Crypto News | Bitcoin Mining & Growing Electricity Demands

It is no secret that Bitcoin mining hogs a lot of resources. If it weren’t so, everybody would be doing it. The year so far has been particularly harsh on miners, with low Bitcoin prices dragging mining companies below the line of profitability. With BTC looking rather bearish lately and slowly but surely approaching $8,000 (at $8,118 as of press time), mining businesses could once again find themselves in the red. Back in March, CNBC reported that the break-even cost of Bitcoin mining is around $8,000. This is corroborated by an earlier report by 99Bitcoins, which calculated that, at Bitcoin’s Feb 26 exchange rate of around $8,500, a smaller mining business would either be breaking even or losing some money.

While the price of mining hardware plays a vital role when it comes to profitability, the cost of electricity is a much more important factor. But how much electricity does Bitcoin mining require?

According to a report published on LiveMint, Bitcoin mining currently uses at 2.55 gigawatts of power. That is equal to the total electricity requirements of Ireland. Alex de Vries, a Dutch economists and blockchain specialist working for PwC, calculated that Bitcoin mining could be consuming 0.5% of the world’s electricity by the end of 2018, with the network’s usage growing to 7.7 gigawatts. As shocking as that may sound, de Vries believes that Bitcoin mining may consume up to 5% of the world’s electricity in the future, as long as the price of BTC keeps growing by as much as some experts have been predicting.

Bitcoin miners certainly are faced with many challenges. Unfortunately, in many countries, including the US, China, and South Korea, both individuals and mining companies sometimes engage in illicit activities to take advantage of cheap electricity. Last month, five miners were arrested in South Korea for operating a mining facility under the guise of a chicken farm in Nam Yang city. Both factories and chicken farms can access cheaper electricity in some parts of South Korea.

But enough with the mining stories. Let’s move on to how different countries are handling potential central bank cryptocurrencies, a very hot topic at the moment.

On May 17, Reuters reported that the Swiss Finance Ministry may soon be conducting research on whether issuing a state-backed cryptocurrency, the so-called “e-Franc”, might be a good idea. The research has been requested by the Federal Council of the Government of Switzerland, and now it is pending approval by the lower house of the Swiss parliament. While traditional financial institutions in the country have been wary of cryptocurrencies, some, such as Romeo Lacher, chairman of the Swiss stock exchange SIX, believe that a state-backed cryptocurrency would be good for the economy.

In China, Sheng Songcheng, a senior counselor at the People’s Bank of China (PBoC), said that the government must have monopoly over currency issuance at all times. In his view, decentralization threatens the ability of the government to direct monetary policy and use that tool to shape economic policy. Earlier this year, the PBoC revealed its plans to release a state-owned cryptocurrency.

Meanwhile in the US, on May 17, CoinDesk reported on Lael Brainard, who serves as member of the board of governors at the U.S. Federal Reserve, saying that there is no need for a state-issues cryptocurrency. She also mentioned several times that she does not believe that cryptocurrencies pose a threat to financial stability.

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Author: Max Rothstein

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