Prompted by local energy crises, among other things, numerous countries across the globe have implemented restrictions on, or outright bans on, cryptocurrency activity including trading and mining.
The most recent country to enact such restrictions is Kosovo which outright banned crypto mining in the entire country, with authorities going so far as to seize hundreds of mining rigs.
“The government [of Kosovo] says security services will identify and clamp down on sources of cryptocurrency mining,” the BBC reported.
Kosovo’s Interior Minister Xhelal Svecia announced via a Facebook post on Dec. 8 that “the Kosovo Police has organized an action to discover and confiscate equipment for minimum cryptocurrencies,” adding that “272 of these kinds of equipment were seized and one person arrested.”
Following the shut down of the country’s largest coal power plant in December, over a technical issue, an energy crisis has hit the small nation, prompting the government to declare a 60-day state of emergency. The declaration gave the government the ability to allocate more money for energy imports and to impose stricter restrictions on power usage.
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Since the shut down, the country has been experiencing rolling blackouts and protests have erupted over the government’s practice of importing electricity. Last month authorities said Kosovo was importing as much as 40 percent of the energy the country consumes.
Kosovo is not alone
Kosovo is but the latest country on a lengthening list of countries who have placed restrictions or bans on cryptocurrency activity.
China was once one of the world’s largest cryptocurrency markets however, in September 2021, the People’s Bank of China announced that “virtual currency-related business activities are illegal financial activities,” adding that cryptocurrency activity “seriously endangers the safety of people’s assets,” the BBC reported.
Like Kosovo, China is in the midst of a severe, widespread, energy crisis however China’s crisis is primarily due to a depleted stock of coal.
China has implemented a state-run token called the digital RMB or Digital Currency Electronic Payment (DCEP). The token is a central bank digital currency issued by China’s central bank, the People’s Bank of China. It is the first digital currency to be issued by a major economy.
In Vietnam the issuance, supply and use of bitcoin and other cryptocurrencies as a means of payment is illegal and violators are subject to fines ranging from 150 million VND (US$6,600.00) to 200 million VND (US$8,800.00).
In Russia bitcoin is unregulated however its use as a payment method for goods or services is illegal.
In 2018, Egypt’s Dar al-ifta, the country’s primary Islamic advisory body, issued a decree classifying Bitcoin transactions as “haram” or something prohibited under Islamic law. Hence the country considers any cryptocurrency transaction as “haram.”
Other countries who have restricted the use of cryptocurrencies and its related activities include, Nepal, Colombia, Ecuador, Bolivia, Algeria and Indonesia.
Bitcoin’s energy usage
Bitcoin is but one cryptocurrency in a market that boasts thousands of tradable tokens. Bitcoin however is the leader in energy consumption.
In 2017, mining Bitcoin cost more energy than what 159 countries consumed in a year, according to research by Power Compare, a website set up to monitor and report on energy trends in the UK.
In 2017 Bitcoin activity alone accounted for 0.13 percent of the total global electricity consumption.
“If Bitcoin miners were a country they’d rank 61st in the world in terms of electricity consumption,” Power Compare states on their website.
To put it another way, Bitcoin mining consumes more electricity than 12 U.S. states including Alaska, Hawaii, Idaho, Maine, Montana, New Hampshire, New Mexico, North Dakota, Rhode Island, South Dakota, Vermont and Wyoming meaning, Bitcoin consumes more energy than over 14 million Americans and the local businesses that support them, combined.
Bitcoin uses more energy than the entire country of Morocco does in a year and 1006.23 percent of Kosovo’s electricity consumption. Kosovo would have to increase its power consumption by 10 times to match the electricity consumption of the Bitcoin blockchain.
The coin’s computational requirements are to blame for the massive amounts of energy required for it to operate.
Bitcoin, and practically every other cryptocurrency relies on miners to handle transactions done on their respective blockchains. In order to verify transactions, miners are required to solve math problems, which become increasingly difficult to solve the more miners there are.
The hardware required to complete these calculations are typically high-end gaming graphics cards or application-specific integrated circuits (ASICs), which consume considerable amounts of energy when they operate.