere is devoid of mining activity. With this crackdown, regional diversity has become critical.
“A lot of countries previously untapped by Bitcoin miners, like in Southeast Asia, South America or Australia will be incentivized to use their stranded renewable power. These energy markets weren’t needed before.”
El Salvador recently laid out the volcanic Bitcoin mining strategy. “Mining in a humid and hotter climate is difficult, but it is doable with appropriate feasible equipment and technologies,” Zhang believes.
Fourth of July gift worth a trillion dollars
Giving up, rather than donating, a whole tech industry to the US would bring enormous real benefits, particularly to the country’s northern regions.
“These benefits have multiplied with China’s shut down which had around 50-70% of the global mining network. When you lose 90% of it within few months, other regions/ networks will grow (now around 25 to 30% of the entire network in North America).”
In fact, according to Zhang, the U.S accounts for two major advantages, when compared to China.
“First the capital markets which can really accelerate the growth and amount of capital you have at your disposal.”
Furthermore, he added,
“US and a lot of western parts are democratic, that is why government won’t really step in and seize the equipment.”