Ratings agency calls for regulated crypto mining

Fitch Ratings has argued that an increase in crypto mining could have an impact on the energy sector in emerging markets and the developed world.

The credit rating agency estimates that crypto mining is already consuming between 0.4% and 1% of the global electricity output.

However, the company also said that regulation and the arrival of new technology would help offset some of the increased demand and help protect utility companies and their infrastructures. One possible solution has already been pitched by Intel.

Fitch warned that there are still numerous operations that run outside of any regulation. They often fail to pay tax or use complicated methods to avoid detection.

In China, miners continue to operate across large geographical swathes hoping that dispersing the energy necessary for bitcoin mining would hide their trace.

Meanwhile, Fitch noted that the early days where people could set up desktop equipment to mine Bitcoin are now gone and whoever wishes to proceed would need equipment worth thousands of dollars per farm.

Meanwhile, jurisdictions such as Kazakhstan, Canada and the US have been opening up to crypto mining operations. However, Kazakhstan has grown chillier towards crypto recently.

The risk that Fitch outlines is the growth in unregulated cryptocurrency energy demand which could disrupt the energy sector if left unchecked.

Lack of transparency makes it hard for energy suppliers to plan what powers are needed to satisfy consumer demand. However, as those farms operate illegally, they have no incentive to making their existence known.

Fitch predicts that the digital currency market should become more mainstream and predictable. This is mostly due to the fact that even mining operations are finally coming under regulatory scrutiny which should help address some of the problems posed by excessive energy use.

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Updated: 02/22/2022 — 14:00