Fortunately, we have the solutions to solve these and improve the network.

Bitcoin’s global accessibility, in addition to the ability to readily switch on and off the ASIC miners, used to help secure its network, has made it popular for individuals and businesses of various sizes to mine BTC. 
 
Since launching in January 2009, its 99.99% uptime has made it the most reliable and secure blockchain. Yet, it faces multiple challenges that must be overcome to maintain its dominance, security, and decentralisation while continuously aiming to reduce its overall environmental footprint.
 
Let’s begin. 

A lack of hashrate decentralisation

 
While China once accounted for up to 75% of the overall hashrate, its central government “banned” Bitcoin mining, causing many to relocate to the USA or go underground
 
As a result, the USA now has the highest proportion of Bitcoin hashrate in the world. This is January 2022 CBECI data, so the current figures differ. I have sought updated numbers, but many websites claiming 2024 stats use the same CBECI data included below.

Bitcoin mining map. These data are from January 2022, which appears to be the latest available in this form. 
 
 
Source:

Cambridge Bitcoin Electricity Consumption Index

(

CC BY-NC-SA 4.0

licence) from the

Cambridge Centre for Alternative Finance

 (CCAF).

Even though it is relatively more transparent for countries to track mining activity in the USA instead of China, one nation still has significant clout over the global hashrate. This is not ideal for Bitcoin, let alone for any digital asset whereby mining or staking activities are managed by one or two countries (or entities). 
 
It’s one thing to be at the mercy of the incumbent government influencing energy policy, but there’s the more common problem of dealing with extreme weather events. For example, Texas reportedly makes up 29% of Bitcoin mining in the US. 
 
In January this year, a persistent cold snap in the Lone Star State led to an unexpected (albeit temporary) 34% decline in the Bitcoin hash rate. 
 
Before continuing, yes, I understand Texas’ hashrate share wasn’t the only reason for this. However, as with prices for BTC, ETH and other digital assets, bad news tends to panic the market, even if it’s a one-off event or something expected to happen well in advance, e.g., Mt Gox repayments. 
 
Moreover, during energy shortages in the middle of summer or winter, electricity operators sometimes order Bitcoin miners to halt operations to provide greater grid stability. Riot Platforms experienced this when it was compensated $31.7 million in energy credits via the Electric Reliability Council of Texas (ERCOT) to scale back operations during a heatwave last August. 
 
Such events prompt the need to spread Bitcoin mining, preferably across more countries worldwide. 
 
The unfortunate truth is that most people who hold BTC couldn’t care less about the network’s distribution, whether the Bitcoin nodes across the globe or the locations of mining operations. 
 
For many, having a robust, decentralised and censorship-resistant alternative to fiat currencies — including the USD — is barely a consideration for many laypeople holding BTC.
 
According to a tweet from Elon Musk, there’s even potential for it (or another digital asset) to be used as interplanetary money, but I digress.

Share of global Bitcoin hashrate per country, September 2019 — January 2022. Source:

CBECI

via CCAF (

CC BY-NC-SA 4.0

licence).

*To CCAF’s knowledge, Germany and Ireland’s statistics are most likely overestimated due to insufficient evidence to back these stats. VPNs or proxy services have most likely contributed to their relatively high percentages. 

An energy-food conundrum

 
Until recently, Iceland was perceived as an attractive location for Bitcoin mining operations owing to its abundance of renewable energy, which has historically been used to power aluminium smelters
 
Earlier this year, its Prime Minister, Katrín Jakobsdóttir, expressed concerns about the potential clash between Bitcoin mining operations and the energy demands of its agricultural industry.
 
The nation imports far more food than it exports, so there’s a compelling argument for supporting more local agriculture for improved food security, which is becoming increasingly important amid rising global tensions. 
 
So, why am I discussing Iceland in this piece? Despite its tiny size — both in terms of its geography and population — it is the world’s highest Bitcoin hash rate producer and biggest energy producer per capita
 
It’s playing its role in helping distribute Bitcoin mining, with the added benefit of it being mostly powered by locally sourced renewable energy; 85% of the nation’s electricity comes from renewables (65% geothermal and 20% hydropower), helping make its operations more environmentally sustainable. 
 
While Bitcoin is expected to become increasingly important, notably in countries suffering from hyperinflation and poor governance, access to reliable energy and nutritious food takes precedence. 
 
It is also difficult to justify assigning resources to energy-intensive Bitcoin mining farms in developing countries (for the sake of geographical hashrate distribution) when these nations still lack the suitable infrastructure to meet basic energy requirements for their citizens. 
 
Until this is resolved, these areas won’t play a major role in powering Bitcoin’s network. 
 
Thus, this energy-food dilemma affects everyone. Even Bitcoin’s most devout believers can’t ignore this.
 
It is not a new problem, as this phenomenon was well-documented in other industries before Bitcoin existed. For example, earlier forms of biofuel production led to a water, food, and energy trilemma. 

Dealing with old ASIC miners

We’ve found solutions to reduce carbon emissions from operating ASIC miners and mass-scale Bitcoin farms — such as ones deployed by publicly traded Bitcoin mining companies — by utilising as much renewable and nuclear energy as possible, innovative miner cooling methods, and harnessing waste heat, to name a few. 
 
However, a major challenge remains — E-waste generated from obsolete or broken ASIC miners. 
 
I will acknowledge that this problem is not exclusive to ASICs. All consumers and electronics manufacturers face the same issue in dealing with vast quantities of problematic waste.
 
As I’ve previously covered, this matter doesn’t appear to interest enough people, at least not now. If you’d like to learn more about this, I recommend the following article. 

On a positive note, I came across a Georgia-based company that accepts used cryptocurrency miners for recycling or disposal (Litecoin, Dogecoin, and Ethereum Classic are other blockchains that also use Proof-of-Work). 
 
Whether it is economically feasible to extract valuable materials from used equipment depends on the following: 
 
— local minimum wages 
— how viable it is to ship e-waste to countries or regions with lower wages
— the work health and safety rules in place (or lack thereof)
— the procedures used to separate metals and various materials for reuse or recycling, i.e., how mechanised the process is. 

Additional thoughts

 
Other countries capable of accommodating Bitcoin mining facilities must increase Bitcoin’s hashing power to the global mix. 
 
One that stands out is my home country, Australia. 
 
According to the CBECI map, Australia accounts for only 0.36% of the total hash rate, which is on par with its northern neighbour, Indonesia, and Brazil. Much smaller Southeast Asian countries, such as Malaysia, Singapore, and Thailand, contribute much more to the hashing power than Australia. 
 
This resource-rich land spans over 7.7 million km2 (2.98 million sq mi) and has the massive potential to significantly boost its share of renewable energy production. Several zones Down Under are well equipped for solar (PV and thermal), wind, and wave power. Hydroelectric power stations also add to the renewable energy mix. 
 
There was potential for nuclear power once upon a time here. Still, due to the political climate (particularly recently), massive R&D and interest in renewables, and upfront costs and timeframes, establishing nuclear power is an uphill battle.
 
Considering all of this, it is embarrassing that, as a highly developed country, it hasn’t done enough to boost the network’s decentralisation. Hopefully, this will change in the coming years, but I’m not convinced. 


As I wrap up, Bitcoin’s mining pool centralisation is another factor to consider. For context, this has been discussed for several years, so it is nothing new. This is also why I’ve left this towards the end, as many articles have been written about this topic.
 
Furthermore, these concerns are not exclusive to Bitcoin, let alone PoW networks. Ethereum, which fully transitioned to a Proof-of-Stake network in 2022, also faces its lion’s share of criticism due to the dominance of a few validators. Vitalik Buterin has recently spoken about this matter and possible solutions. 
 
This reinforces the need to encourage different entities to offer Bitcoin mining services across more regions globally. However, I do recognise the logistical and regulatory hurdles to overcome, coupled with the massive upfront and ongoing investments required to establish mining firms that are large enough to make a noteworthy contribution to the overall hashrate.
 
Let’s see how the most dominant players — whether in mining or the largest BTC holders — shape Bitcoin’s future. Besides them, we need more individuals to play their role (where possible) in ensuring this ecosystem remains sufficiently decentralised. 
 
Based on current trends with the increasing influence of institutional investors, I’m not holding my breath, but I remain hopeful. 
 
P.S. Quantum computing is another challenge I could (perhaps should) have included here, but it is another factor discussed at length in recent years. Here’s an article I’ve written about QC and Bitcoin.