Bitcoin mining power plants are here
Recent headlines illustrate thousands of electric companies planning to run Bitcoin mining rigs. It has been said that Bitcoin mining uses as much power as Ireland and consumes 30 times more electricity than Telsa Cars.
If you’re asking yourself, what bitcoin mining is, check out my introductory piece on the subject.
Morgan Stanley estimates it costs $3,000 to $7,000 to produce one bitcoin. But honestly, can we trust Morgan Stanley if they do not specialize in Bitcoin? Nevertheless, the overall consensus is that mining is expensive.
Big Plans for Bigger Plants
IOT Group and Australia’s Hunter Energy may have a solution for the high energy cost of Bitcoin mining. Both are teaming up to create an economic solution for crypto miners.
IOT, which specializes in “selfie” drones, will be collaborating with Hunter to build Blockchain Applications Complex (BAC) connecting directly to the power station.
This mechanism will decrease energy prices for miners from 28 cents per kilowatt-hour to as low as 5 cents per kilowatt-hour. If a miner’s energy bill is $4,500 USD, a 17% decrease can mean a $765 USD difference in cost.
This deal, the first of its kind, shows a demand for services catered to the mining ecosystem.
This inventive solution may also provide eco-friendly value. Hunter has future plans to implement solar panels to generate renewable energy.
Background on BTC Mining
Fundamentally, Bitcoin mining is an activity which adds Bitcoin transactions to the blockchain ledger. The process of mining is referred to as proof of work. Bitcoin mining creates proof of work by solving mathematical problems to create hashes.
For a miner to verify a transaction, they must first calculate a 64-digit hexadecimal hash. This hash is used to identify one unique transaction on the Bitcoin blockchain.
To get credit for mining, you must be the first to meet the target hash. The more miners who are actively competing to predict hashes, the lower the chances of success.
To compete, miners use CPU power with connected, specialized circuit chips from application specific integrated circuits, also called (ASIC) mining hardware.
Debuted in 2013, the pioneers of ASIC hardware created devices specially intended to perform the computations required for mining cryptocurrency. The energy-efficient circuit chips are currently the premier hardware for Bitcoin miners.
Mining is considered an inclusive backend activity, yet the introduction of high-quality ASIC hardware has made it challenging for those who are unable to invest in equipment worth thousands of dollars. On top of the upfront cost of ASIC hardware, the chips use a large number of kilowatts to make computations.
Perspective
In 2017, Bitcoin ranked number two in Google’s world news search. The popularity of cryptocurrency means more people are making transactions on the blockchain.
In order for the decentralized currency to operate, there must be an influx of miners on the network. Lower energy cost creates more of an incentive for new miners to join the blockchain.
With crypto on the rise, the partnership between power plants and the mining community may become commonplace.
The IOT and Hunter Energy partnership marks the beginning of a new way for energy companies to capitalize off of the crypto ecosystem.
