Recently, I came across some data and wanted to chat with everyone about what Bitcoin mining is all about.

A 2021 study from Cambridge University found that Bitcoin mining’s electricity consumption has reached 134.89 terawatt-hours. If it were a standalone country, its power usage would rank in the top 30 globally. This figure is actually quite shocking—it’s equivalent to a medium-sized country’s electricity consumption for an entire year. Many people may wonder: what is mining, and why does it consume so much electricity?

Put simply, mining is about using computer computing power to compete for the right to record transactions. In the early days, Satoshi Nakamoto mined 50 Bitcoins using a home computer, and the electricity consumed was negligible. But as more and more participants joined, the difficulty surged dramatically. Bitcoin’s design mechanism ensures that the total supply is only 21 million coins, and every time 210,000 blocks are produced, the reward is halved once. This means the difficulty of mining increases exponentially.

In a simple sense, initially mining one Bitcoin might have just required one computer running for a day. Later it became ten computers for ten days, and then it turned into hundreds of computers for hundreds of days. To stay ahead of competitors, the only way for miners is to constantly upgrade their mining rigs and stack up computing power. Today, the power draw of a single mining machine is around 35 kilowatts, and a mining farm’s daily electricity consumption is enough for an average person to use for a lifetime. That’s why Bitcoin mining has become a massive energy black hole.

So are the Bitcoins mined by all those miners really worth anything? In my view, this is a question worth thinking about. Bitcoin was created during the 2008 financial crisis. At that time, the Federal Reserve was pumping liquidity into the market, and the devaluation of the dollar was all but certain. Satoshi Nakamoto tried to challenge this system with a decentralized digital currency, and the original intention is certainly interesting.

In the early days, Bitcoin circulated mainly within the tech enthusiast community, and some people even traded 1,000 Bitcoins for two pizzas. But today, Bitcoin has completely turned into a speculative asset. In 2020, the Fed once again flooded the market, and Bitcoin surged all the way to $68,000. The problem is that, from a labor theory of value perspective, Bitcoin itself has no real value. It isn’t a necessity, and miners’ labor can’t directly measure its value. In plain terms, the current high price is nothing more than a bubble inflated by speculation.

Bitcoin’s biggest value may lie in its decentralization and anonymity, but these features are a double-edged sword. In real-world use, it is often used for money laundering, drug trafficking, and other criminal activities—which is also why governments around the world are cracking down. In 2021, the People’s Bank of China reiterated its stance on cracking down on virtual currency speculation. The reasons are clear: first is energy waste. At the time, it was said that nearly 70% of Bitcoin mining farms were in China. If things developed in that way, then by 2024, mining alone would consume electricity equal to three years of the Three Gorges Dam’s power generation, which would be a huge drag on domestic economic development.

Second, Bitcoin’s anonymity really does provide a shield for criminal activity. Most importantly, it threatens a country’s monetary sovereignty. El Salvador’s experiment of making Bitcoin legal tender is a vivid lesson: when Bitcoin’s bear market hit, this small country lost tens of millions of dollars and was almost facing bankruptcy.

So my view is that what mining is and what Bitcoin is, ultimately comes down to a speculative game. It consumes resources, breeds crime, and threatens financial stability—government crackdowns are entirely reasonable. Instead of being swept along by FOMO, it’s better to view the market rationally.