What does bitcoin mining look like

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WATCH RELATED VIDEO: Crypto Mining Farm at Apartment - January 2020 Update

How Much Energy Does Bitcoin Actually Consume?


Today, Bitcoin consumes as much energy as a small country. This certainly sounds alarming — but the reality is a little more complicated. How much energy does an industry deserve to consume? Right now, organizations around the world are facing pressure to limit the consumption of non-renewable energy sources and the emission of carbon into the atmosphere.

As cryptocurrencies, and Bitcoin in particular, have grown in prominence, energy use has become the latest flashpoint in the larger conversation about what, and who, digital currencies are really good for. On the face of it, the question about energy use is a fair one. This certainly sounds like a lot of energy. But how much energy should a monetary system consume? How you answer that likely depends on how you feel about Bitcoin.

If you believe that Bitcoin offers no utility beyond serving as a ponzi scheme or a device for money laundering , then it would only be logical to conclude that consuming any amount of energy is wasteful. If you are one of the tens of millions of individuals worldwide using it as a tool to escape monetary repression , inflation , or capital controls , you most likely think that the energy is extremely well spent.

Specifically, there are a few key misconceptions worth addressing. While determining energy consumption is relatively straightforward, you cannot extrapolate the associated carbon emissions without knowing the precise energy mix — that is, the makeup of different energy sources used by the computers mining Bitcoin. For example, one unit of hydro energy will have much less environmental impact than the same unit of coal-powered energy.

But its carbon emissions are much harder to ascertain. Mining is an intensely competitive business, and miners tend not to be particularly forthcoming around the details of their operations.

The best estimates of energy production geolocation from which an energy mix can be inferred come from the CCAF, which has worked with major mining pools to put together an anonymized dataset of miner locations. Based on this data, the CCAF can guess about the energy sources miners were using by country, and in some cases, by province.

Furthermore, many high profile analyses generalize energy mix at the country level, leading to an inaccurate portrait of countries such as China, which has an extremely diverse energy landscape. As a result, estimates for what percentage of Bitcoin mining uses renewable energy vary widely.

Almost all of the energy used worldwide must be produced relatively close to its end users — but Bitcoin has no such limitation, enabling miners to utilize power sources that are inaccessible for most other applications. Hydro is the most well-known example of this. In the wet season in Sichuan and Yunnan, enormous quantities of renewable hydro energy are wasted every year. In these areas, production capacity massively outpaces local demand, and battery technology is far from advanced enough to make it worthwhile to store and transport energy from these rural regions into the urban centers that need it.

Another promising avenue for carbon neutral mining is flared natural gas. The process of oil extraction today releases significant amount of natural gas as a byproduct — energy that pollutes the environment without ever making it to the grid.

But Bitcoin miners from North Dakota to Siberia have seized the opportunity to monetize this otherwise-wasted resource, and some companies are even exploring ways to further reduce emissions by combusting the gas in a more controlled manner. To be fair, the monetization of excess natural gas with Bitcoin does still create emissions, and some have argued that the practice even acts as a subsidy to the fossil fuel industry, incentivizing energy companies to invest more in oil extraction than they otherwise might.

But income from Bitcoin miners is a drop in the bucket compared to demand from other industries that rely on fossil fuels — and that external demand is unlikely to disappear anytime soon. Given the reality that oil is and will continue to be extracted for the foreseeable future, exploiting a natural byproduct of the process and potentially even reducing its environmental impact is a net positive.

Interestingly, the aluminum smelting industry offers a surprisingly relevant parallel. Regions with the capacity to produce more energy than could be consumed locally, such as Iceland , Sichuan, and Yunnan, became net energy exporters through aluminum — and today, the same conditions that incentivized their investment in smelting have made those locations prime options for mining Bitcoin.

There are even a number of former aluminum smelters, such as the hydro Alcoa plant in Massena, NY, that have been directly repurposed as Bitcoin mines.

How energy is produced is one piece of the equation. Once coins have been issued, the energy required to validate transactions is minimal. And that leads us to the final critical misconception: that the energy costs associated with mining Bitcoin will continue to grow exponentially. This was the premise of a widely-reported study that was recently cited in the New York Times , making the shocking claim that Bitcoin could warm the earth by two degrees Celcius.

First, as has become common in many industries, the energy mix of Bitcoin grows less reliant on carbon every year. In the U. And of course, as renewable options such as solar grow more efficient and thus more viable for mining, Bitcoin could end up serving as a serious incentive for miners to build out these technologies.

In addition, miners are unlikely to continue expanding their mining operations at the current rates indefinitely. The Bitcoin protocol subsidizes mining, but those subsidies have built-in checks on their growth. However, the protocol is built to halve the issuance-driven component of miner revenue every four years — so unless the price of Bitcoin doubles every four years in perpetuity which economics suggests is essentially impossible for any currency , that share of miner revenue will eventually decay to zero.

We can expect some miners to continue operating regardless, in exchange for these transaction fees alone — and in fact, the network depends on that to keep functioning — but if profit margins fall, the financial incentive to invest in mining will naturally decrease. You have 1 free article s left this month. You are reading your last free article for this month.

Subscribe for unlimited access. Create an account to read 2 more. Technology and analytics. Read more on Technology and analytics or related topics Economics and Sustainable business practices. Nic Carter is a general partner at Castle Island Ventures, a Cambridge, MA-based venture firm investing in public blockchain startups, and the cofounder of Coin Metrics, a blockchain analytics firm.

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Understanding When and Why Bitcoin Miners Sell Their BTC

Adrian Kingsley-Hughes is an internationally published technology author who has devoted over two decades to helping users get the most from technology -- whether that be by learning to program, building a PC from a pile of parts, or helping them get the most from their new MP3 player or digital camera. I'm old enough to remember being given a couple of bitcoins when they were worth next to nothing. Needless to say, I don't have them anymore. Now, with bitcoin and other cryptocurrency prices skyrocketing again, there's renewed interest in cryptomining, which is a way to accumulate cryptocurrency without having to pay for it.

But they soldier on, and look set to prosper. People in the crypto industry like Gieno Miao, the former miner and crypto entrepreneur.

What is bitcoin and how does it work?

By Matthew Sparkes. Bitcoin is a digital currency which operates free of any central control or the oversight of banks or governments. Instead it relies on peer-to-peer software and cryptography. A public ledger records all bitcoin transactions and copies are held on servers around the world. Anyone with a spare computer can set up one of these servers, known as a node. Consensus on who owns which coins is reached cryptographically across these nodes rather than relying on a central source of trust like a bank. Every transaction is publicly broadcast to the network and shared from node to node.


Congress weighs cleaning up cryptocurrency mining in the US

what does bitcoin mining look like

Get the best experience and stay connected to your community with our Spectrum News app. Learn More. Basically, you're the accountant for the Bitcoin blockchain network. Bitcoin mining is the process of verifying blocks of bitcoin payments and adding those transactions to a massive public ledger.

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Mining Maximization: Which Countries Thrive on Bitcoin Mining?

Bitcoin Stack Exchange is a question and answer site for Bitcoin crypto-currency enthusiasts. It only takes a minute to sign up. Connect and share knowledge within a single location that is structured and easy to search. As with mining, what are the bitcoin miners really solving? I read they are solving hashes, but what does that really mean. Can we see what they are solving?


A Bitcoin Boom Fueled by Cheap Power, Empty Plants and Few Rules

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What Is Crypto Mining at Home Going To Look Like? Is Crypto Mining at Home for You? There are numerous factors to consider when deciding whether you want to.

How coal country lawmakers came to love crypto

Cynthia Lummis R-Wyo. And lawmakers on Capitol Hill are moving to facilitate the trend. And in Kentucky, Democratic Gov.


This 19-year-old earns $54,000 a year mining bitcoin as a full-time job — here's what it's like

RELATED VIDEO: What is Bitcoin Mining? (In Plain English)

This value is the highest it has ever reached and an indication of good tidings for the cryptocurrency. Over the years, there has been growing interest in the bitcoin currency so much so that its value has grown to resemble that of gold. The future is promising for bitcoin miners and enthusiasts. Of these three, bitcoin mining is perhaps the most exciting option as it sends miners on a path to discovery.

Bitcoin mining is designed to be similar to gold mining in many ways. Bitcoin mining and gold mining are both energy intensive, and both have the potential to generate a handsome monetary reward.

Bitcoin miners align with fossil fuel firms, alarming environmentalists

China's ban on cryptocurrency mining has forced bitcoin entrepreneurs to flee overseas. Many are heading to Texas, which is quickly becoming the next global cryptocurrency capital. When China announced a crackdown on bitcoin mining and trading in May, Kevin Pan, CEO of Chinese cryptocurrency mining company Poolin, got on a flight the next day to leave the country. Headquartered in Hong Kong, Poolin is the second largest bitcoin mining network in the world, with most of its operations in mainland China. Now China's "bitcoin refugees" are urgently scrambling to find a new home, whether in neighbouring Kazakhstan, Russia or North America, because for bitcoin miners, time is literally money. In what some call the "Great Mining Migration," the Poolin executives are among the many bitcoin miners who have recently landed in a place reputed as part of America's wild wild west: Austin, Texas. Bitcoins are a digital currency with no physical form - they exist and are exchanged only online.

Subscriber Account active since. Even more intriguing is that the creator of Bitcoins is unknown, pseudonymous like Banksy. And maybe like installation artist JSG Boggs producing a work exploring the meaning of money. But rather than being stored in underground vaults Bitcoins are simply entries in a notional ledger held across many computers around the world.


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