Bitcoin is an entirely digital currency. Satoshi Nakamoto created bitcoin to give an extra hedge to inflation. Inflation refers to the increment in the value of goods and services. Since bitcoin has a capped supply, the more supply of bitcoin also decreases after every four years, the rate of inflation of bitcoin is meager. As bitcoin is entirely virtual, the process of creating bitcoin is also virtual. Bitcoin mining creates new bitcoin units and adds these bitcoin units to circulation.
Undeniably, bitcoin mining is one of the most critical aspects of the bitcoin complex. Still, several countries are banning bitcoin mining. Bitcoin mining is a profitable business, but there are some drawbacks of bitcoin mining as well.
The profitability of bitcoin mining keeps changing, but bitcoin trading has always been profitable. To get profitable results in your bitcoin trading expedition, study the benefits of bitcoin to different sectors and check out some urgent data on bitcoin. Also, here are some of the crucial reasons why countries are banning bitcoin mining.
Basics of bitcoin mining
Before understanding why few countries are banning bitcoin mining, you should know what bitcoin mining is. Bitcoin mining is a computerized progression that requires a robust electrical source.
At the very first instance of the bitcoin release, bitcoin mining was possible with an average CPU. Bitcoin mining is the action of verifying bitcoin transactions by contributing robust bitcoin mining hardware. Furthermore, the proof of work mechanism ensures that every miner must solve a math puzzle to verify these transactions.
After verifying the transactions, the bitcoin miner gets a block reward. The block reward of bitcoin mining includes a specific number of bitcoin units alongside the transaction cost. So, in a nutshell, bitcoin mining is getting new bitcoin units and verifying the bitcoin transactions.
Why are few countries banning bitcoin mining?
As mentioned ahead, individuals performing bitcoin mining avail bitcoin units after verifying the transactions. Therefore, the block reward of bitcoin mining demonstrates that bitcoin mining is very profitable and has massive earning potential.
Rather than just being a profitable business, bitcoin mining is also very essential for the bitcoin complex. Because bitcoin mining maintains the supply of a bitcoin network; all the more, it increases the security of the bitcoin network.
Recently, several countries have started developing strict crypto regulation rules that include banning bitcoin mining, but why? Here is a complete explanation of why countries are banning bitcoin mining.
Electricity consumption of bitcoin mining
You are familiar with the fact that there is massive competition in the bitcoin mining industry. In bitcoin mining, miners have to compete with other miners to solve the math puzzle at the very first instance.
The arrival of a specialized bitcoin mining rig has completely changed the scenario of bitcoin mining. Most of the bitcoin mining plants are using these robust bitcoin mining hardware to mine bitcoin.
The prominent reason for this is that the capability of specialized bitcoin mining hardware is much more than central processing units and graphic units. In a nutshell, to avail profitable results in the bitcoin mining journey, everyone is using these specialized bitcoin mining hardware. This specialized bitcoin mining hardware consumes an exceeding extent of power in contrast to the graphic processing units.
All the more, according to the proof of work mechanism, if a bitcoin miner cannot solve the math puzzle at the very first instance, he has to start all over. Therefore, to avail profitable results in the bitcoin mining venture, miners have to run their bitcoin mining rigs all day long.
Iran banned bitcoin mining due to its energy consumption. The energy consumption of bitcoin mining in Iran was the only reason behind power cuts and blackouts in Iran. However, Iran is about to restart bitcoin mining very soon.
Everyone is familiar with the fact that electricity consumption leads to burning fossil fuels such as coal. As mentioned ahead, bitcoin mining consumes an exceeding extent of electricity which means there is a lot of fossil fuel burning due to bitcoin mining. One transaction of bitcoin generates 233 grams of e-waste. China banned bitcoin mining due to its environmental toll.
These are some of the reasons why few countries are banning bitcoin mining.