American miners face challenges from China

The crypto mining industry started to explode in the US and Canada, offering competition to Chinese mines that control more than half of the world’s hashing power.
In March, Neptune Digital Assets and Link Global announced the construction of a 5 MW Bitcoin mine in Alberta, Canada. CEO Cale Moodie of Neptune Digital Assets at the time emphasized the importance of global pressure in building Bitcoin mining pools spread around the world.

Recently, an investment of over $ 200 million has been made to build a mine in the US. This trend is increasing rapidly in North America, according to CoinShares chief strategy officer Meltem Demirors. In March, the US state of Kentucky also passed two bills to reduce taxes for cryptocurrency miners, in order to attract more local workers. With capital released, the construction of a large-scale Bitcoin mining industry in North America has never been so explosive. What happened? China now accounts for 65% of the global Bitcoin mining size, compared with just 7.24% for the US. The exact number may not be the same according to reports from the US and China, but the fact is that the US is far behind on this front. China accounts for 65% of the total global Bitcoin mining capacity (source: Cambridge University) In the early days of cryptocurrencies, American miners were still wondering if their hashrate was paid when contributing to the mining pool. In many cases, miners are paid less than their efforts. Since Bitcoin uses proof of work (PoW), the hash rate becomes what determines what percentage of the miner’s effort is paid off. Proof-of-Work ̣ (PoW) is a consensus algorithm created in the blockchain network, used to validate transactions and produce new blocks in the chain. Meanwhile, hash rate is a measure of the algorithmic ability of a cryptocurrency miner like Bitcoin. Because bitcoin mining involves solving algorithms to confirm transactions, it requires powerful equipment to help find the required hash in the shortest amount of time. But China started to exploit very quickly thanks to cheap labor and electricity prices without having to worry too much about external problems. The country currently leads the world, accounting for about 30% of hydroelectricity and 50% of its coal-fired power generation capacity. The problem of the environment In North America, any act of harmful to the environment is put on the radar of the activists. When the virtual currency craze exploded, Bitcoin mining, which consumes electricity and emits greenhouse gases, quickly became the focus of criticism. Meanwhile, electricity consumption for Bitcoin mining in China will peak at 296.59 TWh by 2024, according to Nature Communications. This exceeds total energy consumption in 2016 by Italy and Saudi Arabia combined. In March, the Bank of America criticized the consumption of one Bitcoin at a price of $ 50,000 for carbon emissions equivalent to 270 tons, equivalent to the internal combustion engines of 60 cars. The PoW mechanism causes Bitcoin transactions to require miners to compete for an algorithm to validate the block on the chain. In return, they are rewarded with Bitcoins for completing difficult problems. So, machines like the ASIC are specifically designed to do this, and they consume tremendous amounts of power. This is actually a security enhancement of PoW, not a bug. If the answers called hashes are too easy to solve, the blockchain network is vulnerable to attack by hackers. However, using a lot of energy isn’t necessarily a bad thing. A company called Crusoe Energy has developed technology to “capture” gas in the central atmosphere at oil wells and use it to power on-site data centers. The company deployed projects in Colorado, Montana, Wyoming, and North Dakota and resulted in a 72% reduction in CO2 emissions compared to burning it. Bitcoin mining is essentially power consuming because it runs 24/7 and needs stable and constant energy sources. Another advantage of Bitcoin is that it uses energy in places far from residential, like mining mines located in remote areas in Xinjiang, China. The big problem today is that Bitcoin is still using fossil fuels and enrich these companies. Only 39% of total energy consumption comes from renewable sources such as wind, water, and solar, according to research from Cambridge University. But even if Bitcoin mining runs entirely on renewable energy, it will create increasing demand for ASICs and disrupt the global supply chain of semiconductors. The end result is a pile of electronic waste that no single green energy source can deal with. The problem could be under control if the industry’s focus was shifted from China to the US, where environmental activists play an active role in curbing energy consumption and carbon emissions. school. Security risks? Aside from the environment, another danger lies in Bitcoin’s consensus mechanism with more than half of the network hashes located in China. That makes it possible for China to control the protocol and reverse transactions. This is a disgrace to Americans when the Internet revolution was initiated in the country of chess, but in the age of cryptocurrencies, China is in control of the game. Cryptocurrency attacks, known as 51% attacks, target a weakness in PoW’s consensus mechanism when a group of people has more than 50% of their hash power. In such attacks, the attacker does not actually steal the virtual currency, but just spends twice the amount he has by executing two transactions simultaneously to two different wallets and defrauding the system. But any exchange with good liquidity can prevent such an attack by setting a withdrawal limit. In the future, the competition of semiconductor chip factories creating more 4.0 shovels is expected to help this industry have global coverage. The end of PoW? Will the PoW mechanism be out of date? After all, Ethereum is emerging with the second largest market cap, preparing to move to a Proof-of-Stake mechanism that significantly reduces energy consumption and speeds up transactions. This mechanism makes it possible for one person to mine or validate block transactions by depositing virtual money into the network. This deposit is locked and returned to its owner after a set period of time, to prevent fraud. Even so, PoW in the 12 years of its existence has demonstrated its ability to prevent any cyberattacks. Meanwhile, PoS still needs time to experiment. Ethereum’s PoS transition phase, which is known as ETH 2.0, was planned 2 years ago and is expected to begin rolling out next July. The new hub of Bitcoin? Neither the US nor China, other emerging countries could soon outperform both thanks to more renewable energy and cheaper operating costs like India. America is thriving, but the gold mines in China cannot disappear overnight unless there are special government regulations. Experts expect that China can drop to 40-50% of the total hash rate within the next three years, and then North America could account for 30%, 20% from Europe and the remaining 10%. scattered in other areas. The problem with the US is that the federal government does not interfere and needs its own policies in states to attract and retain blockchain companies, as is the case with the state of Zug in Switzerland, which is known as the Valley. virtual money of the world thanks to specific policies of the state government. A miner is cleaning the ASIC Several states like Kentucky, Texas, and US cities like Miami are slowly recognizing blockchain as the technology of the future, and experts expect North America to win 10% of the global hashrate next year. Even so, as Bitcoin continues to receive investment, environmental issues will continue to be a major hurdle preventing the explosion of mining pools in North America, said the Hashrate Index expert Ethan Vera. The power failure in Xinjiang on April 16 affected the mines there and indirectly caused Bitcoin to lose 21% of its value from the peak of $ 64,000, possibly the strongest warning to the United States. in the war of cryptocurrencies, the future of humanity. Phuong Nguyen (according to CoinTelegraph)