Last year, Chinese President Xi Jinping announced that China plans to become carbon neutral by 2060 and called for a green revolution.
A properly executed plan could finally help China get rid of its biggest pollutants and radically improve the global ecosystem, which could also revolutionize the country’s renowned bitcoin mining (BTC) industry.
The most famous mining center in China is the southern province of Sichuan, which has a rich hydropower sector. However, electricity is especially cheap there only during the rainy season, which occurs from May to September. Outside of this period, most miners migrate north to Xinjiang and Inner Mongolia, which currently generate over 40% of the total bitcoin hash rate. Unlike Sichuan, these desert regions depend on non-renewable energy sources such as coal. If the government continues to push for carbon-free emissions, mining will be ineffective and local actors will have far fewer alternatives.
The future of bitcoin mining in green
As the world finally learns the hard facts about climate change and anthropogenic CO2 emissions, continued access to renewable energy will become one of the most important factors in Bitcoin mining. But are there places that can satisfy this requirement?
Let’s take a look at a bitcoin mining map that provides an accurate estimate of the geographic distribution of the global hash rate of BTC. Of course, China is the undisputed king, accounting for over 65%. The USA, Russia and Kazakhstan follow with 7.24%, 6.90% and 6.17% respectively.
The Commonwealth of Independent States or the CIS region, which includes both Russia and Kazakhstan, appears to be particularly ignored by international players, mainly due to the lack of information on local mountainous areas.
As in northern China, electricity in Kazakhstan is mainly generated by coal-fired power plants. It’s cheap but not sustainable. Local authorities have also disrupted the electricity market by cutting tariffs and costs, which means they can eventually recover.
On the other hand, Russia has many natural conditions for cheap renewable electricity, as well as a more stable economic environment.
Cool and lively
If you ask me to mention one thing that the Soviet Union was good at, I would say industrial infrastructure.
Most of Russia’s bitcoin mining takes place in the popular region of Siberia, which has also been an important aluminum production site since the 1960s. Due to the consumption of energy in the production of aluminum, the Soviet Union decided to build metallurgical plants in Siberia next to hydroelectric power plants (up to 9% of the world’s water resources are concentrated in Russia, especially in Siberia and the Far East).
Since then, the technology for smelting aluminum has undergone changes, making production more energy efficient. This, coupled with the fact that the Soviet government often allowed future growth in infrastructure construction, is the key to a region that has a lot of power today. According to RusHydro, the second largest hydropower producer in the world, the total installed capacity of hydropower units in Russia is currently around 45 million kilowatts. In particular, it is estimated that hydroelectric power plants in Siberia produce about 10% of the total production of all power plants controlled by the Unified National Electric Grid.
Another important aspect is the notorious climate of Siberia, where it is cooler nine months a year. If anything is right for this kind of weather, it houses a data center filled with large, fully functional ASIC machines. Anyone who has tried mining at home during the summer will probably understand what I mean.
China is an ally
Russia’s proximity to China is also a huge advantage, as it produces the best production there.
Historically, Moscow has had a strong economic relationship with Beijing that continues to grow to this day. Shipping between the two countries is cheap, fast and stable, with freight trains and cargo planes continuing to run despite the COVID-19 pandemic.
Imagine sending thousands of rigs to Texas from Beijing, given that the United States is in a trade war with China and has imposed a whopping 25% tariff on imported mining equipment.
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Compared to the United States, the operating and capital costs of maintaining a data center in Russia are much lower, mainly because local labor and construction costs are cheaper.
What’s more, if your rig fails, you don’t even have to return it to China, and you will spend several weeks (and this is the era in Bitcoin mining).