China's mining operations have almost completely stopped since the government banned the use of cryptocurrency in May, meaning that much of the work has moved elsewhere - including Kazakhstan, where fossil fuels, including coal, generate more than 90 percent of the nation's electricity supply.
Bitcoin relies on a computer network known as miners who solve math problems to protect money, consuming a lot of electricity in the process. Data from the Cambridge Center for Alternative Finance (CCAF) shows that the fastest investment in new bitcoin mining investments stopped in China from September 2019 to April 2021 in anticipation of a ban.
China's share of global bitcoin mining potential has dropped from 75.5 percent to 46 percent over the period, while existing miners remain motionless while awaiting news. At the same time Kazakhstan's global mining share rose from just 1.4 percent to 8.2%, placing it third behind the US.
Bitcoin has faced growing criticism for its impact on climate change and the growth of Kazakhstan's mines is likely to further that narrative as the country relies heavily on mineral oil. Kazakhstan was the ninth largest producer of coal in 2018, according to International Energy Agency data. That same year, 70 percent of its electricity comes from coal, and 20 percent from natural gas. Renewables makes up only 1.4 percent of the country's energy supply.
Government energy supplier KEGOC did not respond to a request to discuss how it plans to increase access to services, however in 2013 the country set a goal to produce 50 percent of its energy from non-coal or oil sources, including gas, nuclear power and renewable energy, by 2050.
CCAF data show that US mines have also grown at the same time, from 4.1 percent of the world's shares to 16.8 percent, which puts them in second place. Only 11 percent of US electricity supply comes from renewable sources. The analysis is compiled from data provided by the four pools in the combined mines that represent 37 percent of the world's mineral wealth.
The Chinese ban has shaken the entire sector, with CCAF data showing that more than half of the world's miners have stopped working. The entire network is estimated to use 132 hours of terawatt power in mid-May but this has dropped to 59 TWh in early July.
"It is very safe to say that there is very little work left in China," Michel Rauchs told CCAF. "The big question, then, is where that is going."
Peter Wall at mining company Argo says he sees a "gold explosion" by Chinese miners who want to move their obsolete equipment and stop it in the US, and look for renewable energy sources.
“They left China in part because they were associated with coal and polluted energy. They know that the long-term mining method is to use renewable energy, ”he said. "If you're a miner, the thing that keeps you awake at night, the thing that gives you nightmares, having equipment sitting in a storage area and not in the mines."