Mining Industry 4.0

Valarhash
Valarhash
Published in
9 min readMar 3, 2020

March 3, 2020 | We are at the brink of a new dawn in mining.

It’s happening in every industry whether it takes decades or centuries. It’s inevitable that it will come. Change is something we cannot predict how it will unfold, just that we simply know IT WILL unfold.

Stone Age, Bronze Age, Iron Age…

First Industrial Revolution, Second Industrial Revolution, Third Industrial Revolution…

Web 1.0, Web 2.0, Web 3.0…

Asset Management 1.0, Asset Management 2.0, Asset Management 3.0…

As 2020 has already come upon us, many have envisioned this year to be the year that Mining 4.0 will erupt, or for the more colloquial terminology, “Cloud Mining”. Although the term, Mining 4.0, does not have a solidified definition or time frame that it encapsulates, it more or less stems off of the notion of Industry 4.0, or the Fourth Industrial Revolution. For the sake of the cryptocurrency industry, we propose to explain here what defines Mining 4.0 as well as the preceding Mining periods before. This will be a mix of a short history lesson as well as hopefully an eye-opener to those that are still unfamiliar with the erupting cryptocurrency asset class unfolding right before our eyes.

And just note that despite the negativity we hear whenever mining news surfaces our media channels, such as the “blood diamonds” in Africa, this form of earth extraction has been the vital bedrock of our civilization.

Mining 1.0

Gold mining in Korea. circa 1800s.

Physical hand mining goes back centuries, probably all the way to the stone age, where literally sticks and rocks were the hardware of choice to extract minerals from the ground to form tools, weapons, and eating utensils. This occurred amongst most ancient civilizations after surface deposits dried up and the need to go further down the ground became a necessity. Minerals such as iron, copper, jade, gold, etc. were all being mined in scattered pits use time consuming methods such as “hitting the rock” or literally hand digging.

As time passed on, the development of smelting arrived which allowed miners to extract metals from ores through heat. This invention was pivotal allowing civilizations to mine minerals at a greater quantity leading to an increase in minerals trade with other civilizations.

As time past the A.D. timeframe into the renaissance period, mining became even more complex with the use of aqueducts and water tanks, which were processes fundamental to modern day hydraulic mining. For example, the Romans took over many gold mines in Britain when they invaded and took advantage of the mineral rich areas. A gold mine specifically situated in Wales, the Romans would release waves of water from above held in tanks to remove ground from the underlying bedrock. The bedrock would then be heated through various fire methods to soften the rock. When another water wave was released, the rocks were then able to be broken or swept away exposing gold dust and flakes. This technique produced numerous opencasts amongst the hillsides of the area still seen today.

Centuries later leading up to the 1600s, the use of explosives became about to break heavy hard rock covering up rich amounts of minerals. The technique simply known as drilling and blasting was not only used for mining, but also for tunnel digging and excavation. A dangerous, yet effect method, drilling and blasting allowed miners and diggers to speed up the process of rock blasting. The process was fairly straightforward. A number of holes would be drilled into a rock which was then filled with gun power (which eventually was replaced by dynamites and other effective explosives), a string, wire, or some form of passage was then used to set off the explosive with enough time beforehand allowing the person lighting it up enough time to find a safe area. After the rocks explode and break up, rubble would then be swept away revealing the ground area underneath it.

An example of a rock blasting caught in the action.

Mining Industry 2.0

The turn of the 1800s came along the Industrial Revolution which sprouted up industry and factories allowing mass production to rise at an exponential rate. New discoveries such as the California Gold Rush led to the boom in gold mining in the US leading to a flock of immigration and the passage of the General Mining act of 1872. This act, along with other laws/regulations passed decades afterwards sought to standardize the mining industry and promote the development of the mining resources through research and safety standards.

Mining technology has advanced by leaps and bounds over the past two centuries. New modern day “earth movers”, such as heavy machinery and bulldozers have allowed large quantities of earth to be removed easily. New monstrous machines such as rotary blasthole drills, as they are commonly referred to, basically allow miners to drill through any rock conditions on earth. Through the use of ample torque and bit loading, machines like these allow mining in difficult arctic conditions (-40 degrees C), high altitude (up to 15,000 ft.), and weak power grids.

An example of a rotary blasthole drill.

To top that, mega machines such as the bucket-wheel excavator, used for strip mining, was used in the late 1900s, used for the job of removing overburden before actual mining proceeded. The most well known bucket-wheel excavator is the Bagger 288, built by the German company ThyssenKrupp, which weighs over 29 million pounds and moves at a speed of about 0.4 km/h. It is literally a monster if seen in real life.

The Bagger 288 bucket-wheel excavator, beside a bulldozer for size comparison.

Advanced technologies have brought about a wave of remote sensing capabilities allowing airborne platforms using infrared and ultraviolet wavelengths in detecting earth minerals in a more safer, efficient manner. The shuttle radar topographic mapping (SRTM) system provides high-quality, detailed digital topographic and image data. Hyperspectral technologies are being developed to gather additional data that can be used to map the mineralogy of the ground surface. Many of these technologies are being used by space agencies in planetary exploration, such as our own Moon and Mars.

An image of mining volume measurements with satellite topography.

Mining Industry 3.0

Digital mining through the use of expensive computer hardware.

The year 2009 was the birth year of cryptocurrency mining due to the advent of Bitcoin. Bitcoin has given birth to the ideology of a decentralized form of non-sovereign currency that is out of the hands of central entities allowing corruption and inflation to be desolate. With Bitcoin, including alternative cryptocurrencies and fiat alike, the reason why it has value is because believe in its value. Since the days when the dollar was de-pegged from the gold standard, our monetary base has risen exponentially to levels that can not be sustained forever as our Debt-to-GDP ratio is now at record highs.

Bitcoin miners are essentially folks that utilize hardware to maintain the decentralized state of the network by running nodes and creating blocks full of transactions. They are then given monetary rewards, in the form of Bitcoin or other crypto, as a token of their service. Through a consensus algorithm known as Proof-of-Work, miners essentially are competing to run the SHA 256 algorithm as fast as they can to guess a number that would satisfy the target difficulty set by the network. And when I mean fast, I mean FAST. In the beginning, a CPU would be able to satisfy these requirements and be able to individually win a block reward based on the number of hashes it is able to generate per second. As time went by, more miners joined the network which increased the total number of hash rates in the network, consequentially increasing the difficult to mine so that the block creation is steady every 10 minutes.

An example of a typical GPU mining rig setup.

Naturally and based on the laws of economics, miners started using more powerful machines such as GPUs to generate hashrates in the race to win a block reward. For reference, one GPU equals to around 30 CPUs in generating hashrates. Then came the wave of FPGA mining which can reach to 100 times faster than a GPU. But setting up an FPGA mining rig was quite complex and expensive.

An example of a ASIC mining rig setup.

Then as 2013 came around, technology sprouted a new breed of miners known as ASICs (Application Specific Integrated Circuits). As dominate as they are, they are still to go to machines for bitcoin mining in 2020 because they are programmed to do one thing and one thing well, which is to run the SHA 256 algorithm trillion times a second. And new generation models coming out such as the Antminer S19 and Whatsminer M30s can generate around 100 trillion hashes per second. Let that sink in for a moment. All this has pushed up the total network’s hash rate to all time highs of around 110 exahashes per second. But ASIC mining has come with a hefty cost of consuming a lot of electricity and needing an isolated area because of physical size and household vacuum-like disturbance generating from it, about 75 decibels each (not a great thing to have in your room if you want to sleep at night). This is forced industrial and commercialized build outs of mining farms filled with thousands of mining machines joining large mining pools.

Mining Industry 4.0

Cloud mining is allowing hashrates generated to be shared amongst new users.

This has led us to the 4th wave of mining in the form of cloud computing mining. Simply put, miners are now able to rent hash rate produced from commercial operations to have a chance in mining on the bitcoin network. A lot of mining operations are out in isolated rural areas which are not very accessible to the average person. By storing their hash rates and renting it out, miners are now able to basically own hash rates that are stemming from actual mining machines. To make it easier to understand, think of it as Mining-as-a-service. A more fluid and easier transition for newcomers to get involved in supporting the bitcoin network. Large mining operations and pools have come to realize the large barrier of entry for beginner miners to get in the Bitcoin mining game, hence the influx of cloud mining platform to satisfy this opportunity.

Conclusion

We at Valarhash are standing here at this turning point of Bitcoin mining with the introduction of our own cloud mining platform. Despite the stigma around cloud mining, we truly believe it is the next step in strengthening the Bitcoin network to a whole different level.

Why keep these high barriers when we could simply understand that in order for Bitcoin to grow, we need a platform allowing newcomers to hurdle the barrier in the clouds of hash rates available that could be supplied.

We are at the forefront of this pivotal shift in bringing Bitcoin mining back to the individual user through our numerous state of the art data centers scattered all over the world.

Other Mining Resources

  1. https://www.nap.edu/read/10318/chapter/5#22
  2. https://www.bitcoinmining.com/
  3. Bitmain.com

Our Resources

  1. Valarhash.com
  2. Twitter.com/VaIarhash

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Valarhash
Valarhash

A Blog Dedicated to Teaching the Community on the Quintessential Importance of Crypto Mining.