Cryptocurrency Miners Fleeing a Chinese Ban, Risk Expanding America's Carbon Footprint

The United States is now the country that leads in cryptocurrency mining following China's ban earlier this year, University of Cambridge researchers said Wednesday.

In an update to the Cambridge Bitcoin Electricity Consumption Index (CBECI), researchers with the Cambridge Centre for Alternative Finance (CCAF) said cryptocurrency mining in China has nearly disappeared after previously accounting for about 75 percent of the global share in September 2019. China's percentage of the global share was at about 38 percent before the country's ban was announced earlier this year, a number that other top cryptocurrency miners around the globe have since worked to replace.

The global Bitcoin network hashrate credited to the U.S. was just over 35 percent by the end of August, an increase of nearly 20 percent since April, CBECI researchers said. Kazakhstan and the Russian Federation follow the U.S. on the list of global leaders, with Canada, Ireland, Malaysia and Germany also each making up 4 percent or more of the global share.

The CBECI defines total hashrate as "the aggregate computing power of all mining hardware attempting to solve the puzzle at a given point in time." The amount of electricity Bitcoin uses can be estimated but not directly identified due to several variables in the cryptocurrency mining process, which include miner anonymity and the different kinds of tools they use.

"If the August data updates are an indication for the future, then that recovery will likely be further distributed predominantly between the largest share gainers—U.S., Kazakhstan and the Russian Federation," CCAF's Michel Rauchs wrote Wednesday.

Bitcoin's carbon footprint has been estimated to be equivalent to the annual carbon footprints of countries like New Zealand or the Netherlands, according to CNBC. Rauchs told CNBC earlier this year Bitcoin's "enormously large" energy demands were about 0.5 percent of the total amount of energy consumed worldwide. Even so, he added that the amount of energy used by Bitcoin was still less than the amount used in the U.S. by devices in the home that remain plugged in even while not in use.

While CBECI has advised caution for those who make "strong assertions" about the risks cryptocurrency pose to any country's carbon footprint, its researchers have noted efforts to address worries about Bitcoin's sustainability are likely to be driven by investors, with individual miners typically in pursuit of "cheap and stable power."

"In the future, the pursuit of a 'net-zero' emissions strategy may well turn into a competitive advantage as the world is moving toward decarbonization," CBECI said on its website. "In either case, operations will continue to be dictated by economic rather than ideological or environmental principles."

Despite concerns raised by some about the impact Bitcoin has on countries' carbon footprints, the digital asset management firm CoinShares has in the past argued cryptocurrency mining can be a "building block" in the shift toward renewable energy.

Newsweek reached out to CoinShares for comment and will update this article with any response.