Digital currency mining meets the changing situation, “big energy consumers” also need to be “carbon neutral”?

Digital currency mining meets the changing situation, “big energy consumers” also need to be “carbon neutral”?

China Times (www.chinatimes.net.cn) reporter Feng Yingzi reports from Beijing

Today, “carbon neutrality” is undoubtedly one of the hottest topics being discussed. At present, more than 120 countries and two-thirds of the economies in the world have joined the “carbon neutral” transformation. Under this trend, the high energy consumption problem of virtual currency mining has also become the focus of heated discussion in the industry.

Previously, on February 25, the Inner Mongolia Development and Reform Commission announced on its official website that in accordance with the dual energy consumption control work arrangement, it will speed up the elimination of backward and excess production capacity, emphasizing: “Comprehensively clean up and shut down virtual currency mining projects, and all exit before the end of April 2021. ”

In this regard, Zhang Lu, the CEO of Hash Power 360, said in an interview with our reporter that carbon neutrality may force mine owners to accelerate the elimination of unclean energy such as coal combustion and turn to idle clean energy such as wind power and hydropower. At the same time, the cost of mining may increase, and the elimination of small computing power mining machines will accelerate.

How long can thermal power mining last?

At present, domestic mines are mainly distributed in Xinjiang, Yunnan and Sichuan. Among them, Xinjiang is dominated by thermal power generation. Yunnan and Sichuan are dominated by hydropower. Data shows that the carbon emissions of hydropower per unit of electricity are only 1/5 of that of thermal power.

However, hydropower is divided into dry and wet periods, and the electricity price in dry periods is twice as expensive as in wet periods. Judging from the data from May to October each year during the high water period, Sichuan’s mining power consumption accounts for half of the country’s mining power consumption, but in the dry season, Xinjiang accounts for more than half of the country’s mining power consumption.

Under the trend of carbon neutrality, as to the conjecture that “virtual currency mining in thermal power areas may withdraw completely in the future”, Zhang Lu said that at present, we have no way to give a particularly clear conclusion and the impact on the industry. There is no real game in the industry yet. For example, in Sichuan, the park’s electricity consumption was proposed very early but it has not been implemented because the direct power supply and the park’s electricity consumption itself have a game.

“We need to consider the value of virtual currency mining on the first day of business and how to operate in compliance.” Zhang Lu mentioned that if the electricity itself is not illegal and the filing is complete, we will first choose two places in China: No. One is Sichuan. Because of the energy support provided by the park, its companies can consume electricity that cannot be delivered to create value for the country. The second is Xinjiang Zhundong Economic and Technological Development Zone.

“In fact, in the Zhundong area, we use coal from the surface, which is a huge waste of energy if these resources cannot be used.” Zhang Lu said.

According to statistics, in 2019, the global waste of electricity reached 5.49 billion kwh, and the waste of water was about 69.1 billion kwh. The use of waste energy is what crypto mining is doing.

In addition, Zhang Lu said: “We can always choose to mine in Sichuan using hydropower. This will not cause fatal effects. It’s just that electricity bills are more expensive during wet periods. Small computing power machines are eliminated, but large computing power machines can still operate. , When the computing power of the entire network decreases, the number of bitcoins mined increases, and the impact is not significant.”

Hu Yiying, assistant to the general manager of Hash Power 360, also mentioned: “The trend of carbon neutrality will lead everyone to think longer and move to a place rich in hydropower, which is undoubtedly Sichuan.”

In the next year, the transfer of computing power may accelerate overseas

Since the beginning of this year, many U.S. stock companies have announced their entry into the computing power market. According to the latest report of Guosheng Securities, as of February 2021, about 17 listed companies have disclosed that they have purchased Bitcoin mining machines. The disclosed mining machines have a computing power close to 21E, which is 16% higher than the Bitcoin network computing power during the same period.

China is the country with the largest share of bitcoin computing power in the world, but data shows that China’s bitcoin computing power has been slowly declining since September 2019. Bitcoin computing power is quietly but rapidly moving overseas, especially in North America.

When sharing, Hu Yiying said that in March this year, China’s share of global computing power fell below 70% for the first time, dropping to 65.7%. It recovered to 71.70% in April. In contrast, the growth rate of the United States is very obvious, and its global computing power accounts for 7.24%.

The distribution and ranking of the world’s top ten major mining power regions are relatively solidified. The top three are China, the United States, and Russia, followed by countries such as Iran, Malaysia, and Kazakhstan. Relatively speaking, the next is more competition between China and the United States. The characteristics of the mining ecology of these two countries are very obvious: China’s industrial chain is very complete, because China is the country with the longest mining history. The advantage of the United States is compliance, and Wall Street has long-term fixed investment funds to enter the market.

Zhang Lu also believes that one of the important reasons for the transfer of computing power overseas is that there are very compliant deposit channels overseas. This allows them to purchase mining equipment with low-cost legal currency. In the United States, the interest rate for legal currency mining is 3%-4% per annum; in Japan, the value is 1%-2%. In China, traditional miners need to sell coins in exchange for computing power equipment, risking the skyrocketing Bitcoin to buy mining machines. In the current market environment, the “opportunity cost” of domestic mining is very high.

In an interview with reporters, Zhang Lu said that the current supply-demand relationship of mining machines is extremely imbalanced, and the supply is still stuck in the previous era, but now the demand has entered the next era, resulting in a large amount of overseas funds, especially Wall Street funds. , Rush to buy mining machines.

Overseas giants believe that the competition in the Chinese market is too fierce and there are many immature places. In the future, more and more institutions will choose to establish mines overseas. Zhang Lu mentioned that under these various factors, the computing power of overseas mines will continue to increase. She predicts: “There will be huge changes from the end of this year to the beginning of next year.”

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