The enormous quantity of electricity used by miners has prompted governments in Russia and Belarus to explore alternative pricing.
Russian energy minister Nikolai Shulginov suggested last week that higher rates may be on the horizon for miners who take advantage of the discounted tariffs available to the general population for mining activities. Shulginov replied to concerns about illicit crypto miners made by Igor Kobzev, the governor of Irkutsk Oblast. According to Kobzev, power consumption totaled 4.7 billion kWh in the first half of 2021, down from 5.7 billion kWh in all of 2020. His region boasts the lowest power prices in Russia, with urban rates of less than $0.02 per kWh and rural rates slightly more than $0.01.
In September 2021, the head of the Russian Financial Market Committee expressed his support for the legal registration of mining companies in order to tax them equitably.
Belarus already charges miners separately if their yearly usage exceeds or equals 25 million kWh, and companies may be classified into one of four tariff categories. Each group’s cost per kWh has not been revealed. Since March 2018, mining has been allowed in Belarus, and the president has stated a favorable stance on mine, as compared to strawberry picking on a foreign farm. In 2019, he enticed miners with the promise of nuclear energy.
After China’s recent crackdown, power providers discovered to be supplying electricity to miners risks legal consequences. Miners from China have rushed to Kazakhstan, the United States, and Russia. Kazakhstan currently hosts 18% of the world’s hash rate (collective computing power), which is not surprising given the country’s closeness to mainland China. However, the country’s grid saw an annual consumption rise of 7%, which is 5% more than the anticipated yearly increase. On October 15, 2021, the national grid operator said that it will disconnect consumers that use excessive amounts of energy and that it would charge miners beginning in 2022.
Numerous parties weigh in on the mining industry’s energy use.
Tesla CEO Elon Musk has said that the firm would not accept bitcoin as payment until bitcoin mining’s energy usage is reduced by 50%. Mining was briefly prohibited in Iran but has been restored, however, only 50 mining enterprises have been granted legal permission to operate.
Stronghold Digital Mining has begun an emission-controlled burn of abandoned coal stockpiles in Pennsylvania that were deemed unsuitable for the nineteenth-century steel industry. They are able to sell electricity to the grid during periods of high demand, and they utilize the energy produced for mining operations during periods of decreased demand. In this manner, mining operations are not powered directly by the grid.
In Texas, flared natural gas is proving to be a feasible source of energy for miners since it emits carbon dioxide rather than pure methane. By using flared natural gas, miners are able to disconnect from the grid.
In Texas, the power system is deregulated, and spot-price energy purchases enable miners to operate at the lowest feasible tariff. Electricity prices and availability comparable to those found in Texas may entice more miners away from Russia and Belarus in the months and years ahead, as a result of recent government discussion.
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