Crash helps find Bitcoin’s critical weakness

The coal mining accident that happened in China has affected both the Bitcoin and crypto markets in general over the past week.
Over the past few years, China has become the world’s crypto mining “factory”. Many mining farm owners are concentrated in deserted areas and cheap electricity prices of this country.

The importance of Chinese mining farms is evident in the accident at a coal mine in Xinjiang. This incident caused nearly a third of the world’s crypto mining network to be interrupted over the weekend. Bitcoin price has also plummeted since April 18 and there is no sign of recovery. The incident caused Bitcoin’s mining capacity to decline According to the Fortune A coal mine in Ho Do Bich district, Xinjiang was overflowed, trapping 21 workers inside on April 11. The workers were then rescued. A week later, the coal mine is still shut down to check the safety of workers, so it is not able to supply enough fuel for power plants in the region. The coal mine incident in Xinjiang left more than 20 workers trapped. Photo: AP. This causes Bitcoin mining farms, which consume huge amounts of electricity, to stop working. At the end of the following week, April 17-18, the capacity of the global Bitcoin network dramatically plummeted. Bitcoin’s difficulty to “mine”, calculated as the total algorithmic capacity (also known as hashrate) of the computers on the network, has dropped sharply from over 160 EH / s to around 130 EH / s. By the morning of April 23, this number was still around 133 EH / s. Before the incident, experts all considered China to play an important role in the Bitcoin mining network. However, the flood showed that almost all the miners in Xinjiang are located in Ho Do Bich district and surrounding areas, depending on the fuel source of the same coal mine. “This accident confirmed the predictions, possibly even confirming that the mining capital in Xinjiang is much smaller than previously thought. It shows China’s dominance in Bitcoin mining. , and concerns about security, “said Alex de Vries, an economist specializing in tracking the use of Bitcoin mining energy. Inner Mongolia, China, has banned Bitcoin mining since May to minimize the environmental impact. Photo: Getty. The incident also showed that the energy source for Bitcoin mining still mainly comes from coal. Not only in China, in many regions in the US such as New York state or Kentucky, mining farm owners also take advantage of old factories to get cheap electricity. This is Bitcoin’s danger to the environment. The bad side of Bitcoin “Carbon footprint”, the term for the amount of CO2 emitted when mining Bitcoin is about to exceed the emissions of the whole country of Australia and greater than the technology giants like Facebook, Google or Microsoft combined. The negative impact on the environment is the ugly face of Bitcoin. In addition to Xinjiang, Bitcoin is also banned from mining in Inner Mongolia, China from May to here because of environmental impact. It is also the region that contributes about 4% of the world’s Bitcoin mining capacity. Of course, there are Bitcoin farms that use renewable energy as well. However, this power source is considered to be unstable, difficult to ensure that it runs 24/7. “Miners often do not like renewable energy because they are difficult to guarantee to run 24 hours a day. Green energy is not suitable for Bitcoin,” said de Vries. Much of Bitcoin is mined on farms in China. Photo: Bloomberg. In the Bitcoin mining game, miners need to take full advantage, because only those who complete the first series of computations will be rewarded with Bitcoin. The number of miners joining the network more and more, so the reward received Bitcoin is less and less. Miners therefore need the machine to run continuously. Mr. de Vries said that about 70% of Bitcoin created using fossil energy, of which the majority is coal. Bitcoin’s price increase almost 6 times in the past 7 months has caused more and more miners to enter the game. The total amount of electricity that the Bitcoin mining network uses is about 2% of the US, and 10% of Russia’s electricity. The numbers all point to Bitcoin’s environmental impact. However, this ugly truth seems to have been ignored by celebrities like Elon Musk in praising Bitcoin.