Bitcoin can drop 50 pct and China miners still make money

Mae Love
January 13, 2018

A report by Bloomberg New Energy Finance reveals that electricity demand for bitcoin mining grew to almost 20.5 terawatt-hours per year as of the end of 2017. The digital currency was last in that range back in mid-November and now trades at about $13,900.

Electric cars, by contrast, are expected to attain the same level only by 2025.

"Bitcoin mining under the current price is likely to be profitable under any electricity price regime in China", Lu wrote.

Two Chinese miners said local authorities in China are increasingly unwilling to allow expansion and had started to shut down some mines in late 2017, as China clamped down on cryptocurrencies. It's in "very advanced" talks with more than 30 cryptocurrency miners - many of them now operating in China - and expects to announce agreements in 2018, Marc-Antoine Pouliot, a spokesperson, said on Wednesday in a phone interview.

"According to Hydro Quebec, the province has an energy surplus equal to 100 Terawatt hours over 10 years". That's more than half of the 38 terawatt-hours of power used each year by the world's biggest traditional mining company, BHP Billiton.

Cryptocurrency miners will probably migrate to low-priced power regions, including China and the US, Midwest and Pacific Northwest.

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Despite China being home to the world's largest community of bitcoin miners, they only use 0.2 percent of the country's annual electricity production, or 15.4 terawatt hours, according to the report.

It's hard to predict how much power will be used to mine bitcoin in the future, Lu wrote, as it depends on how efficient the computers running the complex calculations needed for mining become and how many additional computers will be used in the process.

The first miner to solve the problem is rewarded in bitcoin and the transaction is added to the blockchain.

Mining bitcoins can use a lot of electricity, but the low costs in China- from $0.03 to $0.13 per kilowatt hour-make it profitable even if the price drastically drops.

In China, a leaked Jan 2 memo from the "Leading Group of Internet Financial Risks Remediation" - the country's internet finance regulator which initiated the clampdown on bitcoin - said bitcoin miners should make an "orderly exit" from China because they have consumed "huge amounts of resources and stoked speculation of 'virtual currencies", the TechCrunch website reported.

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