Cost of mining 1 bitcoin 2019

Bitcoin mining consumes electricity in a uniquely flexible way, making the process highly suitable for stabilizing electricity systems through a mechanism called demand response. The current transition from fossil fuels to renewable energy reduces the flexibility in electricity systems globally. The need for demand response is therefore increasing. In this blog post, I explain why we desperately need to increase the flexibility in electricity systems and evaluate if bitcoin mining can be a solution. In electricity systems, supply and demand must be balanced in real-time since electricity cannot easily be stored.



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WATCH RELATED VIDEO: My electric bill after Mining Bitcoin

Bitcoin (BTC) mining profitability up until November 8, 2021


Bitcoin mining consumes electricity in a uniquely flexible way, making the process highly suitable for stabilizing electricity systems through a mechanism called demand response. The current transition from fossil fuels to renewable energy reduces the flexibility in electricity systems globally. The need for demand response is therefore increasing. In this blog post, I explain why we desperately need to increase the flexibility in electricity systems and evaluate if bitcoin mining can be a solution.

In electricity systems, supply and demand must be balanced in real-time since electricity cannot easily be stored. The electricity supply going into the system must equal the demand at all times. If the supply gets higher than the demand, transmission lines or other equipment can get fried. On the other hand, customers will be out of electricity if the supply gets lower than the demand. Power companies have become adept at estimating future demand, but as with all modelling, it involves errors.

The margin of error is more significant the further into the future the estimation is. On the supply side, power generators or other equipment can go down, or in the case of wind and solar - the wind can suddenly stop blowing, or the sun can suddenly stop shining. The flexibility in the system balances supply and demand in case of either supply shocks or failures in demand estimation. Both resources on the supply side and the demand side can provide flexibility. Historically, the supply side alone has provided the needed flexibility by adjusting power plant output to match the real-time demand.

Natural gas power plants are especially suited as peaker plants - holding back supply until demand increases and firing on all cylinders to meet the rising demand. A traditional electricity system often consisted of colossal coal power plants that met the baseload - the minimum level of demand typically seen over 24 hours, and natural gas-powered peaker-plants adjusting the supply to match the demand at any given time. In recent years, a new flexibility challenge has arisen that can potentially create grave dangers for the security of the electricity supply if left unmitigated.

We are in the middle of an energy transition where we replace fossil fuels with renewable energy, fueled by massive growth in wind and solar. These are so-called variable renewable energy sources, which means that they only produce electricity when the weather conditions allow for it. Unfortunately, the weather does not consider the demand for electricity before deciding to turn up as sun or wind.

In addition, even the best weather forecasting models are prone to occasional errors. Since they are uncontrollable resources, wind and solar can't provide flexibility. Because of these characteristics of variable renewable energy sources, a growth in their share in the electricity mix reduces the supply side's predictability and flexibility, pushing flexibility responsibilities over on the demand side. We are going towards a future where controllable and reliable power plants running on fossil fuels are being replaced with wind and solar - uncontrollable and unreliable sources of electricity that can't provide flexibility.

So, how are we going to replace the lost flexibility? Batteries or hydrogen are proposed solutions, but these technologies are far from mature and thus extremely expensive to deploy. Expanding the geographical size of the market with transmission lines is also an option. Still, they require substantial initial investments and introduce a non-negligible electricity loss when electricity is transported across vast distances, especially considering the remote nature of the best renewable energy generation locations.

Although we will need a mix of these flexible solutions, increasing the demand side's flexibility stands out from the others regarding cost and simplicity. This is where demand response comes into the picture. Demand response is when electricity consumers voluntarily agree to reduce their electricity consumption when demand exceeds the available supply.

This can be structured in several ways, but common practice is that the consumer has a power purchase agreement with an electricity provider while simultaneously selling the electricity provider an option to reduce electricity consumption when certain conditions are met. This way, if for example, demand suddenly increases because of an unexpected heatwave, consumers participating in demand response programs will reduce their consumption and let that electricity flow to other consumers instead.

This is a win-win situation since the electricity consumers who provide flexibility through demand response are paid for it. Although it can be lucrative to participate in demand response programs, not all electricity consumers can deliver these services. Certain power consumption characteristics enable a process to be used for demand response. These are the demand response flexibility factors Mellerud, :. High energy intensity: The task of demand response is for a consumer to reduce its electricity consumption in certain situations so that other, less flexible consumers can instead enjoy the released electricity.

For the discharged electricity to make a difference for the grid, the released electricity must be of a meaningful amount. EnelX states that a process should at least be able to reduce kilowatts of electricity to be a good candidate for demand response.

Low reaction time: A process acting as a demand response must react quickly since the imbalances between supply and demand, which it is engaged to stabilize, are often short-lived and hard to predict. High availability: Availability relates to the up-time of the process. If a process is continuously running at full capacity, it will always be able to sell its electricity back to the grid. In other words, the payments for reducing electricity consumption must be higher than their cost of reacting.

Therefore, a high cost of reacting limits the possibilities for a process to reduce its electricity consumption on short notice. The reason is that a process that can turn its electricity consumption up or down through many levels can sell many different amounts of electricity back to the market instead of just one amount. High geographic flexibility: Demand response is about providing flexibility to local electric power systems.

If processes can locate themselves almost anywhere, they can be used for demand response in many different electric power systems. In addition, many of the regions where demand response is needed the most are located in high variable renewable energy clusters far away from population centres, like West Texas.

Most industries are relatively inflexible when it comes to where to locate their processes. Examples of sources of such inflexibility can be access to workforce, raw materials and logistics networks for their finished products. To get a grasp on if bitcoin mining is suitable as demand response, we can now evaluate the process based on the demand response flexibility factors:. Based on these numbers and the world's total electricity consumption IEA, , bitcoin mining is responsible for around 0.

This undoubtedly makes bitcoin mining a highly energy-intensive industry. In addition, economies of scale are extremely important to draw down costs and be competitive, so most of the individual mining sites are huge electricity consumers. As explained earlier, processes that draw a minimum of kilowatts can be candidates for demand response. A bitcoin miner needs about 30 of these to be eligible to participate in demand response programs. Most bitcoin mining facilities have thousands of machines like these.

ASICs are computers and can therefore quickly adjust their electricity consumption. The ASICs can be connected to a control panel that lets the administrator adjust their power draw at a moment's notice. This process can be automated based on factors such as electricity price or grid frequency. According to Lancium, their patented demand response software allows bitcoin miners' and other data centres to ramp up or down their electricity consumption in as little as five seconds.

This reaction time is on par with the fastest reacting peaking plants and lets bitcoin miners in Texas participate in the demand response programs that require the quickest reaction times. Bitcoin miners are economically incentivized to constantly produce at full capacity since they have significant investments in machines that they are eager to earn back.

Because of this, bitcoin miners are highly reliable and stable loads with excellent availability. Bitcoin mining is a straightforward operation: A bitcoin miner owns computing hardware, feeds it with electricity and receives bitcoin in return. It's a probabilistic game where, in the long-term, the amount of bitcoin a miner earns depends solely on their computing power, which again depends on their electricity consumption.

A bitcoin miner transforms electricity into bitcoin. At what time of the day a bitcoin mining facility runs doesn't matter. Bitcoin mining's computations can be characterized as a non-time-sensitive computation Maze-Rothstein, because there are no clients except for the Bitcoin network and no requirements for up-time.

In addition, a bitcoin miner has no costs related to the actual down-ramping of the facility's power consumption. The only cost of reacting for a bitcoin miner is the alternative cost of not mining bitcoin when the machines are turned off.

For all industrial processes utilized as demand response, the alternative cost of not producing will always be the minimum cost of reacting, making bitcoin mining's cost of reacting minimally. Liegl explains that physical power plants can usually only increase or decrease output in significant increments of 1 megawatt or more, while Virtual Power Plants VPPs can increase or decrease production in hyper-granular increments on the kilowatt level.

A VPP consists of several flexible consumers who aggregate their combined demand response capabilities. In this respect, a bitcoin miner can be compared to a VPP, but there is one big difference.

A bitcoin miner already can granularly increase or decrease its electricity consumption while the VPP must integrate several flexible consumers to get these capabilities.

There are several ways miners can granularly adjust their electricity consumption: Miners usually have several thousands of ASICs, so they can change the total number of ASICs running at any time, or they can adjust the effect of each ASIC.

It's safe to say that there is no other electricity consuming processes with a higher consumption level granularity than bitcoin. As explained, all processes have constraints limiting their geographic flexibility, although to different degrees.

Examples of such constraints include: Access to labor; access to raw materials and other input factors; and access to distribution networks for their products and services. Bitcoin mining is not a labour intensive industry. When the data centre is up and running, the workforce mainly consists of technicians who control and configure the machines and other technical equipment.

Workers fulfilling the requirements for such roles can be found in most locations. When it comes to access to raw materials and other input factors, bitcoin miners need ASICs, electricity and cooling systems. ASICs and cooling systems are capital expenditures and only need to be deployed once and can practically be shipped to any location with a road connection. Like most novel technologies, ASICs improved rapidly, so miners constantly had to upgrade them to stay competitive.

Since the biggest ASIC manufacturers are located in China, it was natural for miners to locate themselves there too to get their hands on the newest machines before their western competitors. Therefore, in the first years of ASICs mining, miners were significantly less geographically flexible than they are now. This has changed, and most miners today prioritize having access to cheap electricity over having quick access to the newest ASICs.

The reason is that the technological improvement rate of ASICs has drastically slowed down, leading to a longer lifetime of the machines and thus less importance of the newest gear.

The most significant input factor for a bitcoin miner is electricity, and miners are dependent on having access to cheaper electricity than their competitors to stay profitable in the long term.

This means that bitcoin miners are geographically tied to places where electricity is cheap. These cost savings can open up many new locations for bitcoin miners where previously the electricity was too expensive, given that there are possibilities for doing demand response there. When it comes to access to distribution networks for their products, bitcoin miners distribute their product, processing power, over the internet.

Their payments in bitcoin are also distributed to them through the internet. Bitcoin mining is an energy-intensive and stable load that can be rapidly adjusted up or down with extreme precision at no extra costs.

With an internet connection and access to electricity as the only geographic requirements, bitcoin miners are also extremely geographically flexible. They can easily locate themselves exactly where demand-side flexibility is needed.



Bitcoin Uses More Electricity Than Many Countries. How Is That Possible?

US , Innosilicon Miners 14 products available. Liquid immersion cooling has been demonstrated to yield greater hashrate capacity than air cooling, the current industry standard. Prices and availability change often. You provide the power, water and network. Bitcoin miners will need as … A nonconductive fluid is used to submerge Bitcoin miners during immersion cooling.

4 #bitcoin mining facts in for FUDsters: 1) In Kuwait, it only costs USD to mine 1 BTC 2) % of mining is renewable energy 3).

Bitcoin Energy Consumption Index

Thank you for visiting nature. You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser or turn off compatibility mode in Internet Explorer. In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript. The growing energy consumption and associated carbon emission of Bitcoin mining could potentially undermine global sustainable efforts. By investigating carbon emission flows of Bitcoin blockchain operation in China with a simulation-based Bitcoin blockchain carbon emission model, we find that without any policy interventions, the annual energy consumption of the Bitcoin blockchain in China is expected to peak in at Internationally, this emission output would exceed the total annualized greenhouse gas emission output of the Czech Republic and Qatar. Domestically, it ranks in the top 10 among cities and 42 industrial sectors in China.


How bitcoin mining can support the energy transition

cost of mining 1 bitcoin 2019

Energy consumption has become the latest flashpoint for cryptocurrency. Critics decry it as an energy hog while proponents hail it for being less intensive than the current global economy. This puts the bitcoin economy on par with the carbon dioxide emissions of a small, developing nation like Sri Lanka or Jordan. Jordan, in particular, is home to 10 million people.

Tron mining live.

This map shows the best states for bitcoin mining

The Bitcoin network is burning a large amount of energy for mining. In this paper, we estimate the lower bound for the global mining energy cost for a period of 10 years from to , taking into account changes in energy costs, improvements in hashing technologies and hashing activity. We estimate energy cost for Bitcoin mining using two methods: Brent Crude oil prices as a global standard and regional industrial electricity prices weighted by the share of hashing activity. Despite a billion-fold increase in hashing activity and a million-fold increase in total energy consumption, we find the cost relative to the volume of transactions has not increased nor decreased since This is consistent with the perspective that, in order to keep the Blockchain system secure from double spending attacks, the proof or work must cost a sizable fraction of the value that can be transferred through the network.


Crypto mining: Why Does Bitcoin Use so Much Energy?

Reykjavik, Iceland — Marco Streng first visited Iceland to solve a simple problem. His bitcoin computers were using more energy and the remote North Atlantic island had massive amounts of electricity at inexpensive rates. He travelled no more than three kilometres from the airport terminal to an abandoned airstrip built by allied forces in World War II. This was in and the barren, windswept ground then seemed like an unlikely place for a financial district. Powerful computers, stacked inside long and grey warehouses, use more electricity than all Icelandic homes combined, according to a local energy firm. Raised in Bavaria, Germany , the 29 year old was a maths prodigy on a glowing academic track until he began collecting digital coins. Being a bitcoin entrepreneur is the only job Streng has ever held. Hydroelectric dams sink untouched land under water and alter rivers and waterfalls.

It's market cap is currently ₹T. Over the last 24 hours, Ether (ETH), the currency for the Ethereum network, went from ₹1,99, to ₹2,04,

We use cookies and other tracking technologies to improve your browsing experience on our site, show personalized content and targeted ads, analyze site traffic, and understand where our audiences come from. To learn more or opt-out, read our Cookie Policy. Be skeptical. The cryptocurrency bitcoin has become notorious for its ravenous appetite for electricity — and its presumed massive carbon footprint.


We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence. Our articles, interactive tools, and hypothetical examples contain information to help you conduct research but are not intended to serve as investment advice, and we cannot guarantee that this information is applicable or accurate to your personal circumstances. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional.

Among asset classes, Bitcoin has had one of the more volatile trading histories.

Bitcoin uses more electricity annually than the whole of Argentina, analysis by Cambridge University suggests. Cambridge researchers say it consumes around Critics say electric-car firm Tesla's decision to invest heavily in Bitcoin undermines its environmental image. But the rising price offers even more incentive to Bitcoin miners to run more and more machines. And as the price increases, so does the energy consumption, according to Michel Rauchs, researcher at The Cambridge Centre for Alternative Finance, who co-created the online tool that generates these estimates. The energy it uses could power all kettles used in the UK for 27 years, it said. However, it also suggests the amount of electricity consumed every year by always-on but inactive home devices in the US alone could power the entire Bitcoin network for a year.

The latest data from the Global Energy Institute shows the average price of electricity is lowest in states including Texas and Washington, which certainly jibes with the fact that both states are increasingly hot destinations for minting new digital coins. While the cost of power isn't everything when deciding where to set up shop, it sure goes a long way. Miners at scale compete in a low-margin industry, where their only variable cost typically is energy, so they are incentivized to migrate to the world's cheapest sources of power. In California and Connecticut you will pay anywhere from 18 to 19 cents per kilowatt hour, whereas in Texas, Wyoming, Washington, and Kentucky, you will pay less than half that, according to the Global Energy Institute, which puts out an annual electricity price map of the country, using the most recent full year of data available from the U.


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