Bitcoin Mining Scheduled to Come Under Fire on Capital Hill
It’s been a busy turn of the year for the cryptos, Bitcoin (BTC) miners, and regulators across the globe. While regulators, including the Bank of England, look for unified drive to create a global regulatory framework, Bitcoin mining has also hit the news.
Bitcoin Mining and Regulatory Activity
At the turn of the year, the Kosovo government banned all crypto mining due to an ongoing energy crisis. Also, at the start of the year, news hit the wires of an internet blackout in Kazakhstan, the world’s 2nd largest Bitcoin mining nation.
The news coincided with news hitting the wires of a U.S Congress sub-committee preparing a hearing to assess the impact of crypto mining and cryptos on the environment.
Last summer, the Chinese government had banned Bitcoin mining due to the impact of mining on the environment. At that time, China had been the largest Bitcoin mining nation, with China having accounted for as much as 75% of the global Bitcoin hashrate. China has a goal of becoming carbon neutral by 2060.
As a result of the ban, the U.S became the largest Bitcoin mining nation. According to Cambridge Centre for Alternative Finance, the U.S accounted for 35.4% of the global hashrate in August 2021. Before the China’s government’s ban on Bitcoin mining, the U.S had accounted for just 16.8% of global mining back in April 2021.
Bitcoin Mining and the Numbers
With cryptos already in the of sights of the U.S government, it was only a matter of time before Bitcoin mining became an area of focus.
As we have previously covered, some key mining stats are worth considering:
- According to Columbia Climate School, Bitcoin (BTC) is thought to consume 707KwH per transaction. In addition, there are also mining computers that heat up and need cooling.
- The University of Cambridge estimated that Bitcoin (BTC) mining consumes 121.36 terawatt-hours (TWh) per year. Based on this estimate, if Bitcoin were a country, it would be a top 30 energy consumer.
- It is estimated that Bitcoin (BTC) mining yields 22m to 22.9m metric tons of CO2 emissions each year.
- In terms of global warming, Bitcoin (BTC) mining could push global warming above 2 degrees centigrade in less than 3-decades.
House Committee on Energy & Commerce
Following December’s Stablecoins Committee Hearing, the Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce has announced a hearing titled “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains”.
The hearing is scheduled for Thursday, 20th January at 1030am. With China having banned Bitcoin mining in a bid to meet its carbon neutral aspirations, the focus will likely be on the environmental impact. Regulatory aspects of cryptos, however, will also likely be discussed.
A blanket ban on crypto mining would have a material impact on Bitcoin. More significantly, however, would be whether any ban is immediate or phased in. A phased in ban would give miners the opportunity to relocate mining resources. Last week we had explored Russia and the CIS as a possible alternative to the U.S, with Kazakhstan already accounting for 18.1% of global Bitcoin mining.
Bitcoin (BTC) Price Action
With Bitcoin and the broader crypto market having been under pressure since November, we can expect the markets to be sensitive to updates from the hearing.
An outright ban would certainly be Bitcoin negative. Much, however, will depend on the speed with which Bitcoin miners can redirect mining resources.
At the time of writing, Bitcoin was down by 0.49% to $42,888. A move back through to $45,000 levels would bring January’s high $47,979 into play. Failure to move back through to $45,000 levels will likely leave Bitcoin under pressure. A negative outcome to the sub-committee hearing could see Bitcoin fall back to sub-$40,000 levels and revisit the current month low $39,668.