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Norway Mulls Backing Sweden’s Call for Euro Ban on Crypto Mining

18/11/2021 by Idelto Editor

The government in Norway is considering ways to limit the environmental impact of cryptocurrency mining and may support Swedish proposals to that end, including a European ban on proof-of-work mining. The European Commission has revealed it is already working to promote a transition to “more sustainable” protocols.

Extensive Use of Renewable Energy for Mining Is Hard to Justify, Norway Minister Says

Authorities in Norway are mulling over potential policy measures to deal with the effects of crypto mining on the environment, the country’s minister responsible for local government and regional development has indicated. As part of the review, the Norwegian government intends to look into solutions recently put forward by Swedish regulators and work for common European rules. Speaking to Euronews Next, Minister Bjørn Arild Gram also stated:

Although crypto mining and its underlying technology might represent some possible benefits in the long run, it is difficult to justify the extensive use of renewable energy today.

Both countries, along with another Nordic nation, Iceland, have in the past few years become popular destinations for cryptocurrency miners. The region boasts abundant renewable energy resources and maintains relatively low electricity rates. According to Eurostat data for the first half of 2021, Norway offered the cheapest electricity for non-household consumers in the European Economic Area (EEA), with over 90% of its energy coming from hydroelectric power generation.

Bjørn Gram’s statement comes after the directors of Sweden’s financial services and environmental protection agencies called for imposing a ban on proof-of-work mining across the European Union, after a multifold increase of energy usage by bitcoin miners in the country this year. “Sweden needs the renewable energy targeted by crypto asset producers for the climate transition of our essential services, and increased use by miners threatens our ability to meet the Paris Agreement,” the officials warned.

“Overall, we want our renewable energy to be used in a way that creates value and that supports the transition to a climate neutral society,” Minister Gram elaborated. His comments are part of a heated discussion in Norway regarding the use of renewable energy to power digital coin minting after Oslo introduced tax breaks for data centers in 2016. The country’s new environment minister, Espen Barth Eide, has in the past expressed concerns over Norway becoming the “world’s Bitcoin mine” at the expense of its own power-intensive industries.

European Commission Urges Crypto Miners to Move Away From Proof-of-Work Concept

Regional Development Minister Bjørn Gram did not provide any specific details regarding the regulatory policies the Norwegian government is currently considering. But if Norway decides to follow in the footsteps of Sweden, it may result in a crackdown on crypto mining operations that require significant amounts of energy.

Meanwhile, the European Commission (EC), which would be responsible for enforcing crypto regulations in the EU, has admitted that it’s already encouraging the crypto mining industry to “migrate applications” from energy-intensive proof-of-work blockchains to less demanding protocols like proof-of-stake and hybrid consensus models, Euronews Next revealed. A spokesperson for the executive body told the publication that the EC is working to promote “more sustainable forms of blockchain technologies.”

The Commission, the representative added, has “ambitious emission reduction targets” and promotes the advancement of less energy-intensive blockchain technologies through funding for startups and direct development of a public sector blockchain network. Although the Paris Climate Agreement, referred to by Swedish regulators, does not ban crypto mining, Brussels is aware of developments in jurisdictions like China and will discuss the matter with EU member states, the official added.

Do you think Norway, Sweden, and the EU will impose restrictions on energy-intensive crypto mining? Share your expectations in the comments section below.

China Targets Crypto Mining at State-Owned Enterprises, Threatens Punitive Measures

17/11/2021 by Idelto Editor

Authorities in China are continuing to crack down on activities linked to cryptocurrencies which they consider illegal. The country’s top economic planning body has clearly indicated it intends to go after large-scale cryptocurrency mining taking place at government-operated industrial facilities.

State Firms Mining Crypto in China to Face Higher Electricity Bills

China’s National Development and Reform Commission (NDRC) announced Tuesday it plans to concentrate on the “comprehensive rectification” of state-run industrial enterprises involved in the extraction of digital currencies. The initiative is part of an ongoing crackdown on crypto-related operations that are banned in the People’s Republic.

The economic planner cited concerns over energy waste associated with crypto mining as well as financial activities linked to cryptocurrencies, reiterating these are deemed illegal in China. Virtual currency does not have the same status as legal currency, the commission emphasized, quoted by CGTN, the international arm of the national broadcaster, CCTV.

The NDRC noted that the disruption of crypto mining activities at state-owned companies will facilitate the optimization of China’s industrial structure. The commission also believes this will boost energy conservation and the reduction of emissions while helping the nation to achieve its carbon neutrality goals on schedule.

Digital coin minting consumes a lot of energy, the planning body further remarked. In order to discourage government-run entities from spending a lot of power on it, those that are now using subsidized electricity for crypto mining may face higher electricity rates in the future. Meng Wei, a spokesperson of the NDRC, revealed at a press conference that the commission intends to study the possibility of levying “punitive” tariffs as part of its preventive measures.

In early October, the National Development and Reform Commission proposed to add cryptocurrency mining to the country’s latest draft of the “Negative List for Market Access,” jointly released with the Chinese Ministry of Commerce. The move would make the industry off-limits to investors. The 2020 edition of the list consists of 123 industries, as Bitcoin.com News reported.

China banned cryptocurrency trading in 2017 but authorities did not interfere with crypto mining until earlier this year. In May, the State Council, the cabinet of ministers in Beijing, clamped down on the sector following President Xi Jinping’s pledge for the country to achieve carbon neutrality in the next four decades. In September, the People’s Bank of China reiterated its hardline stance on cryptocurrencies.

Along with the signing of the infrastructure bill by U.S. president Joe Biden, which concerns crypto taxation, the latest announcement by the NDRC in China has likely influenced cryptocurrency markets, which shed billions of dollars in capitalization. Major cryptocurrencies fell on Tuesday, when the coin with the largest market cap briefly dipped below $60,000. Bitcoin (BTC) is trading at a little over $60,500 at the time of writing.

Do you expect China to continue its crackdown on cryptocurrency mining? Let us know in the comments section below.

China’s Bitcoin Ban Is The Unnoticed Geopolitical Event Of The Decade

15/11/2021 by Idelto Editor

It may be under appreciated just how badly the autocratic government of China blundered with bitcoin.

The political and economic sun has been rising in the East over the past century with China playing an increasingly important role in global geopolitics. Despite this trend, I have long been skeptical of China’s centralized and autocratic governance structure, and 2021 could be a monumental year, exposing the frailties of excessive control. If Bitcoin proves to be as important a technology as I think it is, then the CCP’s decision to ban bitcoin mining could prove to be the biggest geopolitical faux pas of the next decade. In summary, while decentralized Bitcoin has displayed its resilience to regulation, bans and decreased the probability of a 51% attack, centralized China may have handed a critical technology of the future to its peers.

U.S.–China Conflict Is Not Just A Donald Trump Phenomenon

The U.S. and China have been at loggerheads in recent years with flashpoints over controlling companies, tariffs and trade, Xinjiang, the Olympics, coronavirus origins, Hong Kong, spying, Huawei, Taiwan, the South China Sea, TikTok and WeChat, Tibet, and so on. Hopefully the world’s two largest nations do not end in a hot war, but they will likely remain in a cold war for many years to come as the U.S. withdraws from its position as global hegemon, China rises in the East and we jostle for a new world order. Despite all this conflict, the geopolitics of bitcoin mining has fallen under the U.S.-China radar.

Bitcoin Geopolitics — Who Cares?

Most people do not properly comprehend Bitcoin — let alone politicians and mainstream media outlets — so ignorance of Bitcoin geopolitics is unsurprising. But just like Bitcoin is growing in financial and economic importance, so will its geopolitical significance.

There is a fascinating geopolitical shift underway in Bitcoin where power is shifting from the East to the West.

China and the U.S. are both trying to exert control over their populations. The Chinese centralized apparatus is far swifter and more effective than the U.S. Some would argue there are benefits to the Chinese approach — like fighting the COVID-19 pandemic — but there are certainly consequences too. While China is turning away bitcoin miners, Western entrepreneurs are capitalizing and entrenching this industry in the West.

“Strategic China” Has Ignored Innovation Because Of Centralized Governance

We have established over recent quarters that Bitcoin is a powerful technology with immense potential for the world. The future is uncertain, but a digital, decentralized, secure and scarce asset has the potential to be a cornerstone of a new digital financial infrastructure. With each passing cycle, the probability that Bitcoin has a role to play in global financial infrastructure increases and smart individuals, institutions and funds are securing their exposure to the network.

Miners are a critical component of the Bitcoin network; they secure the network and process transactions. At the start of the year, China sat in the kingmaker seat in this industry with approximately 75% of global bitcoin mining resources. This dominance was potentially a powerful tool for the Chinese economy. Yet in Q3 2021, China decided to ban bitcoin mining. Rather than tax, coerce or confiscate the equipment, miners were allowed to leave China en masse in Q3 2021.

The reasoning for China’s decision is uncertain but what we do know is that it would be very difficult to execute this type of blanket ban in a moderately free country. Imagine your country wiping out an industry at a whim. The U.S. is struggling to pass an infrastructure bill; how are they going to pass a ban on an asset they do not even understand? I wrote more about this in “Worried About A Ban? Then You Need Bitcoin More Than You Think.”

The Western world is far too swayed by tax revenue, fear of making mistakes and immediate political pressures to implement a blanket ban on bitcoin mining. By contrast, China is only able to implement a ban because it is centralized and autocratic. I expect this rash centralized decision could be the biggest geopolitical faux pas of the next decade, ceding technological power and resources to global peers.

Bitcoin Miners Could Have A Profound Impact On The Energy Industry

Not only do miners secure the network, they convert energy into a digital monetary network, which has potentially profound implications for the broader energy industry. I recommend reading Nic Carter’s recent article “Bitcoin Mining Is Reshaping The Energy Industry And No One Is Talking About It” for more information . I also covered much of this ground in “The ESG Solution.”

1) Miners can utilize energy at times when normal consumers have low demand. Often this energy is wasted because we do not have a cost effective means of large-scale energy storage nor long-distance transportation.

2) Miners can provide a base load for intermittent electricity producers. Renewable energy producers are often the most intermittent, so miners can support renewables investment and ESG goals.

3) Miners can make an energy grid more robust because they can also be turned off if energy is required elsewhere.

China has just handed over one of the most exciting new industries to the rest of the world. Miners have relocated across the globe, and the U.S. has been the biggest beneficiary. Most U.S. politicians probably have no idea what is going on, but some do. I know Ted Cruz is not everyone’s cup of tea but listen to this interview he gave on bitcoin mining. I think he understands a thing or two about the potential positive impact mining could have in America.

Key Implications

Prior to this shift, a 51% attack on the Bitcoin network was already an unlikely event. But with China holding 75% of global hashing power, a nation-state coordinated 51% attack was a possibility.
Bitcoin mining is far more decentralized and the likelihood of a 51% attack has reduced, enhancing Bitcoin security.
Bitcoin displayed resilience to a massive reduction in hash rate (a measure of bitcoin mining power), processing transactions as normal through Q3 2021.
After falling more than 50%, hash rate has recovered to within 10% of its previous peak, further solidifying the resilience of Bitcoin.

China’s actions highlight the risks of centralized autocratic governance.
Western political governance is in an awful state itself, but the more decentralized nature of the political and economic processes, with greater respect for property rights, is more robust than in a centralized system. Entrepreneurs can capitalize on these opportunities and those entrepreneurial risks benefit society long term through a more robust energy grid, economic growth, employment opportunities, and more.
Certain Western politicians might not like Bitcoin, but it continues to become more entrenched economically, financially and politically in Western countries. Plus, for each politician who is Bitcoin negative, there is another who is substantially more positive and knowledgeable.
China may have handed a strategic global resource of the future to the rest of the globe. Transaction verification of the world’s first decentralized value storage and transfer network, plus the ability to convert surplus energy into a monetary network could revolutionize the energy industry in the years ahead, but China will play no part in that. Perhaps the sun does not rise in the East after all?

Conclusions

Bitcoin mining is far more decentralized after the China mining ban.
The likelihood of a 51% attack has reduced, enhancing Bitcoin’s security.
Bitcoin displayed resilience to a massive reduction in hash rate, processing transactions as normal through Q3 2021.
China’s actions highlight the risks of centralized autocratic governance.
Western entrepreneurs have capitalized, benefiting society long term, no matter the views of their politicians.
Bitcoin continues to become more entrenched economically, financially and politically in Western countries.
China may have handed a strategic global resource of the future to the rest of the globe.

This is a guest post by Rob Price. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

Swedish Regulators Call for EU Ban on Crypto Mining, Power Company Defends Industry

10/11/2021 by Idelto Editor

Alarmed by the rising energy needs of cryptocurrency mining, Sweden’s financial and environmental regulators have recently proposed an EU-wide ban on proof-of-work coin minting. The Swedish officials believe this would encourage a move towards a more energy-efficient extraction of bitcoin while supporting the transition towards climate neutrality in Sweden and Europe. A state-run power company warns, however, that restrictions could have an adverse effect on global carbon emissions.

Expensive Bitcoin Generates More Emissions, Swedish Authorities Allege

The rising value of crypto assets attracts more businesses to join the competition to solve the encryption puzzle at the core of cryptocurrency mining while the proof-of-work method is the main reason for its high energy consumption. The remarks come from a joint statement by the director generals of Sweden’s Financial Supervisory Authority and Environmental Protection Agency, Erik Thedéen and Björn Risinger.

The two officials have recently issued a call for the prohibition of energy-intensive mining of digital currencies across the European Union, citing various concerns including the migration of miners to other destinations after China’s crackdown. In the Nordic region, for example, their appetite for renewable energy could undermine the transition towards climate neutrality and the efforts to meet the Paris Agreement goals.

The government executives quote different estimates highlighting the power-hungry nature of crypto mining such as the one that Bitcoin and Ethereum together use around twice as much electricity as Sweden or the claim that a mid-size electric car can be driven 1.8 million kilometers with the energy burned to mint a single bitcoin. They further point out:

Our conclusion is that policy measures are required to address the harms caused by the proof-of-work mining method. It is important that both Sweden and the EU can use our renewable energy where it provides the greatest benefit for society as a whole.

Thedéen and Risinger believe that governments have several policy options to address the issue. “For instance, Sweden and other countries could introduce a tax on the energy-intensive production of bitcoin. Another option is to communicate more widely around the climate problems related to crypto-assets, in the hope that this will lead to both producers and investors demanding a shift to mining methods that require less energy,” they elaborate.

As demand for crypto assets continues to grow at a fast pace, however, the Swedish officials are worried that neither of these moves would adequately limit the harm caused to the environment. “The emissions need to stop here and now, and renewable energy needs to be used for the climate transition of essential services.”

The heads of the Swedish regulatory bodies have called on the EU to consider a blanket ban on proof-of-work mining. Other methods, they insist, can reduce energy consumption by over 99%. The directors want Sweden to halt the establishment of new facilities employing energy-intensive coin minting methods. They also propose to prohibit companies from trading and investing in crypto assets mined with a proof-of-work process to advertise themselves and their activities as sustainable.

Such steps could encourage crypto miners to relocate to other countries and increase global carbon emissions anyway, the authors of the proposal have admitted. Nevertheless, they think Sweden and the EU should set an example for other countries and regions. Thedéen and Risinger emphasize:

A ban on the proof of work mining method within the EU could be an important first step in a global move towards a greater use of more energy-efficient crypto mining methods. It would also mean that our renewable energy is used as efficiently as possible in order to support the transition towards climate neutrality.

According to the statement published by Finansinspektionen, electricity consumption in Sweden’s bitcoin mining sector has increased significantly, already reaching 1 TWh annually. This amount of energy would be sufficient to satisfy the power needs of at least 200,000 households, the Swedish regulators calculate.

Meanwhile, the country’s state-owned power generation company Vattenfall has defended cryptocurrency mining. It views bitcoin extraction as an industrial activity that can actually help electricity producers to overcome some of the challenges they are facing. Henrik Juhlin, head of Physical Power Management at Vattenfall, told the Swedish public broadcaster SVT that mining has the potential to balance loads on electrical grids.

This is the case when power supply varies, sometimes exceeding demand, and is especially valid for countries like Sweden which increasingly use renewable sources. Wind and solar power generation depend on factors that are beyond human control and consumption by crypto farms can play the role of a buffer at times when there is a surplus of available electricity. Juhlin also warned that banning crypto mining in the EU could in fact increase carbon emissions around the world as the industry could relocate to regions relying on fossil fuels such as coal.

Do you think Sweden’s proposal for an EU ban on proof-of-work crypto mining will gather support from other member states? Share your thoughts on the subject in the comments section below.

Why Russia Is Benefiting From The Great Chinese Bitcoin Miner Migration

01/11/2021 by Idelto Editor

Russia has increased its hash rate because of miners fleeing from China due to the country’s ban against Bitcoin mining.

Its been less than six months since China’s May 2021 crackdown on bitcoin mining, resulting in the greatest shakeup in the network’s history.

According to Cambridge University’s Center for Alternative Finance (CFAF), since May, the US has pulled into first place for bitcoin mining with 35% of the global hashrate, while China has gone from 45% to zero.

Although Kazakhstan is currently in second place with 18% of the network’s mining, the small country is running out of energy and has asked that the mining sector reduce their consumption to a total of 100MW, giving each farm 1MW over two years.`

That leaves Russia coming up fast with 11% of the network’s hashing, up from 7%, and likely to bypass Kazakhstan at some point as its northern region of Siberia has abundant amounts of stranded hydroelectric power, much like the now abandoned mining area of Xinjiang, China.

Why Russia Is A Natural Mining Destination

When it comes to proof of work mining, there’s nowhere better suited than Russia’s Siberia Irkutsk region, where most mining in Russia takes place. Its abundance of stranded hydroelectric power (estimates are only 20% is used now) makes it a destination of choice for environmentally conscious miners.

The climate couldn’t be more ideal — cooling large numbers of ASICs is a growing challenge for the industry with bigger ops looking at immersion cooling to compensate for the heat generated by running so many computers in one place.

Large quantities of stranded energy, mostly hydroelectric dams are going unused and leftover from the Soviet Union’s industrialization drive in the 1920s. They’re still producing energy but there’s no market close enough to benefit.

The Russian government has welcomed miners despite their prohibition on bitcoin as a currency.

Bitriver Mining

In a recent release, bitcoin miner Bitriver, headquartered in Zug, Switzerland, with offices in Moscow, who is currently mining in the Irkutsk region of Siberia, said:

“Russian authorities have attributed a massive increase in retail energy consumption to crackdowns in China and a surge in underground cryptocurrency mining operations that take advantage of cheap retail electricity in some regions while overloading the regional grid — increasing the risk of accidents and emergencies.”

BitRiver, Russia’s biggest mining company provides a hosting service and equipment at its flagship 100MW data center in the city of Bratsk, along with other smaller sites, for mining companies from the US, Europe, and Japan who want to take advantage of the region’s cheap energy.

Bitriver Has Abundant Cheap Green Power

Bitriver has committed to using only green energy mining and says in its release:

“BitRiver is the world’s largest colocation services provider for green cryptocurrency mining. It utilizes renewable energy to power roughly 90% of its colocation facilities located in the Siberian region.”

Siberia has gigawatts of surplus hydroelectric power thanks to massive hydroelectric power plants that were among the world’s biggest when they were built (during the Soviet era).

Russia is also the second country in the world in terms of hydroelectric potential, yet only 20% of this potential is developed (Russia still accounts for over 9% of the world’s hydroelectricity generation and most of this comes from the Siberian region).

Asked about working with Russian authorities, BitRiver CEO Igor Runets commented:

“Bitriver fully supports this new effort of the government because it believes that these efforts could serve as a stepping stone for healthy regulation.”

“The government has continued to embrace and regulate cryptocurrency mining. As a result, mining operations provide co-location services for miners from all over the world instead of mining for themselves. This positions Russia even better as an ideal location for anybody in the world to host his/her miners.”

Current legislation in Russia does not hamper us in any way,” said Runets. “It allows us to host foreign clients’ computing equipment on Russian territory with settlements for this in dollars or roubles.”

As noted on Bitriver’s website:

“We buy electricity at wholesale price. We actively cooperate with the Bratsk city administration and contribute to the city’s development. We also pay all our due taxes.”

Runets is happy to be participating in a new surge of mining in Russia. In his release he notes:

“Legitimate mining operations rack up industrial electricity rates that are up to thrice the retail electricity rates in the Siberian regions of Russia. Such operations generate high-skilled jobs and attract foreign investments, contributing to the development of the local economies.”