Photo by Ben Robbins on Unsplash.
Mining for Bitcoin(BTC) is a popular topic.
The method of earning bitcoin in return for executing the verification procedure to confirm Bitcoin transactions is known as bitcoin mining.
These transactions help to guarantee the Bitcoin network, which is in turn rewards miners with Bitcoins.
If the price of bitcoins exceeds the cost of mining them, miners will benefit.
Recent advancements in mining equipment and technology, as well as the establishment of professional mining centers with enormous processing capacity, have transformed the benefits and environment of mining.
Bitcoin mining is a highly concentrated industry, according to a recent study, with 10% of bitcoin miners owning 90% of the mining power on the Bitcoin network.
Another finding from the study is that 0.1% of all miners possess 50% of the network's mining capacity.
China made headlines last year when it banned cryptocurrency, but it is only one of dozens of nations and authorities that have either explicitly banned or severely limited cryptocurrency use in recent years.
Cryptocurrency is banned in countries such as Egypt, Iraq, Algeria, and Oman. According to a 2021 summary report issued in November by the Law Library of Congress, 42 additional nations, including Algeria, Bahrain, Bangladesh, and Bolivia, have implicitly prohibited digital currencies by restricting banks' capacity to deal with crypto or outlawing cryptocurrency exchanges.
Now on 4th January 2022, Kosovo's government banned cryptocurrency mining on Tuesday to reduce electricity use as the nation faced the greatest energy crisis in a decade owing to production disruptions.
The Role of Cryptocurrency Mining in Kosovo
In recent years, Kosovo has become something of a crypto mining hotspot, notably in the country's north, which is dominated by Serbs and has refused to recognize the central government's authority.
Due to the difficulty, central authorities have had in integrating the region into the rest of the republic, inhabitants in the north of Kosovo have paid next to nothing for energy for the previous 22 years. This made it extremely attractive for people looking to get rich quickly.
According to one Kosovo activist who chooses to remain anonymous and is aware of the government's decision-making process, said that:
“We are in the middle of an energy crisis, so the ban makes practical sense."
Dr. Shyqyri Haxha, a researcher in the Department of Electronic Engineering at Royal Holloway University in London, has mixed sentiments regarding the Kosovo government's attitude. According to Haxha, who has been tracking the development of the cryptocurrency mining sector in Kosovo, it "doesn't grow the economy."
"The government has spent millions subsidizing power in North Kosovo, where the government has limited authority and where it is alleged most of the crypto mining occurs," Haxha tells TRT World.
Kosovo Joins China in Banning Bitcoin Mining
Kosovo has banned Bitcoin (BTC) mining. According to the report, the government has banned the mining of all cryptocurrencies, not just Bitcoin (BTC). The decision to ban cryptocurrency mining was taken to save energy.
The administration declared a 60-day state of emergency late last year to allow for the reallocation of funding for energy imports. The government will also be able to implement additional power cuts and take other measures to reduce energy use as a result of the action.
On 4th January 2021, Kosovo's Economy Minister, Atrane Rizvanolli, decided to ban cryptocurrency mining in the country. The decision was made on the proposal of the Technical Committee on Emergency Energy Supply Measures, she said in a statement. Rizvanolli said:
“These actions are aimed at addressing potential unexpected or long term lack of electricity production capacities, capacities of transmission or distribution of energy in order to overcome the energy crisis without further burdening the citizens of the Republic of Kosovo.”
Coin mining has become more popular in northern Kosovo, which is mostly populated by Serbs who refuse to pay their bills because they do not recognize the independence of Kosovo.
The 1.8 million countries currently import more than 40% of their energy, with significant demand in winter, when people mainly use electricity for heating. In Kosovo, lignite, a soft coal that emits harmful pollutants when burned, accounts for around 90% of power generation. Kosovo has the world's fifth-biggest lignite deposits, with 12-14 billion tonnes, according to official estimations.
Bitcoin Mining (BTC) and Climate Change
The Kosovo government's recent decision brings Bitcoin mining and climate change back into the public eye. China's ban on Bitcoin (BTC) mining was not just a response to the government's anti-crypto stance. By 2060, the Chinese government wants to be neutral with carbon.
According to the Climate School of Columbia research:
"Bitcoin's power usage has dire implications for climate change and meeting the aims of the Paris Accord"
Bitcoin mining is predicted to emit 22 to 22.9 million metric tonnes of CO2 each year. It is feared that this figure will continue to increase.
Renewable energy is too costly and would eat into mine profit margins. The paper stated that "Bitcoin might push temperatures past 2 degrees centigrade in less than three decades" in terms of global warming.
My Verdict
In the case of China, I conclude that a total ban on cryptocurrency is nearly impossible, and investors will find a way to utilize and invest in cryptocurrencies.
Because cryptocurrencies are a stateless asset, no government can assure or enforce a broad ban on them. As a result, any attempt at prohibition would increase the concerns, citing which the law is being enforced.
Ultimately, these bans will have little impact on investors because there are many marketplaces for cryptocurrencies like bitcoin, whose global acceptance is increasing.