Crypto Mining Might be A Reason to the Ongoing Global Power Shortage

The northern hemisphere, where most people of the world are located, just went through a hot summer with power use peaks. The upcoming winter is expected to see a second wave of power use peaks. Except what might happen this year will be greatly different from previous ones.

In China, limited power supply across the country made headlines. For certain reasons, the Chinese government has been suppressing the power price from rising, so more power being generated, greater losses power plants will bear.

As a matter of fact, the thermal power generated in China this year so far shows an increase from past years, and the increase is significant. Nevertheless, the growth is still insufficient compared to the consuming volume, and the consumption is largely from industrial manufacturers.

As a country which recovered from the Covid pandemic early, and literally the only major manufacturing country back to normal, the industrial power consumption in China has seen a conspicuous growth recently.

Let's shift our eyes onto others. Power prices in the West have been rising sharply ever since the beginning of 2021. EU countries are seeing their electricity bill getting doubled and even more. As of July, the power price in Italy, Spain, Germany and France has jumped by 166%, 167%, 170%, and 134% respectively from a year ago. U.S citizens are paying their electricity bill at as high as 13.9 cents per kWh, a new record high. The reason? It comes down on the power structure again. Europe is the fastest-growing region for new energy occupation; natural gas occupation stays the same; while coal has taken a nosedive in price. The same happened in the U.S in terms of coal price though, the drop is balanced out by natural gas. Hence the U.S is not experiencing a price rise as dramatic as EU.

The global power shortage this time boils down to the excessive transition of power structure worldwide, which has been turning "green" way to early while traditional power fails to catch up and fill in the gap. The unexpected Covid hit all of us off guard, and that created a supply-demand conflict, leading to a global power shortage. In particular, the conflict is going to intensify as the winter power use peaks are on the brink.

Does crypto mining have anything to do with this?

"Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel," tweeted Elon Musk this May, Tesla's CEO. The tweet was posted merely two months away from Tesla’s U.S website announced the acceptance of purchase with Bitcoin.

Fig.1

(Source: wallstreetcn.com)

Fazzaco has covered a number of China's crackdown on crypto mining too, at mid-year.

China's Crackdown on Crypto Mining Leads to Sales Suspension of Bitmain​

Bitcoin Price Plunges as China Cracks down on Cryptocurrencies

Crypto Miner Huobi Stops China Business after Beijing's Crackdown​

IBC Group to Shut Down Bitcoin and Ethereum Mining Operations in China​

In fact, the crackdown in China was a decision made on their forecast of the potential power shortage in the second half of the year. After all, power is consumed extensively the most during summers and winters.

How much power does crypto mining eat?

According to Prof. Brian Lucey at Trinity College Dublin, the sheer volume of power being used for Bitcoin equals the power consumption of a mid-sized European country.

Specifically, the latest data provided by Cambridge University's Bitcoin power consumption indicators showed that Bitcoin mining consumes 133.68 terawatt hours (1tWh = 1 billion kWh), a number that surpasses the total power consumed by all Swedish combined in a year, and ranks the 27th position in the list of the world's power consumption by country.

Fig. 2

(Source: wallstreetcn.com)

Probably the most costly winter

Whether it is because of the power structure, or the immense appetite of crypto mining for power. It is destined that the world is experiencing power shortage in the remaining days of the year. As countries see power price rise, it is probably going to be the world's most costly winter this year.