Bitcoin is a decentralized system that the world’s central banks do not control. New digital coins are emerging thanks to the efforts of individuals.
Mining requires a powerful computer that can handle a lot of computational operations. The process is very protracted and therefore consumes a lot of energy.
According to the Cambridge Bitcoin Electricity Consumption Index, in 2020 more energy was spent on mining than was consumed by countries such as Ukraine or Argentina.
According to Bohdan Prylepa CTO of Prof-it Blockchain Ltd and COO in Bitcoin Ultimatum, mining farms in China that rely on coal for mining. “Separate data shows that the Bitcoin network leaves a Carbon Footprint equivalent to that of New Zealand. Also, what happens when each miner consumes an unreasonable amount of power?” he said in an interview
China accounts for about 65% of all bitcoin mining in the world. The northern region of Inner Mongolia alone accounts for about 8% of the segment, due to the cheap labor force. By comparison, the US produces only 7.2% of all bitcoins.
It should be noted that not all cryptocurrencies are mined according to the same principle as Bitcoin.
Inner Mongolia failed to meet the central government’s energy use targets in 2019 and was criticized by Beijing. In response, the Regional Development and Reform Commission has developed plans to reduce energy consumption.
Some of these plans provide for the closure of existing cryptocurrency mining projects by April 2021 and the complete absence of new initiatives. They also include a revaluation of other energy-intensive industries such as coal and steel.
While the Chinese government supported the development of the basic bitcoin technology – blockchain, the digital currencies themselves were under severe pressure. In 2017, Beijing banned ICOs, the cryptocurrency equivalent of an initial public offering. The government has also abolished cryptocurrency exchanges and token companies.
China is also striving to become more environmentally friendly. Chinese President Xi Jinping said last year that the country is committed to achieving carbon neutrality by 2060.