The crypto industry, for the decade, that it has been existence, has gone through many significant changes and has seen market rising and falling and in the midst of all of this change as well as the growing acceptance of cryptocurrency, the state of the mining sector of the market can be viewed in a new lens. The mining industry has always been, in many ways, the backbone of the crypto industry as miners have been supplying tokens to industry users and the state of the mining industry is usually a reflection of what is going on within the industry itself. When the infamous bear market took place in late 2018, the mining industry was one of the worst-hit with several firms shutting down altogether, rushing to sell off their mining machines and so on.
Now a report from Coinshares is hoping to shed light on the future of the Bitcoin mining network. The report takes electricity consumption into consideration and was able to estimate the total electricity draw of the entire Bitcoin mining industry to be 4.7 GW which is similar to what it was reading in November 2018.
What the Numbers Say
The power consumption of the global bitcoin mining network has remained the same but the report showed that interesting trend of reduction in the geographical dominance of China among bitcoin miners. The reduction in Chinese dominance can be attributed to the cracking down on cryptocurrency by the Chinese government as crypto as a whole is banned within the country. However, despite the loss of geographical dominance, the country continues to dominate in the hardware manufacturing sector of the market and shows no signs of stopping which is rather ironic considering there is a reduction in miners themselves from that part of the world.
“It is also worth noting that the ~40% drop in hash rate observed at the tail-end of 2018 represents the first time we have ever observed a substantial and prolonged drop in hash rate as a result of sustained large-scale corrections in the Bitcoin price,”
the report says.
This contradicts the previous trend as a recent increase in hash rate can be attributed to either a restarting of the previously shelved mining gear or the deployment of the next generation of mining gear. There has, however, been an increase in the amount of energy that is required for hashing as it was previously 3.9 GW but is now 4.3 GW. This is in line with the increase in the hash rate itself which has been 25 percent and the 10 percent increase in machine efficiency. All in all, the network is drawing a total of 41 TWh.
The report then suggests that Bitcoin mining is behaving like a global electricity buyer of last resort and as such, the consumption tends to collect around underutilized renewables infrastructure. This has great implications even as the industry matures into itself as mining could be the catalyst for new renewable developments in locations that would have been otherwise considered an economic or before the maturity of the industry itself
There has also been much discussion in recent times about cryptocurrency mining and renewable energy as it was revealed that 75 percent of crypto-related activities run on renewable energy which is contrary to the previous belief that crypto mining cryptocurrency was bad for the environment and not compatible with the future of renewable energy.