Investment and research company CoinShares presented a report “The Bitcoin Mining Network – Trends, Composition, Marginal Creation Cost, Electricity Consumption & Sources”, which states that most companies use energy from renewable sources for cryptocurrency mining.
In the context of Bitcoin mining, the company analyzed the geographical distribution of mining companies, energy efficiency, and associated resources. In addition, the document describes trends associated with hash rate, marginal cost, equipment cost, and its effectiveness.
The CoinShares report begins with a statement of the fact that in the second half of this year, several new-generation miner models appeared on the market. They have much higher efficiency and computing power, expressed in Giga Hash per joule (GH/J) and Tera Hash per second (TH/s), respectively.
Also in the image above in Figure 2, it is shown that the indicator $/TH/s decreases over time. This means that productive equipment becomes more affordable.
The researchers also concluded that at a bitcoin price of $4,000, the average miner works at a loss and is not able to recover capital costs. On the other hand, CoinShares recognizes that, under certain conditions, bitcoin mining can remain profitable.
Mining in China
Researchers studied the distribution of mining capacity by geography. The company notes that many miners are leaving China, moving to Scandinavia, Russia, Canada, and the USA, where there is access to excess and cheap electricity, where there are a more friendly regulatory environment, fast Internet and a cold climate. China is not the same.
According to CoinShares, at present no more than 60% of the total number of Bitcoin miners are concentrated in China. Moreover, 80% of their number are located in the province of Sichuan.
Some of them mine digital gold in southeastern Yunnan province, southwest Guizhou, and also in Tibet, the northwestern autonomous region of Xinjiang, Inner Mongolia, and Heilongjiang province. In other regions of the PRC, confident in CoinShares, a small number of miners are valid.
CoinShares also analyzed the use of renewable energy sources by miners. For example, in China over the past ten years, the use of such sources has been purposefully reduced due to the risk of overload and failure of the energy infrastructure.
In some regions, the percentage of cuts in renewable energy production exceeds 30%. This, in turn, makes the extraction of electricity from “green” sources less profitable.
The table below in percentages shows the limits on the extraction of wind and solar energy in different regions of China:
For local miners, however, it is the regions with a high percentage of reduction that are attractive, because there you can buy excess energy at low prices.
In the table below, researchers list the level of development of renewable electricity in various regions of China and in some countries:
According to CoinShares, the proportion of Sichuan in the global mining of Bitcoin, using renewable energy is 43.2%. The share of the remaining Chinese provinces in this context is only 5.7%, Western countries – 27.8%, and the rest of the world – 0.9%. Thus, the researchers conclude that a total of 77.6% of mining farms use renewable energy for bitcoin mining.Leave a comment