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The China mining ban was a godsend for Bitcoin decentralization. So far, the USA is the big winner. However, for the good of the network, it would be ideal to distribute the hashrate all over the world. How do we accomplish that in Bitcoin-land? Relying on incentives. If it’s profitable to do, and there’s the possibility to do it, Bitcoin decentralization will happen. That’s why this global cheap electricity map is such good news.
"Electricity Cost of Mining 1 Bitcoin Worldwide" (click to expand) | Source: Arcane Research
As you can see, low-cost electricity is available all over the world. That means that, theoretically, Bitcoin mining will flourish evenly through the Earth. What’s stopping the Bitcoin decentralization phenomenon? Nowadays, a shortage of ASICs. Which has to do with the global shortage of chips. However, in ideal circumstances, it’s still difficult to get high-grade Bitcoin mining machines in some countries. In some cases, the local taxes are extremely high. Plus, the manufacturers prioritize so-called first-world country clients.
Related Reading | Bitcoin Hashrate Nosedives as Chinese Miners Move On
Arcane Research’s The Weekly Update says:
“Mining can also be done cheaply in many of the American and Canadian states and provinces. Miners have flocked to North America this year, giving the US 35% and Canada 10% of the global hashrate.”
This is good for North America, but not great for Bitcoin decentralization. Why did it happen? A high percentage of Chinese miners moved their operations to those two countries, yes. Another reason, however, is that the process to get ASICs in North America is pretty straightforward. The supply chain already exists.
The Path To Further Bitcoin Decentralization
There’s no denying that Bitcoin decentralization is already in a pretty good place and advancing. China’s hold on mining is no more. There are more nodes popping up every day. The actual bitcoins are slowly leaving whale hands and moving towards retail diamond hands. And then, there’s the Lightning Network, bringing another dimension to the equation. However, more work is needed. And the point of the map is, the conditions to do it are there.
BTC price chart for 11/02/2021 on CEXIO | Source: BTC/USD on TradingView.com
Speaking about the map, how did Arcane Research get those numbers?
“We calculated the amount of electricity an Antminer S19 uses to mine one bitcoin. We found the average electricity price for all countries. We then used these prices to estimate the electricity cost of mining one bitcoin in each country. Our estimate is very rough, and electricity prices can vary significantly within a country.”
To put that into perspective, let’s quote Nick Hansen, CEO of Luxor Technologies. In his appearance in the “What Bitcoin Did” podcast, he said:
“There’s about 140X of hash on the network right now. If you assume they’re all latest gen, S19, which is the most efficient, that means that the network would use about 4.2 Gigawatts. And then, you can move to the other side of the scale and say, maybe it’s all S9s. It’s not, but if it were the least efficient machine we’re running today, that would be about 14.2 Gigawatts. So, most likely, the Bitcoin network is between 4.2 and 14.2 Gigawatts.”
Related Reading | Since China’s Mining Ban, Bitcoin Hashrate Has Recovered by 68% And Counting
So, Arcane Research used the most efficient machine available to produce the map’s numbers and the Bitcoin network doesn’t use that much electricity after all. Perfect. For those interested in a miner’s perspective, here’s the full show.
Conclusions And Projections
For the Bitcoin network to be as decentralized as its participants hope, it needs further distribution of ASICs. Nowadays, everyone is fighting to get any and all machines they can get, and that’s alright. There are incentives to do so. However, in the future, Bitcoiners will have to find a way to get ASICs everywhere. There’s also an incentive to do this. And it presents an immense business opportunity.
Featured Image by Colin Behrens from Pixabay - Charts by Arcane Research and TradingView
