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‘Great Mining Migration’: Power-Hungry Bitcoin Leaves China

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A worker checks the fans at the cryptocurrency farming operation, Bitfarms, in Quebec, Canada (image: Alamy)by Joe Coroneo Seaman (london)Friday, December 10, 2021Inter Press Service

A significant driver behind this sudden drop was the news that China had begun a sweeping crackdown on the cryptocurrency industry, driven by concerns about financial risk and excessive energy consumption. Bitcoin “mining” – the process by which transactions are verified and new coins are created – is highly energy intensive, leading to criticism of the currency’s oversized carbon footprint.

Before the clampdown, China accounted for two-thirds of Bitcoin mining worldwide. In the months since, mining companies have been quick to move their operations overseas. Recent data suggests that energy consumed by Bitcoin has increased in the US, Canada and Kazakhstan, and with it, pressure to address the currency’s soaring electricity appetite.

Power-hungry Bitcoin mining

Bitcoin is a decentralised digital currency, meaning that each time money is sent or received, the transaction is kept on a public record, rather than with a bank. But in the absence of a trusted authority to verify each transaction, the responsibility falls to participants in the Bitcoin network known as “miners”.

To verify transactions, miners connect computers to the cryptocurrency network and use them to solve incredibly complex, randomly generated mathematical puzzles. But not just any computer will do the job: Bitcoin mining requires running multiple specialised computers almost 24/7 in order to achieve the computing power needed to find the solution.

Whoever solves the puzzle first is allowed to add a “block” of transactions to the global ledger, and is rewarded with a small amount of newly minted Bitcoin.

Herein lies Bitcoin’s energy problem. The more computing power you can muster, the more often you will be first to solve the puzzle and earn the Bitcoin. And the machines used to mine Bitcoin – application-specific integrated units (ASICs) – consume a lot of energy, to say the least.

In one year, the entire Bitcoin network consumes around 120 terawatt hours (TWh) of energy, or more than the whole of the Netherlands, according to estimates by Cambridge University’s Bitcoin Electricity Consumption Index (CBECI). If Bitcoin were a country, it would rank 32nd in the world by annual electricity consumption.

“That’s the price we pay to secure transactions,” says Anton Dek, cryptoasset and blockchain lead at the Cambridge Centre for Alternative Finance, and one of the creators of the index. Bitcoin’s energy usage isn’t an accidental by-product, he explains. Mining Bitcoin is purposefully designed to be costly – both in terms of electricity and money – to prevent would-be hackers from taking over the network.

So far, it seems to have worked. “We haven’t seen any double spending or any attacks on the network, partially because this attack would be too expensive. So it kind of makes sense, though that doesn’t mean it shouldn’t be of concern,” says Dek.

Bitcoin mining: A climate disaster?

Bitcoin’s energy footprint has skyrocketed in recent years. In 2017, economics blog Digiconomist estimated that the network of specialised mining computers used 29 TWh annually, equal to 0.13% of total global electricity consumption. This had grown to around 0.65% by May this year, according to CBECI data.ƒcbeci

Unchecked, Bitcoin mining operations in China alone were set to generate 130.5 million metric tons of CO2 by 2024, around the same as the total annual emissions of the Czech Republic, according to a 2021 study in the journal Nature.

Crackdown

Since President Xi Jinping pledged last year that China would aim to be carbon neutral by 2060, the government’s stance on Bitcoin and cryptocurrency mining has hardened.

The first sign came in March this year, when Inner Mongolia announced it would phase out cryptocurrency mining entirely after the province failed to meet its 2020 target for reducing energy consumption.

Then in May, China’s Vice Premier Liu He declared at a State Council meeting that the government intended to “crackdown on Bitcoin mining and trading”.

Regional governments were quick to act, revoking licences of companies involved in cryptocurrency mining, cutting off power to mining facilities and in some cases giving firms just seven days to shut down their operations. By the end of June, one industry expert estimated that 90% of China’s Bitcoin mining centres – more than half of the global total at the time – had gone offline. In the same month, Bitcoin’s total electricity footprint was cut in half, according to CBECI data.

Mass exodus

“The crackdown in China has resulted in a mass exodus of miners,” explains Peter Wall, CEO of North American cryptocurrency mining firm Argo Blockchain. “Displaced Chinese miners are searching the globe for appropriate hosting sites for their machines.”

Countries with access to cheap electricity like Canada, Russia, Kazakhstan and, especially, the United States are now seeing a surge in interest from Chinese miners looking to partner with local firms. Latin American nations with similarly affordable electricity rates and a weak institutional framework for the industry are also emerging as destinations for the industry.

Venezuela and Paraguay are among those looking to attract miners unable to operate in China and Argentina could become a global bitcoin mining destination, with Canada-based Bitfarms announcing it had begun construction of a 210 MW Bitcoin mining facility in Argentina, the largest in the country. The mine will source its power directly from the Maranzana gas power station.

In September, El Salvador’s president Nayib Bukele made headlines when he adopted the currency as legal tender, despite experts voicing concerns that the attendant increase in demand for electricity would make the country more dependent on energy imports than it already is.

So how will this “great mining migration”, as it is described in cryptocurrency circles, shape Bitcoin’s carbon footprint?

“We hope that the long-term impact of this migration is the re-installation of machines in jurisdictions in which mining operations can be powered by renewable energy,” says Wall.

The short-term reality may not be so rosy. In July, Beijing-based crypto-mining giant Bitmain agreed to move a batch of its mining machines to a 180 megawatt (MW) facility in Kazakhstan whose electricity is supplied by a local coal power plant. Given that just 1% of Kazakhstan’s energy mix is renewables, this may not be a one-off. In Canada, oil and gas company Black Rock Petroleum has agreed to host up to 1 million Bitcoin-mining machines relocated from China, with the first 200,000 units sourcing power directly from a natural gas well.

The new global hub of Bitcoin mining, however, is expected to be the US state of Texas. The state’s governor, Greg Abbott, is actively courting the cryptocurrency industry, tweeting in June that “Texas is open for crypto business.” Shenzhen-based BIT Mining plans to invest $26 million in a 57 MW facility in the state.

Texas offers “huge possibilities for mining to utilise renewable sources” says Wall. He points out that in the west of the state, wind turbines power 90% of the grid. Overall, however, the Texas energy grid is made up of just over one-fifth renewable energy, and has proven fragile in extreme weather conditions.

Greening Bitcoin

CBECI data now shows Bitcoin’s electricity consumption is climbing once again. As the network becomes more distributed across the globe, what options remain for tackling the currency’s carbon footprint?

One solution may be to rethink how Bitcoin transactions are verified. The current method is called “Proof of Work” because participants must do the work of mining to verify transactions.

The most commonly proposed alternative is “Proof of Stake”. This removes computing power from the equation. Instead of competing against each other, participants who have first made a deposit in Bitcoin are selected at random to verify transactions. The larger the deposit, the greater the chance of being selected and earning the reward.

Several smaller cryptocurrencies already use this method. Ethereum, one of Bitcoin’s main competitors, is expected to make the switch later this year, but some in the industry remain sceptical.

“We have no plans to shift away from Proof of Work,” says Wall. Miners will inevitably migrate to the cheapest electricity available on the grid and increasingly that is not coal, oil or gas plants, he argues. “We are at a point where renewable power is the same price or lower than power generated by fossil fuels.”

“It may be too late for existing digital currencies like Bitcoin to change their methods of confirming transactions,” agrees Truby, of Qatar University. The best option is to “focus on mitigating mining devices’ energy consumption by improving the devices and providing them with renewable energy,” he says.

Norway and Iceland, with their plentiful supply of geothermal, hydroelectric and wind power, have been using renewable energy to power cryptocurrency mining for years. El Salvador also claimed that its Bitcoin mining operations would be powered by “100% clean, 100% renewable, 0 emissions energy” from a volcano.

Against a backdrop of growing pressure on energy-intensive industries of all kinds to address their contribution to global carbon emissions, Wall is frank about the need for cryptocurrency to adapt: “Proving that crypto can be sustainable is pivotal to its success. The future of energy is green and renewable, so the future of crypto must reflect that.”

This article was originally published by ChinaDialogue

© Inter Press Service (2021) — All Rights ReservedOriginal source: Inter Press Service

Article: globalissues.org

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When Will Countries Ever Learn How Well to Do Fuel Subsidy Reforms?

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View of downtown Nur-Sultan, the capital of Kazakhstan. Credit: World Bank/Shynar JetpissovaOpinion by Alan Gelb, Anit Mukherjee (washington dc)Friday, January 28, 2022Inter Press Service

Amid alarming reports of deadly violence in Kazakhstan, the UN High Commissioner for Human Rights and the Special Representative of the Secretary-General for Central Asia called for restraint and dialogue. 6 January 2022

Protestors are out on the streets, clashing violently with security forces called in to maintain law and order. They vent their frustration not only with rising fuel prices but also with living costs, lack of social services, crumbling infrastructure, corruption and political repression.

Faced with the prospect of a popular uprising, the government backtracks on reforms and re-institutes subsidies, postponing the hard decisions for a later date.

This is Kazakhstan in 2022. It is also Ecuador in 2019, Nigeria in 2012, Bolivia in 2010, Indonesia in 2005 and several other energy exporters which have tried to end, or at least reduce, fuel subsidies over the last two decades.

The list will grow significantly if we include importers who are more exposed to the vagaries of international energy prices. What is interesting is that the story plays out in almost exactly the same way, and the consequences of both action – and inaction – are very similar as well.

For resource rich countries like Kazakhstan, Ecuador, Bolivia and Nigeria, subsidized energy, especially from fossil fuels, is one of the few tangible ways by which citizens can feel that they have a claim to a national resource.

While the level of subsidies varies, at some $228 dollars per head or 2.6% of GDP in 2020, those of Kazakhstan are high but not the highest among exporters. In a situation where the government is generally perceived to be repressive, incompetent and corrupt, food and fuel subsidies keep a lid on deeper grievances. It is economically damaging but politically expedient, a delicate equilibrium that many countries have sought to manage over the last several decades – with little success.

Our research has shown that there is a better way to do energy subsidy reform. Providing direct cash transfers to compensate for the rise in energy prices can be a “win-win” solution. To put it simply, energy compensatory transfers (ECT) enable households, especially the poor and the vulnerable, to absorb the shock and reallocate resources as per their needs.

By removing the arbitrage between subsidized and market prices, ECTs can also reduce corruption, improve distribution and incentivize efficient use of energy. Countries like Iran, India, Jordan and the Dominican Republic have been relatively successful in this type of reform, and their experience holds lessons for other countries that choose to embark on this path.

Digital technology can help significantly to identify beneficiaries, provide them necessary guidance and information, and transfer payments directly to individuals and households. Three key enablers of ECTs are an identification system with universal coverage of the population, strong communications and wide access to financial accounts.

Multiple databases can be cross-checked to verify eligibility norms and grievance redressal systems can help reduce exclusion of genuine beneficiaries. As shown, for example, by India’s LPG subsidy reform, countries can progressively tighten the eligibility criteria over time to target the poorest sections of the population.

Finally, ECTs can provide the impetus for a more transparent and accountable system of subsidy management, helping improve public confidence and support to the government’s reform agenda over the long run.

So, why don’t more countries follow this approach? For one, most energy subsidy reforms are pushed forward in times of economic crisis. ECTs require political commitment, openness to engage in public dialogue, building consensus among stakeholders and powerful vested interests, setting up implementation systems and working across different government ministries, departments and agencies.

Direct compensation is also more transparent than the frequently opaque systems of price subsidization that favor the rich, with their higher energy consumption, even if justified by the need to protect the poor.

ECTs are not simple solutions and often require time to be put in place. On the surface, it may seem simpler to just raise energy prices overnight through an administrative order. But the payoffs are significant in terms of sustainability, economic outcomes, social cohesion and political stability.

The sooner countries can take a longer term approach, the better will they be able to manage the transition to a more sustainable system that supports those who need it most.

Kazakhstan is the first country in 2022 to see popular unrest due to fuel price hike. It almost certainly would not be the last.

Anit Mukherjee is a policy fellow at the Center for Global Development. Alan Gelb is a senior fellow at the Center for Global Development.


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© Inter Press Service (2022) — All Rights ReservedOriginal source: Inter Press Service


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Griffiths to Security Council: ‘Your Responsibility Is Not Over’ to Syrian People

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© UNICEFChildren sit outside their family tent at the Alzhouriyeh makeshift camp in east rural Homs, Syria.Thursday, January 27, 2022UN News

“It is not over for the Syrian people,” said Emergency Relief Coordinator Martin Griffiths, as he outlined the myriad challenges.  “And your responsibility is not over either.”  

As I’ve said before, we’re failing the Syrian people, young and old. Failure each year can’t be our strategy.

This year, we have to lighten the load on Syrian civilians.

I urge Member States to work with the UN and other key humanitarian agencies on a new approach.

My remarks:

— Martin Griffiths (@UNReliefChief)

January 27, 2022

Early recovery essential 

The humanitarian affairs chief said it was essential to scale up early recovery programmes – aimed at addressing needs that arise during the humanitarian phase of an emergency – which can offer a pathway to more self-sufficiency and restore basic services.  

Perhaps most immediately, he drew attention to the hundreds of children who this week, have been trapped in a terrifying prison siege in Al-Hasakah, in Syria’s northwest. 

He cited reports announced by Henrietta Fore, Executive Director of the United Nations Children’s Fund (UNICEF), on 25 January, of fatalities among children besieged inside the Al-Hasakah’s Ghwayran military detention facility, and of children trapped as ISIL-affiliated inmates battled Kurdish-led Syrian Defence Forces (SDF), being forced to take part in the fighting. 

News reports indicate the siege is now over with the Kurds regaining control of the prison, but Mr. Griffiths told ambassadors that it was of “critical importance that all children are accounted for, evacuated to safety, and supported,” he insisted.   

Their predicament echoes that of the country, Mr. Griffiths stressed.  He described Syrian girls and boys shivering in tents in the snow, while others are stuck in displacement camps or detention facilities, and millions more – lucky enough to have housing – are still missing out on a healthy diet and reliable schooling. 

Failing the people 

We are failing the Syrian people, young and old,” he said.  “I urge you to work with the United Nations on new approaches.”  

The Under-Secretary General recalled that six civilians were killed on 20 January when missiles landed in Afrin city, while another airstrike in early January, severely damaged the main water station servicing Idlib city.   

Alongside security concerns, unusually bitter winter storms last week damaged thousands of tents in camps in the northwest, forcing those displaced to burn garbage to stay warm and risk asphyxiation, sheltering from sub-zero temperatures. 

Just not enough 

With the cost of a food basket reaching new highs in each of the last four months, and international aid declining, “the food aid we provide to millions of people each month is just not enough,” he warned. 

He called for ongoing support for the UN’s six-month plan for humanitarian operations, drawing attention to early recovery projects to support food production and the cross-line delivery of aid to Syria’s northwest.  Two such operations have been completed and a third is expected to take place soon, he added. 

‘From war to hell’ 

Jan Egeland, Secretary General of the Norwegian Refugee Council, agreed that conditions have grown “dramatically worse,” amid renewed armed conflict in Dara’a, Damascus and Eastern Ghouta. 

Mr. Egeland – who was formerly UN Emergency Relief Coordinator, from 2003 to 2006 – said the economic crisis, exacerbated by drought, is now so deep that families he had met during his recent visit described their journey as one “from war to hell”. 

He implored the Council to end this “suffocating paralysis”, requesting “help from you as members of the Security Council, and from you as influential powers with parties and actors in the region.  “The situation demands it.” 

Humanitarian diplomacy 

Specifically, Mr. Egeland called for help to end access restrictions on all sides of the conflict lines, stressing that humanitarian work is still too often held back by administrative, logistical, legal and physical barriers.  More effective humanitarian diplomacy is needed.  

For example, he said the Russian Federation can help on the Syrian Government side, where the Norwegian Refugee Council is still unable to provide legal aid to displaced people and returnees, while Turkey and the United States can help with de facto authorities in opposition-controlled areas.  

He also called for help in negotiating solutions to conflicts in Idlib and elsewhere, emphasizing that “we cannot allow a war to rage in what is, in reality, a gigantic string of displacement camps.” 

A call for solidarity 

Meanwhile, he said civilians must be able to seek protection and emphasized that “now is not the time to close borders.” 

It will also be essential to resume a deconfliction system, ensure cross-border and cross-line relief, secure access to water and agreement around waterways from the north, support the rehabilitation of civilian infrastructure, enable durable solutions for refugees and close the funding gap for humanitarian operations. 

“2021 was one of the worst years on record for civilians in Syria,” he said. “We urge donor countries not to turn their backs in 2022.”

© UN News (2022) — All Rights ReservedOriginal source: UN News

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In Central Sahel, ‘needs Are Growing Faster Than Generosity’

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© UNOCHA/Michele CattaniA portrait of a Malian refugee in Tillaberi region, Niger.Thursday, January 27, 2022UN News

According to Martin Griffiths, nearly 15 million people in Mali, Niger and Burkina Faso, will need humanitarian assistance this year. That’s four million people more than a year before. 

The UN humanitarian affairs office (OCHA) led by Mr. Griffiths, and its partners, will need close to $2 billion for the humanitarian response in these three countries alone. 

In the Central Sahel, needs are growing faster than the support that is available.

Yet, the Sahel is also a region of enormous potential.

Working together, we can reverse the trend with more efforts focused on resilience, sustainable solutions and cooperation.

My full remarks:

— Martin Griffiths (@UNReliefChief)

January 27, 2022

It is a grim picture. Conflict, drought and food insecurity, gender-based violence – all growing more quickly than the support that is available”, the Emergency Relief Coordinator explained. 

The online meeting was a joint effort by the United Nations, the European Union, the German Federal Foreign Office and the Ministry for Foreign Affairs of Denmark. 

Fact-finding mission

Last week, Mr. Griffiths visited Nigeria and met people affected by the Lake Chad Basin crisis. 

“The stories they told me are emblematic of the struggles people across the central Sahel face: violence, repeated displacement, and difficulty finding sustainable livelihoods for themselves and their families”, he recalled, saying he hopes to visit Mali and Niger in the months ahead.

Together, conflict, climate change, political instability, lack of sustainable development opportunities, and poverty, are driving millions into increasingly desperate conditions. COVID-19 has only made the situation worse.

Violent attacks went up eight-fold in the central Sahel between 2015 and 2021. In the same period, the number of fatalities increased more than ten-fold.

Millions displaced

“The result is more than two million people displaced including half a million internally displaced last year alone”, the humanitarian chief said. 

In the meantime, insecurity and attacks continue to disrupt already weak basic social services.

More than 5,000 schools are closed or non-operational. Many health centres are not working. Displacement and increased insecurity have disrupted access to water, sanitation, and hygiene services. 

According to the last estimates, the number of people facing severe food insecurity has tripled in Mali and doubled in Niger compared to November 2020.

During the lean season, more than eight million are expected to be affected.

Obstacles to aid

While needs grow, the central Sahel remains “one of the most dangerous places in the world for aid workers”, said Mr. Griffiths, noting that one-third of all abductions of aid workers in the world in 2020, occurred in Mali, Niger, and Burkina Faso.

“Despite these difficulties, humanitarian organizations reached more than seven million people in the region in 2021 and raised $700 million”, he added. 

Unfortunately, the UN relief chief informed, this is not even halfway to meeting the needs of people in the Sahel.

To help bridge that funding gap, the UN Central Emergency Response Fund (CERF)released $54.5 million in 2021 for Burkina Faso, Mali and Niger. In the same year, OCHA established the first-ever regional pooled fund, last totalling nearly $33 million.

The humanitarian chief concluded on a positive note, noting that the Sahel is “a region of enormous potential” and that, working together, it’s possible to reverse the current trend. 

© UN News (2022) — All Rights ReservedOriginal source: UN News

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