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Quo vadis, bitcoin? Mining on the crossroads of regulatory pressure and innovative renewal.

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Prelude

“Bitcoin Is Massively Polluting the Earth — And We Should All Be Scared”, reads the headline of Global Citizen, a publication focused on “Defending the Planet”.

The headline is followed up by the claim that bitcoin mining uses as much energy as 28 million US households and most of it comes from fossil fuels. The Guardian, The BBC and NBC echo a similar sentiment.

Most of these publications are not satisfied with just pointing a finger at energy consumption, but go on to demand an end to bitcoin mining per se. They posit that bitcoin is ‘unnecessary’, a speculative bubble that will end badly for all involved, especially the environment.

As bitcoin holders, we have to ask ourselves: Is there merit to these claims? Where does this narrative come from? Which facts substantiate this claim and how can it be countered? Does PoW mining have a future, as it surely must for bitcoin to exist? And where are the opportunities for us as investors?

This research will start from the basics, and cover what bitcoin mining is. It will sketch what the mining industry does and go into detail about how much energy is used and what percentage is from renewable sources.

We will then map out the landscape of regulatory efforts to curb energy usage and in the process find opportunities for entrepreneurial miners.

First Act - Bitcoin Mining History

What is bitcoin mining?

Bitcoin’s blockchain consists of a linked series of data bundles, called blocks. Each block is sealed by a cryptographic hash that can be derived from the block’s data in an unambiguous way. If data was to be altered later, its hash would betray the tampering. Just a tiny change in the underlying data leads to vastly different hashes.

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