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How does bitcoin mining work?

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Technical System Engineer and Hardware Asset Manager perform control and maintenance operations of the mining farm installed inside the hydroelectric power plant.

BOLZANO, ITALY - FEBRUARY 02: Technical System Engineer and Hardware Asset Manager perform control and maintenance operations of the mining farm installed inside the hydroelectric power plant, then powered by a clean energy source with reduced environmental impact on February 02, 2022 in Bolzano, Italy. Mining farms are actual digital mines equipped with super computers, called miners. By excavating cryptographic data and numerical strings, they generate computing power which can be used to operate blockchain networks and to extract new cryptocurrency units. (Photo by Alessio Coser/Getty Images) Alessio Coser/Getty Images

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The world’s leading bitcoin mining country used to be China. But last summer, the Chinese government banned the entire industry. So at the moment, the world leader in mining is us.

More than one-third of global bitcoin is mined in the United States, with companies in places like Texas and Georgia.

But one reason China wanted those miners out? They use a huge amount of energy.

In the U.S., bitcoin mining consumes more electricity annually than Washington state.

Over the next few weeks, we’ll look at the impact of this industry on the climate and our power grid. But to start, what exactly is crypto mining? And why is it so energy-intensive?

Note: This story was originally heard on “Marketplace.” You can read the web version here.

Related links: More insight from Kimberly Adams

If you want to get a sense of the global nature of crypto mining, check out this interactive map from the University of Cambridge, highlighting reported crypto mining activity from August 2019 to July 2021.

Meanwhile, the European Union recently made a notable change to a proposed bill on crypto regulation. Lawmakers decided to remove a proposal that would have banned cryptocurrencies that rely on a mining-verification process and potentially would have banned crypto mining entirely in Europe.

And as we continue to monitor Russia’s war in Ukraine, Bloomberg has a story on how Russia could turn to crypto mining in an attempt to limit the impact of economic sanctions.

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