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Bitcoin Energy Consumption Could Drive Innovation, Says Research Associate

Bitcoin (BTC)–By now, most within and outside of the industry of cryptocurrency are familiar with the narrative surrounding Bitcoin energy usage. The argument goes that as Bitcoin becomes a more popular choice in terms of digital currency, the increase of miners looking to capitalize on transaction fees and reward payouts will increase, thereby also raising the hashing difficulty of the cryptocurrency.

The end result will be more rigs competing for the ultimate prize of the mined blocks–and also consuming a proportionally higher amount of energy. The debate has grown so large that environmentalists and other conservation oriented researchers and politicians have weighed in on cryptocurrency as “evil,” saying it promotes a type of waste that is not necessary in today’s digital age. Others have pointed to the overwhelming benefits of proof of work, and the associated electrical costs as a by-product of a maturing industry. In addition, many cryptocurrency projects have started to emerge that forego energy-intensive Proof of Work systems, while still providing the benefits of blockchain and secure digital payments.

Now, a researcher out of the University of Pittsburgh is weighing in with a bold claim: that energy consumption related to Bitcoin is being unnecessarily criticized by people who find Proof of Work to be a flaw for Bitcoin, when in reality it constitutes a usable feature. Dr. Katrina Kelly-Pitou, electrical and computer engineering research associate at the University of Pittsburgh, wrote an article for the outlet The Conversation in which she claims that the environmental conservation slant against Bitcoin is being used to spread false claims, in addition to being grossly oversimplified in terms of the impact of the technology. In particular, she uses the idea of Bitcoin’s energy crisis as a ‘red herring,’ that distracts people from pursuing a deeper understanding of digital currencies in favor of the knee-jerk reaction to mounting energy costs,

“I am a researcher who studies clean energy technology, specifically the transition toward decarbonized energy systems…New technologies – such as data centers, computers and before them trains, planes and automobiles – are often energy-intensive. Over time, all of these have become more efficient, a natural progression of any technology: Saving energy equates to saving costs.”

As Dr. Kelly-Pitou points out, technologies naturally follow a curve of becoming more resource efficient, which includes Bitcoin and miners finding a way to cut costs while still retaining the benefits of blockchain and reward payouts. Instead of focusing on how much energy Bitcoin mining consumes, Dr. Kelly-Pitou makes the argument that the technology should be focused on developing into a more efficient model, while the greater portion of society should look to renewable resources as a way to supply the power for advancing technological innovation.

Instead, the current narrative is one to shun the growth of a new industry–cryptocurrency being one of several technologies to draw the ire of environmental conservationists–thereby slowing down the overall progress of society as opposed to finding ways to merge technology with more efficient energy production. As she puts it, energy-focused conversations have the effect of keeping Bitcoin in a category of misunderstood, with people failing to go beyond a surface-level of understanding,

“Like many other aspects of the energy industry, bitcoin is not necessarily a ‘bad guy.’ It’s simply a new, and vaguely understood, industry. The discussion about energy consumption and bitcoin is, I believe, unfair without discussing the energy intensity of new technologies overall, specifically in data centers.”


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Coinmint Set to Open Massive Bitcoin Mining Farm in Upstate New York

Coinmint, the cloud mining platform has unveiled its latest Bitcoin mining facility located in upstate New York. The company revealed the new site in a statement released on June 5, 2018. The Coinmint facility becomes the latest Bitcoin mining farm in North America as there continues to be an influx of cryptocurrency miners into the region.

The Proposed Coinmint Bitcoin Mining Facility

Coinmint obtained approval in January to establish a Bitcoin mining farm in the 1,300-acre facility that was once an aluminum smelting plant in Massena, New York. Alcoa owned the plant before shutting down its operations in 2013. Since then, Alcoa had been in search of new tenants for the facility. Coinmint secured a 10-year lease agreement with Alcoa, plus an option to renew. The deal finally came to fruition after a robust back and forth negotiation process.

Mining operations are already ongoing in the facility and will continue under the aegis of the North Country Data Center Corporation – a new Coinmint subsidiary. The company plans to invest about $700 million in repurposing the plant into one of the largest Bitcoin mining centers in the world. The 435-Megawatt complex is expected to be completed in the next one year.

Commenting on the project, Kyle Carlton, a Coinmint spokesperson said:

The start of operations is a key milestone towards the Massena site reaching its full capacity. The area’s citizens and its hydroelectric power – a green alternative to the less sustainable energies used at other digital asset infrastructure data centers – was the catalyst for our move and will be foundational assets for continued expansion. The reduced electricity costs will enable us to compete in the rapidly emerging digital currency global marketplace.

Bitcoin Mining Continues Despite Price Decline

The BTC price has declined significantly in 2018. However, it seems miners aren’t deterred from continuing to mine the number one cryptocurrency. In fact, since the end of negotiations between Alcoa and Coinmint, the price of BTC has declined by more than 30 percent. Speaking on the impact of BTC prices on the company’s operations, Coinmint CTO, Prieur Leary said:

As long as bitcoin network exists we anticipate mining to be profitable. We’ve developed a process to get an edge in the market.

Host Community Excited at the Prospects of Job Opportunities

Massena, the host community is excited at the prospects of the new Coinmint BTC mining complex. According to Town Supervisor, Steve O’Shaughnessy:

We in Massena would like to welcome Coinmint to our town. The thought of 150 jobs and revitalization of the Alcoa East Facility is exciting and what we have been working for. We are ready to provide any assistance we can to move this project to its full potential.

Massena is a town that lies adjacent to the Canadian border. The area is known for its cold climate and cheap electricity, two conditions that are suitable for Bitcoin mining. Large-scale cryptocurrency mining is an energy-intensive process which produces a lot of heat. Thus, miners prefer areas with cold climate to reduce the additional cost of running cooling systems.

Will other firms open up mega Bitcoin mining centers in North America? Keep the conversation going in the comment section below.

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0.5% of World’s Electricity by Year’s End: Bitcoin Mining Power Consumption is Insane

A report by financial economist and blockchain specialist Alex de Vries (@DigiEconomist) indicates that Bitcoin power consumption is currently equal to that of the island of Ireland, and growing at an alarming rate.

Due to intense competition and the difficulty scaling model of Bitcoin mining wherein the block rewards are halved over time, Bitcoin power consumption has grown exponentially in recent years. A single Bitcoin transaction uses the same amount of power as a household in the Netherlands uses in a month.

The Bitcoin network uses 2.55 gigawatts of power currently, and that looks set to more than double by the end of 2018 to 7.7 gigawatts, overtaking Austrian power requirements and bringing Bitcoin power usage to 0.5% of global electricity consumption. A study in 2013 showed that the entire information communications technology sector used 10%, a figure that has likely increased since then.

0.5% is an astronomical figure when considered on a global scale, and de Vries believes it will increase to as much ass 5% of the total supply in the future as demand increases.

“To me, half a percent is already quite shocking. It’s an extreme difference compared to the regular financial system, and this increasing electricity demand is definitely not going to help us reach our climate goals.”

De Vries points out that miners are incentivized to commit as much power as possible to mining Bitcoin in the competitive market, leading to the transformation of Bitcoin mining from a hobbyist activity carried out on a personal computer to an activity best carried out in super-mining facilities containing millions of dollars worth of specialized equipment and established in remote locations where electricity and physical space are cheap.

 “You are generating numbers the whole time and the machines you’re using for that use electricity. But if you want to get a bigger slice of the pie, you need to increase your computing power. So there’s a big incentive for people to increase how much they’re spending on electricity and on machines.”

For the network to operate, the blockchain data must be stored and constantly updated on “nodes” which verify the transactions. The blockchain data is permanent and irreversible, and it’s of paramount importance that the transactions initially verified are legitimate to avoid mistakes and malicious attacks taking place. This is done through a system where transactions are verified multiple times by multiple nodes before being ultimately confirmed and added to a “block” of other transactions. When the block has reached the appropriate size, the block of transaction data is added to the blockchain and the transactions are processed.

The verifications are carried out by mining nodes which dedicate computer processing power to solve complex algorithms, and this process combined with storing and verifying a constantly updating blockchain consumes an immense amount of power. Miners are rewarded 12.5 Bitcoin for each block that enters the chain, and the rewards halve periodically – in the past the reward was 25 Bitcoin, and before that it was 50. The competitive nature of mining has led to the formation of vast mining pools which consist of server farms as well as more independent miners.

Not everywhere in the world is profitable to mine – in some countries like South Korea, the cost of electricity is prohibitively high. The world’s largest mining operations are based in China, where more than 60% of electricity comes from coal burning. Here’s how much it costs to mine one Bitcoin in different countries.