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Bitcoin Hydro Mining

Dave Jackson Dave Jackson, Stockhouse
1 Comment| March 15, 2018

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How the marriage of cheap power and cryptocurrency have changed the face of rural communities around the globe

"A fixed money supply, or a supply altered only in accord with objective and calculable criteria, is a necessary condition to a meaningful just price of money."
Interest and Usury. (1943) Fr. Bernard W. Dempsey, S.J.

Eastern Washington state is a bucolic place best known for its sprawling apple orchards, rolling hills and quiet rural charm. But that endearing pace of life may soon come to an abrupt halt as intensive mining has taken over the region. But not the smoke-belching, dirty work of traditional coal or open pit mining. Nope. This is the Bitcoin mining country – the complex process in which computers solve a complicated math puzzle to win a stack of virtual currency. And because the new technology of encrypting Bitcoin and other cryptocurrencies require an inordinate amount of electricity, the five hydroelectric dams that straddle this stretch of the Mid-Columbia River Basin, miners can buy that power more cheaply here than anywhere else in the U.S., and just about anywhere else in the world.

So, to make money as a Bitcoin miner, the only elements that really matter are scale and access to cheap electricity. And that’s what’s sent Bitcoin miners scurrying all over the earth looking for low energy prices. They tend to find it near big dams that corral river water through massive turbines. In the right geographical circumstances, this can generate the cheapest power on earth. Places like China, Venezuela and Iceland. And East Wenatchee, thanks to the Columbia River and the Rocky Mountains that lend the water its power.

Rocky Reach Dam on the Columbia River outside Wenatchee, WA. Wikimedia Commons

Early Bit-miners knew that if they could find a place where the power wasn’t just cheap, but really cheap, they’d be able to mine Bitcoin both profitably and on an industrial scale. But, utility companies are reacting cautiously, eager to not put extra strain on their current infrastructure if demand for hydro-powered bitcoin mining farms requires off-loading. Although mining operations can squeeze into small spaces – shoebox-size computer servers that can be packed into a 25-by-25-foot room – consume as much power as roughly one-thousand homes. Miners have popped up in unexpected places in the area like an old laundromat, a former fruit-packing warehouse, apartments, and even free-standing cargo containers.

Energy Usage / Environmental Impact

Digital financial transactions come with a real-world price – the tremendous growth of cryptocurrencies has created an exponential demand for computing power. As bitcoin grows, the math problems computers must solve to mine more bitcoin get more and more difficult — a wrinkle designed to control the currency’s supply. Today, each bitcoin transaction requires the same amount of energy used to power nine homes for one day. And miners are constantly installing more and faster computers. Already, the aggregate computing power of the bitcoin network is nearly 100,000 times larger than the world’s 500 fastest supercomputers combined. Many also fear that the new mines will suck up so much of the power surplus that is currently exported that local rates will have to rise. In fact, miners’ appetite for power is growing so rapidly that the three Washington state counties closest to the hydro dams have instituted surcharges for extra infrastructure, and there is talk of moratoriums on new mines. But where there’s a will there’s a way, so expect super-mining to continue to explore new territories around the globe, especially here in Canada. Global Bitcoin miners have also taken note of Canada's abundant cheap electricity, as China looks to crack down on mining operations in their country.

Hydro Quebec offers some of the lowest electricity rates in North America. The utility says the province has an energy surplus equivalent to 100 terawatt hours over 10 years – a single terawatt hour powers up to 60,000 homes in Quebec during a year. Hydro Quebec won’t divulge the names of Bitcoin miners interested in moving their facilities to the province, but said companies are eyeing operations from about 20 megawatts – the size of a data centre, to sites as large as 300 megawatts. And thanks to the abundance of cheap natural gas and lower-than-expected demand growth, Alberta power prices are some of the cheapest around – now about three cents per kilowatt hour – in Canadian dollars. Vancouver-based Hut 8 (TSX: V.HUT, OTCQB: HUTMF, Forum) recently announced a partnership with Bitfury to acquire, install, maintain and operate North America’s largest bitcoin mining data centres in Drumheller with possible expansion to other cities in Alberta and provinces, including Quebec. Bitfury is a leading full-service blockchain technology company, operating private mines – as opposed to public pools – that are responsible for between 11 to 17 per cent of global bitcoin generation right now. This output firmly places Bitfury as a top three miner in the world.

As in oil or gold, prospectors never stop – they just move on to their next stake.


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Comments

"This output firmly places Bitfury as a top three miner in the world" What output? You mention nothing of Bitfury's output - only the output of the mining pools. Lame!
(39)
March 15, 2021

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