Proof-of-Work (PoW) cryptocurrency mining is conventionally characterised as an energy competition, yet this paper provides evidence that the primary competitive margin has shifted from electricity procurement to semiconductor acquisition. Using Bitcoin (BTC) and Bitcoin Cash (BCH)—two SHA-256 networks sharing identical hardware but differing in scale and governance—as a natural comparative setting, we apply the Autoregressive Distributed Lag (ARDL) bounds testing approach to 112 weekly observations (January 2019–March 2021). Mining reward exhibits near-unity long-run elasticity with respect to both hash rate and energy consumption (0.773–1.009), confirming miners’ price-taking behaviour. Critically, the shutdown threshold—an efficiency-based cost floor derived from ASIC hardware generations—dominates all cost-side regressors with elasticities of −1.941 to −2.156, substantially exceeding electricity price effects in both magnitude and significance. VAR analysis provides evidence consistent with a centralisation paradox: rising chip efficiency Granger-predicts increased mining pool concentration for BTC (χ2=33.64, p<0.001) via a revenue-redistribution mechanism, while electricity costs carry no equivalent structural consequence. Zivot–Andrews tests confirm that China’s 2021 mining ban produced a significant transient disruption but no permanent structural break in BTC’s hash rate trajectory, consistent with the geographic mobility of capital-intensive hardware. These findings imply that standard energy-price policies address the wrong margin; effective governance of PoW sustainability requires redirecting regulatory attention toward the semiconductor supply chain—a conclusion with direct relevance to SDG 7 and SDG 13.
Tao et al. (Thu,) studied this question.