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Report: Bitmain to Launch 200,000 Crypto Mining Rigs in China

Bitmain Bitcoin Mining China 2019

According to a report published by CoinDesk on Mazar. 21, cryptocurrency mining conglomerate Bitmain is looking to launch up to 200,000 new mining rigs in China, at a conservatively estimated cost of $80 million.

The move will allow Bitmain to take advantage of the relatively cheap hydroelectric power in China during the summer of 2019, with CoinDesk also reporting that the expensive deployment of equipment may end up being more cost-effective for the company than outright selling their inventory. CoinDesk also reports that the decision by CoinDesk is positive for the industry and miners, sending a signal of a “broader shift in the market, with miners preparing to invest again following last year’s contraction in capacity.”

Bitmain, which holds the distinction of being the largest manufacturer of cryptocurrency mining equipment by market share, can take advantage of the excess hydropower in China’s southwestern province for cheap mining costs relative to the broader market. According to sources in the region familiar with the situation, Bitmain has “already started discussions and making deals with farms to host its equipment so that it can be fully prepared.”

The report also includes information that Bitmain will be primarily deploying its newer model mining rigs, the AntMiner S11 and S15, which retail for around $500 and $1000, respectively, per unit. It is also unclear according to the sources which proof-of-work cryptocurrency Bitmain will be targeting to mine for. As CoinDesk points out, even at $80 million in projected costs to deploy the equipment in the new region, the move represents a “non-negotiable opportunity cost” considering Bitmain’s primary revenue source is from mining equipment sales as opposed to actual mining.

However, the company is caught in a difficult position due to the ongoing bear market that has extended into the beginning of 2019. While the company could attempt to selloff the bulk of their 200,000 intended units for deployment, the marginal profits that could be made from mining in the presence of cheaper electricity may provide the better sunk cost. CoinDesk calculates that, using conservative estimates, Bitmain may be able to secure a monthly profit of $7.7 million.

CoinDesk also reports that Bitmain’s scaling up in mining operations could send a strong signal to the broader market, particularly as cryptocurrency mining and coins prices continue to linger at relative lows. Estimated reports found that over 600,000 Bitcoin miners shut down operation in 2018 due to the falling con prices no longer proving profitable relative to mining costs, leading to the market being flooded with second-hand rigs being sold at a discount.

Despite the decline, Bitmain and other miners deploying to China in the upcoming wet season to take advantage of excess hydroelectric power could bring about a sharp increase in Bitcoin’s hash rate, with some estimates putting it at 70 quintillion hashes per second (EH/s), well above the all time network high of 60 EH/s.

Renewed mining interest in conjunction with building crypto adoption that has already started in 2019 could lead to a reversal in both coin prices and increased competition to capitalize on the market while prices are still depressed. With increased mining competition for Bitcoin, the selling price for newly minted coins should also rise, which could have a broader effect on BTC pricing.

The post Report: Bitmain to Launch 200,000 Crypto Mining Rigs in China appeared first on Ethereum World News.

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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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Bitcoin Mining Should be Illegal in the United States, Says, Congressman

Two separate House Committees spent Wednesday (July 18, 2018) rambling on about Bitcoin and cryptocurrency. The summary of it all is that the United States elected officials do not know much about the emerging technology.

Interested in Cryptocurrencies

Members of the House Committee on Agriculture were the first to deliberate on issues in the cryptocurrency market. The session was called to examine the future of the emerging virtual currency space. Speaking during the meeting, chairman of the Committee, Republican Congressman, K. Michael Conaway representing Texas, said:

This hearing will shed light on the promise of digital assets and the regulatory challenges facing this new asset class. Our committee has a deep interest in promoting strong markets for commodities of all types, including those emerging through new technology.

Bitcoin Mining Should Be Banned in the U.S.

While the first House Committee to deliberate on cryptocurrency yesterday had a more nuanced approach to cryptos, the second House Committee went off the rails. The House Financial Services Committee had a session to examine the potential uses of virtual currencies in both the domestic and global market.

One of the members of the Committee, Rep. Brad Sherman, a Democratic Congressman representing California bashed Bitcoin. According to Sherman:

We should prohibit U.S. persons from buying or mining cryptocurrencies. Mining alone uses electricity which takes away from other needs and-or adds to the carbon footprint. As a store, as a medium of exchange, cryptocurrency accomplishes nothing except facilitating narcotics trafficking, terrorism, and tax evasion.

Sherman parrots the same inaccurate assertions as other Bitcoin naysayers. First of all, there is no absolute scale to measure the amount of electricity needed for Bitcoin mining. It varies from one area to another. Secondly, research has shown that illegal activities only account for less than one percent of the total Bitcoin transactions.

Cryptocurrencies Create Another Money Supply

Another Committee member, Rick Allen also issued his take on the matter, saying;

We’re creating another money supply here as I see it. I just don’t know how that works. Our dollar sets the mark for the world. I can’t visualize how this would work.

Not everyone on the Committee was on the crypto bashing brigade. Conaway in his closing remarks seems to present BTC as a much better option than the more privacy-focused cryptos like Verge and Monero. According to Conaway:

As long as the stupid criminals keep using bitcoin, we’ll be great.

Conaway seemed to be referring to the fact that it is much easier to track transactions on the Bitcoin blockchain which offers pseudo-anonymity unlike with privacy-centric blockchains that provide complete transaction obfuscation.

In a related development, Congressman, Emanuel Cleaver recently called on FinCEN to carry out robust investigations into the use of cryptocurrencies in criminal activities. This call followed the revelation that Russian agents used Bitcoin to finance their meddling in the 2016 U.S. Presidential elections.

Do you think the people in Congress understand what the cryptocurrency market is all about or are they spreading FUD? Let us know your views in the comment section below.

Image courtesy of Twitter (@BradSherman).

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New York State Entices Crypto Miners to Negotiate Cheap Power

Cryptocurrency Mining–Despite the overwhelmingly negative image of crypto mining related electricity costs, from the impact they have on the environment to the rising rates of neighborhood power bills, the state of New York has approved a bid to increase the population of miners through cheaper electricity.

On Thursday, state regulators approved a motion that would create a new rate structure specifically for cryptocurrency miners looking to negotiate a better deal on electricity. Massena, a town in Upstate New York, will allow its municipal utility to review contracts on an individual and isolated basis for miners, thereby protecting other residents from an increase in rates from grid usage. This comes on the heels of an earlier decision related to crypto mining electricity costs, when the State cleared 36 municipalities in March to increase rates for individuals and firms mining cryptocurrency.

At the time of the filing, the New York Municipal Power Agency reported that some mining firms were responsible for 33% of grid usage, despite doing little to invest or promote the local economy. In addition to Quebec, China and Iceland, cryptocurrency miners have flocked to locations like New York for their hydro-rich electricity resources, thereby cutting costs to make the process of mining even more profitable. However, as Bloomberg reports, the draw to low-cost areas has locals up in arms over the drain on their grids–which can lead to increased rates across the board in addition to higher utility loads. In the interim, governments such as the state of New York have been forced to address the issue of crypto mining, which operates as a for-profit business despite the fact that most mining individuals and firms fail to qualify for the same benefits of traditional brick and border outlets consuming a disproportionate amount of municipal resources.

New York State Department of Public Service Chair John Rhodes commented on the drain that some miners put on local resources, while confirming that the state was interested in pursuing a mutual relationship with miners,

“We must ensure that business customers pay a fair price for the electricity that they consume. However, given the abundance of low-cost electricity in Upstate New York, there is an opportunity to serve the needs of existing customers and to encourage economic development in the region.”

While Quebec, a similarly hydro-rich area for electricity, has sought to repel the flood of crypto-miners by instituting a three-fold increase in rates specific to cryptocurrency, New York has seen the benefit in sharing its abundant natural resource. Compared to other areas of the country, where the national averages for residential electricity hover at 13 cents per kilowatt-hour, Massena is able to afford customers 3.9 cents per kw-h, in part due to the efficiency of hydroelectric dams.

As Bitcoin, and all of cryptocurrency prices begin to flounder, miners will be forced to find more profitable areas for their electricity-consuming business in an effort to lower costs and make up for the difference in declining value. Just yesterday Joseph Carson, the chief security scientist at Thycotic, cited the rising cost of crypto mining as being the primary cause for the inevitable death of Bitcoin, before making a prediction that BTC would fall to $43.

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