State of Cryptocurrency Mining
This is a recap of a meetup at Tsinghua University organized by TIBA.
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“You will lose money” if you don’t buy Bitcoin today.
That is according to Kevin Guo, chairman of non-profit organization the China Blockchain Application Center (CBAC).
“Older generations you can see, if don’t buy stocks, you will lose money. But today, if you don’t buy Bitcoin, you will lose money,” Guo said on Nov. 21 at an event held by the Tsinghua International Blockchain Association (TIBA) and the Blockchain Association of Tsinghua Students (BATS) at xSpace at Tsinghua University.
Guo delivered the keynote address which focused on Bitcoin mining. Mining is essentially collecting financial transactions into a block, chaining this block into Bitcoin’s ledger, and sealing it by solving a puzzle of considerable difficulty.
Bitcoin mining is sometimes criticized for using too much power. The carbon footprint of Bitcoin mining last year was the same as Estonia’s, but new research suggests its climate change impact might be less than initially thought.
Guo believes the carbon footprint of Bitcoin mining is a drop in the bucket compared to the U.S. spending $648 billion on its military in 2018 to “keep the position of the U.S. dollar.”
“Each search in Google, the energy you used, can boil one bottle of water,” Guo claimed.
Nature reported in 2018 that information and communications technology (ICT) accounts for over 2% of global emissions and could rise to 8% by 2030. A recent study by cryptocurrency asset managers CoinShares found 74.1% of the electricity used by Bitcoin comes from clean sources.
China is home to over 70% of the world’s Bitcoin miners. China President Xi Jinping said on Oct. 25 blockchain would play “an important role in the next round of technological innovation and industrial transformation.”
But Guo said Bitcoin faces two challenges in China: A lack of liquidity and increasing centralization. He believes moving offline markets to cloud mining to release liquidity and standardizing the mining industry to allow more people to take part and break centralization could be a solution.
Miners continue despite these challenges, because Bitcoins mining costs are worth about 40% of the price of Bitcoin, Guo said.
Thomas Heller, global business director of mining pool F2Pool, said Bitcoin has proven itself over the past decade.
“It’s proved itself to be a very strong network using proof of work,” Heller said.
According to Yuanjie Zhang, COO of public blockchain platform Conflux, the Chinese government is open to working with cryptocurrency if companies protect citizens and its investors.
Nishant Sharma, Head of PR for semiconductor company Bitmain, said decentralization is part of the Bitcoin and blockchain systems to share the power.
“They are way less corruptible than systems without blockchain,” Sharma said. “There’s nothing wrong with getting systems to be more decentralized, but we shouldn’t forget why we are doing decentralization.”
TIBA is the International Students Blockchain Association from Tsinghua University. Our goal is to bridge the gap between students and the industry, between the Chinese and international communities, and to help everyone work together to realize the potential of blockchain.
This article was written by Nico Gous and edited by Péter Garamvölgyi. Photos were taken by Jason from 360Power.