High popularity of cryptocurrencies represents a grave threat to the global energy sector. The surging number of those who want to earn by means of mining has already hurt public utilities. The fact is that virtual miners use the resources necessary for the electrification of other industries.
Experts at Fitch have warned that rapid growth in unregulated crypto mining could contribute to energy market disruptions. Large volume of energy resources used by miners is essential for the operation of other economic sectors. Emerging markets are the first to suffer from uncontrolled mining. Last year has become memorable for a boom in the crypto sphere. As a result, “highly profitable crypto mining has created ecosystems that already consume an estimated 0.4%–1% of global electricity.” Thus, mining of bitcoin needs 125 terawatt hours on a yearly basis. This could be compared with the consumption of energy by whole states such as Norway or Sweden.
At present, miners choose regions with cheap electricity. Notably, they prefer countries where electricity is state-subsidized. The fact is that electricity represents up to 90% of crypto mining costs. Although specialized equipment costs thousands of dollars, it is quick to relocate. Thus, in 2021, when China banned cryptocurrencies, miners easily removed their farms from China to such countries as Russia, Canada, and the US.
