Recently, I saw someone discuss Bitcoin mining again, which reminded me of some data I saw a few years ago that was quite shocking.

Cambridge University once published a study showing that at that time, Bitcoin mining's electricity consumption had reached 134.89 terawatt-hours, equivalent to the electricity used by the 27th largest country in the world. In other words, it’s the annual electricity consumption of Malaysia. This number might not seem intuitive, but just think about it—mining a virtual currency can consume as much power as a country, which is worth pondering.

Why does it consume so much electricity? Actually, this is closely related to Bitcoin’s issuance mechanism. The total supply of Bitcoin is capped at 21 million coins. Initially, miners could earn 50 bitcoins per block, but the reward halves every 210k blocks. What does this mean? It means the mining difficulty increases over time, requiring more computing power, and naturally, electricity consumption multiplies. Back in the day, Satoshi Nakamoto could mine 50 coins with a home computer, but later, specialized mining rigs or even entire mining farms were needed to stay competitive.

Mining farm operators have no choice but to purchase more and faster mining machines to stay ahead of others. These specialized mining machines are equipped with chips designed specifically for mining, which generate a lot of heat during operation and require cooling fans to prevent overheating. A single mining machine consumes about 35 degrees Celsius, and a mining farm’s daily electricity use can meet a person’s entire lifetime electricity needs. It’s said that by around 2024, Bitcoin mining in China alone will consume as much electricity as the annual output of 3.5 Three Gorges Dam.

Speaking of which, with Bitcoin mining consuming so many resources, what’s the purpose? Does Bitcoin itself have value? My view is that it actually has little practical value. Bitcoin was born after the 2008 financial crisis, initially as a challenge to the dollar hegemony. It was first circulated among programmers, and later, because of its decentralization and anonymity, its price was gradually driven up. In 2020, the Federal Reserve’s massive liquidity injections caused Bitcoin to soar to $68,000. But these high prices are just bubbles created by speculation; from the perspective of labor value theory, Bitcoin’s value should be zero.

The high prices we see today are essentially driven by people’s speculation on its scarcity and anonymity. Once it reverts to the essence of money, it will face the fate of being squeezed out by mainstream currencies. To put it plainly, the electricity wasted on Bitcoin mining and the cost of mining machines are probably its biggest “value.”

Because of this, our country has firmly cracked down on Bitcoin speculation. First, there’s the energy issue—early on, many Bitcoin farms were concentrated domestically. Miners would buy cheap hydropower in Yunnan, Guizhou, and Sichuan during the rainy season, then switch to coal power in Xinjiang and Inner Mongolia during the dry season. This unlimited energy consumption crowds out electricity for other industries and affects economic development. Second, there’s the risk issue—Bitcoin’s anonymity makes it a natural cover for money laundering, drug trafficking, and scams. Most importantly, it involves national financial sovereignty. In 2021, El Salvador made Bitcoin legal tender, but due to subsequent bear markets, they lost millions of dollars, and some even say it might become the first country to go bankrupt from “cryptocurrency speculation.”

So, whether for the country or individuals, “speculating on coins” is essentially gambling, which erodes the spirit and wastes the virtue of hard work. Our country’s crackdown on Bitcoin mining and related speculation is undoubtedly a wise move.