Bitcoin Mining: China’s Mining Migration Explained

bitcoin mining hat
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You are here wondering how bad bitcoin mining is, simply because you are curious.

Or because you just heard about the Great Mining Migration happening in China right now.

MINING, whether it’s coal, gold, or even cryptocurrency, has a negative connotation attached to it.

This is due to its devastating environmental effects.

All it took was one tweet from Elon Musk, citing the usage of fossil fuels in crypto mining, for Bitcoin prices to plummet.

However, new data reveals that the bitcoin mining process is itself undergoing a positive evolution. In fact, there are several new cryptocurrency facilities under construction in rural Texas.

Before we delve deeper into the hows and whys, let’s quickly glide over what bitcoin mining is.

Bitcoin Mining : What is it?

As you may be aware, Blockchain is the underlying technology of bitcoin. 

A blockchain is in its simplest terms, a decentralized ledger (kind of like a financial log book) that records all transactions that happen within it. These transactions are recorded in a chronological order.

The system is so secure that transactions that have happened in the past cannot be altered or modified.

However, any new transaction MUST undergo a process of verification. After this, they are approved and recorded in the blockchain.

The verification process involves a “proof of work”, an extremely complex mathematical puzzle. The miners are basically participants in the network who compete with each other to solve this puzzle.

These miners possess necessary hardware and massive computing power to make these verifications happen.

Here’s why Bitcoin mining is getting popular

The process of authenticating a transaction (aka verification) happens when there is consensus among other participants in the network. The “proof of work” submitted is a result of a competition between these participants (also known as ‘nodes’). And for every approved “proof of work”, the miner who solved the puzzle gets rewarded. 

Remember that the current supply limit of Bitcoin is 21 million, out of which 18.80 million BTCs (as of 2021-08-31 | 16:28:06 UTC)  have already been mined. Think of the gold analogy, where there is a limited supply of gold on earth, but only a portion of it has been mined.

With every proof of work approved, the miner who solved the puzzle gets 6.25 freshly minted BTCs. This means that 6.25 BTCs are now newly generated and added to the existing number of BTCs in the network.

And here’s why it became infamous

The addition of new BTCs also means that we are reaching the hard limit of 21 million BTCs fast. To slow down the timer, every 4 years, the reward is halved. So by 2024, the value of the reward goes down to 3.125 BTCs.

This implies that to get the present value of a reward (depending on the market price), miners would need to be able to produce more proof of work, faster. Additionally, the difficulty level of these mathematical problems was turned up by 7% this month compared to July 2021. This also means that computers would probably have to run longer too!

Add in the fact that the odds of solving the problem are about 1 in 17 trillion. You can imagine the galactic amount of computational power needed to authenticate these transactions.

This is why recently there has been an increase in the number of dedicated mining centres. These centres continuously run hundreds of computers at once to produce outputs fast.

Naturally the electricity consumption to keep these computers running soared. It was found that in July 2021, the energy consumption required for a SINGLE Bitcoin transaction was equal to “59 days’ worth of power consumed by an average U.S. household!”


Okay, so with this information in mind, you may be able to figure out why globally, bitcoin mining is considered detrimental to the planet’s health. With more miners joining in to reap the juicy benefits, electricity consumption and the subsequent carbon emissions are hitting the roof.

Why China?

We now know that more computational power is directly proportional to an exorbitant electricity bill.

Now imagine a place where you can set up and run a large mining facility at a fraction of a cost.

That place is China.

China, within 4 of its provinces, was harboring more than half of the world’s bitcoin miners. This translates to about 70% of the global computational power used to mine and process crypto.

The problem here was that most of the energy was being sourced from fossil fuels, coal, and other non renewable resources resulting in increased carbon emissions. Although there were some greener alternatives like hydropower in the mix, non renewable resources took the cake.

So is the Migration Happening as an Effort to Reduce Environmental Damage?

YES and NO.

YES, because with growing concerns over the environmental issues, the need to find a greener alternative was quickly becoming incessant.

NO, because experts speculate that China was essentially driving out commercial use of cryptocurrency. This was due to the fear of a decentralized currency becoming a threat to the country’s current financial model, considering the speed at which cryptocurrencies were mined.
Or as some experts believe, the shutdown came as an attempt to boot their own centrally regulated digital currency – The Digital Yuan.

Howdy Texas!

Naturally, miners from China are now migrating their systems to the US, particularly rural Texas.

Energy consumption is still going to be equal or even more than what was happening in China. However, the sources of energy will fairly remain cheap and non-renewable.

Here’s why.

  • Cheap Energy – Texas’s power grids are deregulated, meaning there is no single entity controlling the prices and supply of electricity. This means miners can essentially choose between various providers. Additionally, the government provides incentives to these suppliers to lower their prices owing to the area’s economic development.
  • Green Energy – Out of the state-wise renewable energy production in the United States, Texas topped the list contributing around 28% of the total wind energy!

    This is the green alternative that transfixed miners to set up base in Texas. This is also an ethical nod to investors who were screaming for clean energy.

Along with the already existing subsidies provided to adopt renewable energy, more ventures are exploring the possibility of including turbine and solar powered mining facilities in Texas.  

From an environmental PoV, this means carbon emissions are slashed. And from a profit point of view, the cost of renewable energy tends to fall too in the long run.

Does this seem like a Win-Win situation?

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