Bitcoin mining community on edge as Kazakhstan rations energy, Elizabeth Warren studies its climate impact
Following the huge drop in cryptocurrency prices after calls for the Fed to start raising interest rates, Bitcoin mining company stocks also took a drubbing, as there might be regulatory headwinds in their direction, too. Rampant inflation unseen in the last 30 years may force the Fed's hand earlier than planned, precipitating an exodus from risky assets like crypto. Bitcoin mining faces a host of other problems besides operational costs, however.
After China banned crypto miners because of electricity consumption, the geographical spread of their operations widened significantly. Bitcoin mining in Kazakhstan soon became the second-largest in concentration after Russia, buoyed by cheap electricity and the proximity to China. The country's energy infrastructure couldn't take the extra load and has introduced energy rationing in the past few weeks, forcing some mining platforms to exit Kazakhstan and head to the US.
Moreover, on the cusp of the first cryptocurrency exchange execs testimony before Congress next week, Senator Elizabeth Warren had sent a letter to Greenidge Generation Holdings CEO Jeff Kirt demanding statistics on how Bitcoin mining affects climate change. This spells double trouble for miners as the regulatory scrutiny vise tightens over them with the looming digital asset regulations on one side, and the climate impact of Bitcoin mining on the other. This perfect storm might explain why Bitcoin mining giants like Marathon Digital or Riot Blockchain saw their share prices drop double digits on Friday.