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As the U.S. House of Representatives prepares to hear from cryptocurrency mining executives on Thursday, the future of the industry has been called into question by political happenings across the world in Kazakhstan.
The House Committee on Energy and Commerce is set to play host to mining execs Thursday afternoon. The hearing, “Cleaning up Cryptocurrency,” is the first time members of Congress have heard from miners.
Meanwhile, the mining hub of Kazakhstan is grappling with its worst unrest in three decades and ensuing internet outages — leading experts to wonder if the miners might move elsewhere.
“Miners have learned to take political risks seriously,” said Nic Carter, partner at crypto venture capital firm Castle Island Ventures. “I think the internet outage and the possible revolution that’s occurring there might spook miners a little bit, but really it was the energy authorities cracking down on miners.”
The rising cost of energy, according to Carter, is likely to push miners out of Kazakhstan — the second-largest mining hub in the world, according to data from the University of Cambridge.
But it’s not yet clear where they might go. A westward shift, which has started in recent months, indicates a likely move toward renewable energy, experts said.
It remains to be seen how U.S. regulators will react. Those testifying in the House hearing include Ari Juels, professor at Cornell Tech; Soluna Computing CEO John Belizaire; Bitfury CEO Brian Brooks and others.
More concrete details on how the U.S. will regulate mining are expected in the coming months as cryptocurrency continues to come into the mainstream, Congress has warned.
But an all-out ban is unlikely. China, which began cracking down on cryptocurrency in 2017, announced a mining ban in June 2021, citing energy concerns. The decision pushed much of the industry out of the country.
“In September 2019, China was about 75% of the hash rate while the US was under 4%, now the US is in the lead,” said Martha Reyes, head of research at Bequant. “The China crackdown has been a blessing in disguise in many ways. Even though part of the mining energy in China was renewable, there’s a lot more awareness and the industry is more proactive.”
Most miners looking to move are headed to countries like the US, Iceland, Canada and Scandinavian nations, according to Garrette David, advisor to the Cosmos Network. That points towards a shift toward more environmentally friendly operations.
“There’s a ton of initiatives around renewable energy mining and offsetting of mining in general,” David said. “It is going to depend on where you can get renewable energy.”
Industry advocates have made efforts in recent years to shift the narrative around mining and energy use. The Bitcoin Mining Council, MicroStrategy’s joint venture with Galaxy Digital and other companies, is the latest effort to push a sustainable narrative.
“The Bitcoin Mining Council is skewed towards the US and the Nordic countries and of course they self-report, so it’s going to be biased,” Reyes said. “But, there is now more transparency about mining and energy consumptions, and I think that’s what will matter to investors.”