China Curbs Cryptocurrency Mining due to Risk of Overloading the Power Grid

Fintechist China Power Grid Cryptocurrency Mining

Mining cryptocurrencies requires a significant amount of electricity. This makes it a rather expensive venture, and most home users can’t keep up with the costs right now. Unfortunately, that is not the only concern we have to worry about right now. More specifically, the electricity infrastructure in both the US and China are getting strained due to these mining operations. It is a very worrisome development which hardly ever gets highlighted.

Everything related to cryptocurrency mining needs to be put in the proper perspective With such high electrical requirements, it is evident a mining operation is expensive. However, this electricity also has to be delivered to the operation somehow. Nationwide infrastructures may come under high pressure when a few of such operations run at full throttle every single day. It seems this is becoming a problem both the US and China right now. Something will have to give sooner or later, although there is no clear-cut solution.

Cryptocurrency Mining Taxes the Infrastructure

More specifically, China is cracking down on cryptocurrency mining altogether. They want all operations to scale down and potentially exit the country as soon as possible. It seems the main reason for this has nothing to do with Bitcoin itself. Instead, the electricity infrastructure gets taxed beyond what it is safely capable of handling. It is a very problematic development, to say the very least. Local authorities complain about the excessive electricity consumption. If the grid were to fail, chaos would ensue.

A similar situation occurs in the US right now. Multiple counties have seen an influx of cryptocurrency mining operations. Regions with cheap electricity are of great interest to mining operators. Unfortunately, there is only so much the infrastructure can handle. Adding more capacity is one option, but the process is slow-going. Such upgrades cost a lot of time, money, and effort. It seems easier to curb Bitcoin mining altogether rather than take the expensive route.

How all of this will play out, remains to be determined. The situation is getting out of hand, that much no one can deny. China will not change its stance on cryptocurrency mining in the near future. The US, on the other hand, tries to keep an open mind but struggles to come up with solutions. All of this shows how brittle the global electricity infrastructure truly is at this stage. If anything out of the ordinary were to happen, entire countries will be plunged into darkness. Upgrading the grid seems the only logical course of action, but that is much easier said than done.

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