Despite the crypto-related troubles that China has had with cryptocurrency in recent months, some Chinese citizens are still managing to profit off of crypto. According to a report from Bloomberg, the practice of mining Bitcoin is so profitable in China that miners would continue to make money with their rigs even if the coin were to drop by 50%.
The high profitability of mining in China is largely due to low electricity costs. Even in areas where electricity is the most expensive, the electricity needed to mine a single Bitcoin only costs about $6,925. Bloomberg New Energy Finance reported that electricity in China costs anywhere from $0.03 to $0.13 per kilowatt hour; at the lowest price, miners can break even at $3,689.
By comparison, the average kilowatt hour in the United States cost roughly $0.12 for residential customers and $0.06 for industrial customers in 2016.
Low-Cost Mining Comes at a High Cost for the Environment
The cheap energy comes at a cost, however–in early December of 2017, Vox reported that the amount of energy needed to keep the Bitcoin network running was greater than the energy intake of more than 150 individual countries. China has the largest carbon footprint of any nation in the world. By some estimates, more than 70% of its electricity is produced using fossil fuels.
New Economic Calendar Feature Added to FBS Personal Area and AppsGo to article >>
Political instability in China–particularly when it comes to cryptocurrency–is also a concern for Chinese crypto miners. Rumours of a ban on the practice of mining cryptocurrency have circulated more than once.
As a result, the mining industry has turned its focus to other places in the world to re-establish itself. In Quebec, Canada, electricity can reportedly cost as low as 2.48 cents (USD)–and it’s much better for the environment. According to CoinDesk, Quebec is “one of the largest hydroelectric power producers in the world.”
The cool climate in Quebec also reduces costs–mining rigs in locations with higher temperatures have to be kept cool with air-conditioning or other kinds of ventilating systems .
In any case, the mining industry around the globe is still profitable enough that the Bitcoin network is not at any serious risk of collapse due to a sudden shutdown of mining operations in China (or any other country, for that matter). However, as the processes required to mine Bitcoin become more difficult (and consume more electricity), the world may have to seriously reconsider how and where Bitcoin mining is done.