Ever since mining Bitcoin became popular, the computational power required to mine it has increased. This means that it is requiring more energy and is, therefore, becoming less lucrative for miners. One way that miners are trying to maintain their profitability is by decreasing their energy costs. The added benefit of this is that it reduces the environmental cost as well.
Mining a single Bitcoin now consumes 20 barrels of oil. This is an astonishingly high amount, although, with the current value of Bitcoin standing at over $6,000, this equates to the value of around 100 barrels of oil. So, once that Bitcoin becomes available, it is immediately worth 5 times the amount of energy used in the mining process.
When we look at the picture on a larger scale, we can see that every year around 22.5 TWh of energy is used in mining Bitcoin. This is equivalent to more than 13 million barrels of oil. For this reason, mining activity tends to take place in countries such as China, which has relatively cheap electricity costs. However, regulation surrounding the mining of Bitcoin in China is becoming more and more stringent, so miners may begin to look at other locations.
For a period, the Russian market for Bitcoin mining was strong, although it has recently become less common there, with reports that the country is set to launch their own CryptoRuble, making all other forms of cryptocurrency illegal. One measure to keep the costs of electricity down is to locate to colder countries where there is less of a need to spend money on cooling. For this reason, countries like Kazakhstan and Iceland seem to be promising future locations.
Wherever the future of Bitcoin mining lies, one thing is clear, utilising renewable energy sources is imperative if the currency is to be environmentally sustainable.