As regulation becomes more and more talked about in the Blockchain and Cryptocurrency industries, the question is then begged as to whether Cryptocurrency Mining should also follow suit.
As with every topic within the Cryptocurrency market, there are always two sides to the story. Some have been pushing for regulation for years whilst others cannot see why you would want to regulate something that is meant to be decentralized.
Is Regulation Important?
Despite the skeptics, it is vitally important that Cryptocurrency Mining is regulated for many reasons. For one, the size of the industry is now absolutely huge and it has become a very serious business. Once upon a time, every man and his dog was able to mine from his laptop at home. However, this is no longer the case and expensive hardware is now required to mine. And because there are less and less Bitcoin to mine, the mining machines need to be more powerful and a whole lot faster. This in turn is eating up power resources worldwide. More and more complaints are flooding in about the effect this is having on the environment. Alternatives are being looked into such as using hydro power and green energy, but these greener options are just not being produced fast enough to meet the growing demand.
The Power Problem
Crypto Miners are now forced to find much cheaper options to keep their profits as high as possible. Favourites include Quebec in Canada because of the cheap hydropower offerings. However, the government have restricted the amount of mining that can take place here in a bid to ensure there is enough power for its residents specifically over the winter months. Iceland has also become a firm favourite as it boasts low-cost energy as well as high-speed internet. Kosovo is also up there because of the remarkably cheap power prices.
At the moment we are in a situation where the cost of the amount of energy required to mine is outweighed by the value of Bitcoin. However, that may well soon tip the other way. It doesn’t look like this will be too far down the track with a recent report from Credit Suisse highlighting that a huge 80% of the reward from Bitcoin mining actually is put straight back into paying the electricity bill for said mining. This is not surprising considering that statistics are now showing that the amount of power required to mine Bitcoin around the world is actually the same size as the daily consumption in the whole of Iceland. Although this statement may well be out of date now. Furthermore, the American Journal of Energy Academics has suggested that by the end of this year – yes this year – the amount of power consumer by Bitcoin mining will be equivalent to 0.5% of the total amount of power consumed worldwide.
And In Summary
The regulation of the industry would certainly assist in keeping the power usage in check and not continue to grow at a massive rate of knots as it currently is. Whether this happens or not remains to be seen and the discussions continue to go well into the night.