Bitcoin Mining Is A Huge Waste Of Earth's Energy, So China Is Rightly Banning The Activity

China is considering banning cryptocurrency in the country. It's not because of fears of a financial bubble or how it can be used for illegal activities.

No, it seems regulators think it's an "undesirable" economic activity because of how much energy it wastes.

The National Development and Reform Commission (NDRC) in China published a research paper in which it proposes a ban on the mining of cryptocurrency like Bitcoin. That proposal is being seriously considered and is currently available online in the country for public comment until next month.

They're not wrong either, cryptomining is indeed incredibly wasteful. Mining Bitcoin and similar coins require specialized high-end rigs, and these sap a massive amount of electricity. In fact, previous studies have shown that Bitcoin mining can actually consume more energy than actually mining precious metals.

This is bad anywhere in the world, but it's especially dire for China. In certain parts of the country where the power grid is still dependent on coal-burning plants, electricity is cheaper. So crypto-miners have been flocking to the area to try and offset their profit margins, putting more stress on the power grid, and therefore causing more coal-burning pollution as well.

An estimated 74 percent of all cryptomining is carried out in China, a country that's also one of the worst polluters in the world, especially where coal is concerned. According to a recent report in Nature Sustainability, mining cryptocurrency is responsible for anywhere between 3 million to 15 million tons of carbon dioxide released globally each year.

Unlike crypto-trading bans, a ban on mining can't be so easily circumvented. Authorities just have to look at locations drawing a suspicious amount of power. After all, you can't keep your power consumption under the radar if you want to actually earn enough coin to turn a profit.

It didn't always used to be that way however. Mining cryptocurrency involves a computer performing complex calculations to keep track of the blockchain, so you're effectively converting processing power into currency. But these cryptocurrencies come in limited quantities, doled out in rations, which mean they get more expensive to earn as time goes by. So Bitcoin miners today are spending much more processing power today for a smaller amount of it than in the early days of the cryptocurrency. As a result, they're also burning through that much more power.

This is true anywhere in the world, including here in India. After all, the price of electricity has increased over the years. It makes cryptocurrency mining somewhat unfeasible, especially so in metros like Delhi and Mumbai where power has been privatized with even higher prices.

So if you're determined to make a profit in crypto, you're best bet is to play the unstable market and hope for the best. Because mining it yourself is very much a loss-making endeavour here.