Why Bitcoin miners are flocking to the US and what this could mean for Australia

Bitcoin enthusiasts are hoping for a greener image.

| More on:

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 9 January 2025

man and woman looking at bitcoin mining

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Bitcoin (CRYPTO: BTC) mining, as you may know, has come under fire for the massive amounts of energy required to run its vast arrays of computer networks.

By some estimates, Bitcoin mining in 2021 is using as much energy as all of Australia.

That's of particular concern when the mining is done in regions reliant on high-emissions coal fired electricity, as was the case with China.

But China's crackdown on crypto mining operations, driven more by regulatory concerns than environmental worries, looks to have succeeded in all but stamping out mining in the Middle Kingdom.

Although, as the Cambridge Centre for Alternative Finance pointed out in Wednesday's data update from its Bitcoin Electricity Consumption Index (CBECI), a growing number of miners look to be rerouting through countries like Ireland and Germany using VPNs or proxy servers.

That's one heck of a shell game.

United States takes lead in Bitcoin mining

Nonetheless, the CBECI data indicates that the "leading share of global Bitcoin network hashrate now sits in the US, followed by Kazakhstan and the Russian Federation".

The hashrate refers to the computing speed and power involved.

The global hashrate share in the US has climbed to 35.4%, from 16.8% at the end of April. Meanwhile Kazakhstan has seen its share increase to 18.1%, up from 8.2%, and Russia now accounts for 11%, up from 6.8% at the end of April.

As for China, its share of the global network hashrate fell to 38% in June 2021 from a high of 76% in September 2019. In the most recent data, Cambridge notes the "declared mining operations in mainland China have effectively dropped to zero".

Commenting on the Bitcoin mining migration to the US, Jonathon Miller, the managing director Australia of cryptocurrency exchange Kraken said:

The news that the US is now the epicentre for BTC Mining doesn't come as a surprise given the ongoing crackdowns we've seen in China and July's ban on mining. It was expected that migration would occur, particularly to locations where renewable energy is cheap and plentiful.

This is a positive thing for the cryptocurrency industry as many miners in North America rely on hydroelectric power, improving the overall energy consumption and impact of BTC.

What are the implications for Australia?

Australia, Miller said, has a global Bitcoin network hashrate share of just 0.19%. "There is a big missed opportunity here for us. But it isn't too late to invest in more renewable energy and increase our own share of the BTC Mining pie."

Milled added:

The US digital asset industry is likely to take advantage of this boom, attracting more talent and investment, leading to more jobs, business, income and tax revenue. If we want to see the same thing replicated here, we need to improve our own energy offering so we can also reap these benefits.

With electricity prices being what they are Down Under, Australia may have some way to go on improving its energy offerings before we see an influx of Bitcoin miners.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Cryptocurrencies

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Cryptocurrencies

Why Bitcoin, Ethereum, and Dogecoin just surged

Today's CPI report turns out to mean a great deal to crypto investors.

Read more »

Bitcoin coin with a rising arrow.
Cryptocurrencies

Bitcoin price smashes new record highs as market value tops US$2.1 trillion

Bitcoin just soared to new all-time highs. But why?

Read more »

a businessman rips open his shirt superman style to reveal the bitcoin logo on a superhero style lycra suit under his clothes.
Cryptocurrencies

Bitcoin price reclaims US$100,000 after AMP reveals an investment

A rising Bitcoin price could validate AMP’s recent investment decision.

Read more »

person dancing in bitcoin spectacles wearing a gold outfit with hands up.
Cryptocurrencies

Why Bitcoin, Ethereum, and Dogecoin just popped again

Here's what gave investors confidence...

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Cryptocurrencies

Bitcoin price blasts past US$100,000 milestone before an unexpected move

Boom! The Bitcoin price just smashed through the US$100,000 mark.

Read more »

Young woman using computer laptop with hand on chin thinking about question, pensive expression.
Cryptocurrencies

Could this be the day the Bitcoin price cracks $100,000?

It's come awfully close at certain points during the past few weeks.

Read more »

ETF on white blocks with a rising arrow on top of coin piles.
ETFs

This ASX ETF is up 30% in a month. Too late to buy?

This ETF's gains have been nothing short of extraordinary.

Read more »

A man clenches his fists with glee having seen the share price go up on the computer screen in front of him.
Cryptocurrencies

Why did the Bitcoin price just rocket to another all-time high?

At new record highs, Bitcoin now has a market cap of almost US$1.8 trillion.

Read more »