Crypto mining is dying

There are a lot of cryptocurrencies out there now, but the biggest is still Bitcoin. By design, it uses a lot of energy. Why does it need so much energy? Generating that number is almost like picking a winning lottery number. The process has to be done with specialized computers and a person or company now needs thousands of these bitcoin miners to find that unique number to add new blocks in the bitcoin blockchain.

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Content:

• Ukraine's new crypto law could make it a trading hub. Some would rather it stayed in the shadows
• New York good-government advocates want moratorium on cryptomining
• Is Cloud Mining Dead? Meet the Alternatives
• Kosovo bans cryptocurrency mining to save electricity
• Bitcoin mining: Is Scandinavia's cryptoboom coming to an end?
• Is cryptocurrency likely to die out as governments attempt to ban it?

WATCH RELATED VIDEO: Why a crypto price crash is great for miners! (Make more money by mining when the market is down!)

Ukraine's new crypto law could make it a trading hub. Some would rather it stayed in the shadows

Bitcoin mining likely uses more energy than it takes to keep New Zealand's lights on. The recent upsurge in the price of Bitcoin seems to have finally awakened the world to the massively destructive environmental consequences of this bubble.

These consequences were pointed out as long ago as by Australian sustainability analyst and entrepreneur Guy Lane, executive director of the Long Future Foundation. In recent months, the Bitcoin bubble has got massively bigger and the associated waste of energy is now much more widely recognised.

In essence, the creation of a new Bitcoin requires the performance of a complex calculation that has no value except to show that it has been done. The crucial feature, as is common in cryptography, is that the calculation in question is very hard to perform but easy to verify once it's done.

At present, the most widely used estimate of the energy required to "mine" Bitcoins is comparable to the electricity usage of New Zealand, but this is probably an underestimate.

If allowed to continue unchecked in our current energy-constrained, climate-threatened world, Bitcoin mining will become an environmental disaster. In the early days of Bitcoin, the necessary computations could be performed on ordinary personal computers.

But now, "miners" use purpose-built machines optimised for the particular algorithms used by Bitcoin. With these machines, the primary cost of the system is the electricity used to run it.

That means, of course, that the only way to be profitable as a Bitcoin miner is to have access to the cheapest possible electricity. Bitcoin mining today is concentrated in China , which still relies heavily on coal. Even in a large grid, with multiple sources of electricity, Bitcoin mining effectively adds to the demand for coal-fired power. Bitcoin computers run continuously, so they constitute a "baseload" demand, which matches the supply characteristics of coal. More generally, even in a process of transition to renewables, any increase in electricity demand at the margin may be regarded as slowing the pace at which the dirtiest coal-fired plants can be shut down.

So Bitcoin mining is effectively slowing our progress towards a clean energy transition — right at the very moment we need to be accelerating.

A widely used estimate by Digiconomist suggests that the Bitcoin network currently uses around 30 terawatt hours TWh a year, or 0. If the current high price is sustained for any length of time, Lane's estimate will be closer to the mark, and perhaps even conservative. The cost of electricity is around five cents per kilowatt hour for industrial-scale users.

Miners with higher costs have mostly gone out of business. As a first approximation, Bitcoin miners will spend resources nearly all electricity equal to the price of a new Bitcoin.

However, to be conservative, let's assume that only 75 per cent of the cost of Bitcoin mining arises from electricity. Roughly speaking, each MWh of coal-fired electricity generation is associated with a tonne of carbon dioxide emissions, so a terawatt-hour corresponds to a million tonnes of CO2.

Digiconomics estimated that Visa is massively more efficient in processing transactions. A supporter of Bitcoin, Carlos Domingo, hit back with a calculation suggesting that the entire global financial system uses about TWh per year, or three times as much as the Diginconomics estimate for Bitcoin.

As a defence, this is far from impressive. First, as we've seen, if the current high price is sustained, total annual energy use from Bitcoin mining is also likely to rise to TWh. More importantly, the global financial system serves the entire world.

By contrast, the number of active Bitcoin investors has been estimated at 3 million. Almost all of these people are pure speculators, holding Bitcoin as an asset while using the standard financial system for all of their private and business transactions.

Another group is believed to use Bitcoin for illicit purposes such as drug dealing or money laundering , before converting these funds into their own national currency. The number of people who routinely use Bitcoin as a currency for legitimate transactions might be in the low thousands or perhaps even fewer. With the current threat of climate change looming large globally — this constitutes an unthinkably large amount of energy consumption.

The disastrous nature of Bitcoin's energy consumption should not lead us to abandon the associated idea of blockchain technology altogether. There are alternatives to the "proof of work" method of validating changes to the blockchain, such as "proof of importance", which is analogous to Google's page ranking systems. Projects such as Gridcoin are based on calculations that are actually useful to science. But these ideas are in their infancy.

For the moment, the problem is Bitcoin and how to deal with it. There is no obvious way to fix the inherent problems in its design. The sooner this collective delusion comes to an end, the better.

Originally published in The Conversation. We acknowledge Aboriginal and Torres Strait Islander peoples as the First Australians and Traditional Custodians of the lands where we live, learn, and work. The rising energy demands of Bitcoin In the early days of Bitcoin, the necessary computations could be performed on ordinary personal computers.

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New York good-government advocates want moratorium on cryptomining

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Is Cloud Mining Dead? Meet the Alternatives

Sunny Leone took the lead among Indian actors to secure her digital assets when she broke the news about her association with NFT, two months back. This made her the first Indian actress to mint NFTs. Choose your reason below and click on the Report button. This will alert our moderators to take action. Nifty 17, Policy Bazaar Market Watch. ET NOW. Cryptocurrency By Crypto Podcast. Crypto Meet.

Kosovo bans cryptocurrency mining to save electricity

Your web browser is no longer supported. To improve your experience update it here. News Technology. Bitcoin falls as China takes aim at 'extremely harmful' crypto mining.

Bitcoin mining: Is Scandinavia's cryptoboom coming to an end?

Bitcoin inventor Satoshi Nakamoto , the anonymous name used by the creators of the Bitcoin cryptocurrency, designed the cryptocurrency essentially as digital gold and capped the Bitcoin maximum supply to mimic the finite quantity of physical gold. The maximum number of bitcoins that can be issued—mined—is 21 million. New bitcoins are added to the Bitcoin supply approximately every 10 minutes, which is the average amount of time that it takes to create a new block of Bitcoin. The total number of bitcoins issued is not expected to reach 21 million. That's because the Bitcoin network uses bit-shift operators—arithmetic operators that round some decimal points down to the closest smallest integer. This rounding down may occur when the block reward for producing a new Bitcoin block is divided in half, and the amount of the new reward is calculated.

Is cryptocurrency likely to die out as governments attempt to ban it?

Bitcoin, the first cryptocurrency, has a problem: It uses ghastly quantities of electricity and thus generates as much carbon emissions as a medium-sized country. This is by design. A new cryptocurrency, Chia, avoids this problem—in favor of creating huge amounts of a different kind of waste. Bitcoin was meant to be decentralized so as to stay out of any central control. You enter this lottery by guessing numbers and running calculations on them as fast as possible—that is, you waste electricity to show your commitment. There is one winner every 10 minutes; as more people join the lottery, the guessing gets harder to stay at one winner every 10 minutes. Bitcoin thus uses as much electricity as the Netherlands. Proof of work has economies of scale: The bigger you are, the more efficiently you can create lottery tickets.

Bitcoin mining likely uses more energy than it takes to keep New Zealand's lights on. The recent upsurge in the price of Bitcoin seems to have finally awakened the world to the massively destructive environmental consequences of this bubble. These consequences were pointed out as long ago as by Australian sustainability analyst and entrepreneur Guy Lane, executive director of the Long Future Foundation.

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This day was expected, just not so soon. Miners who pay average electric rates or higher are likely about to experience financial death by a dozen cuts. After three months having passed so far this year the exchange rate currently sits about even with where it was at the beginning of the year. Not all miners are facing hard times though. Some miners operate from residences where electricity usage is included in the rent. They are doing well. Others are located in areas where the electric rates are very low e.

Danai Makmek, 26, became restless after his homemade hard drive would not turn back on after cutting out while mining for Bitcoin - he sadly tried to fix it himself before dying. A Bitcoin miner died while trying to fire up his homemade hard drive to obtain more cryptocurrency. Danai Makmek, 26, became restless after his device cut out and would not turn back on while mining for Bitcoin. The obsessed crypto-fanatic, from Thailand, told his older brother about the broken technology and begged for help in fixing it over fears he would lose out on precious mining time.