crypto mining

Apr 07 2021

China’s Bitcoin Mining Industry Could Derail Climate Targets: Researchers

As China’s bitcoin mining industry grows bigger, some researchers believe the electricity-gulping bitcoin mining may prevent China from achieving its climate goals.

This was made known in a recent study published in the Journal Nature by the researchers.

Increasing Concerns Over Climate Security

The study reveals that China powers approximately 80% of the world trade in cryptocurrency.

Given the fact that Bitcoin operates on the blockchain, every transaction is encrypted by a network operated by miners, which use high electricity consumption in the process.

The miners use high-powered computers to validate transactions, which consumes huge electricity and may have implications on climate security.

However, the Journal Nature report shows that 40% of China’s Bitcoin is powered by coal. This is where the problem starts.

Researchers believe that since most of these big coal plants emit carbon, they may have adverse effects on the climate’s health.

While China projects to overcome carbon emissions before 2030 and become carbon neutral by 2060, the researchers warned that the lofty objective might be impossible with rising Bitcoin mining activity.

Also, Nature Study projected that China’s Bitcoin mines might accumulate approximately 130.5m metric tons of carbon emission by 2024.

The study gathers that the availability of affordable electricity in China and access to hardware-enabled companies in China controls about 78.89% of the global bitcoin blockchain.

The activities of these companies involve mining coins, tracking and monitoring cryptocurrency transactions.

However, the co-author of the piece, Wang Shouyang, warned that continued Bitcoin mining activities could have grave consequences on the climate if left unchecked.

Way forward On China’s Crypto Mining Industry

Experts have recommended some alternative paths that the Chinese government could take in managing cryptocurrency mining and preserving its climate security policy.

In this regard, Shouyang advised the government to concentrate on upgrading the power grid to create a stable power supply from renewable energy sources.

He explained that renewable energy sources provide cleaner energy and are also cost-effective, adding that this will even motivate the miners to relocate from coal-powered regions to clean-energy regions.

According to a Cambridge University’s Bitcoin Electricity Consumption Index, it is envisaged that the crypto-mining industry will consume 0.06% of the globe’s electricity production.

However, experts enjoined the Chinese government not to raise carbon taxes as a form of deterrence. Instead, they should work in providing alternative solutions.

China imposed a blanket ban on cryptocurrency in 2019 but has allowed the cryptocurrency mining industry to continue.

China’s coal-rich regions are imposing stiffer measures on Bitcoin miners, given their policy in curbing emissions. For example, In April, the provincial government of Inner Mongolia has rolled out plans to outlaw cryptocurrency mining before the end of April.

China’s Bitcoin Mining Industry Could Derail Climate Targets: Researchers

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Jan 25 2021

Network File-Sharing Service Suffers Cryptojacking Attack

QNAP Inc., a company specializing in building file-sharing and storage management applications, has warned users about an ongoing crypto mining attack on its network-attached devices. According to a recent Bleeping Computer report, the attack is essentially a cryptojacking operation, forcing connected devices to mine Bitcoin.

Blaming Weak Passwords

A Taiwanese company, QNAP Systems is a giant in the file storage and memory devices space. The company provides a backup hub for storing files, essentially operating as a hard drive that users can access anywhere and anytime.

As Bleeping Computer reported, security experts have named the malware installed on connected devices as “Dovecat.” They explained that it had been affecting computer systems since November 2020, and QNAP appears to have been its most prominent target. With access to thousands of connected devices, the malware can get a massive amount of processing power for its mining operation.

QNAP explained to the news source that customers’ weak passwords were to blame for the malware intrusion. The company has asked that users replace weak passwords with stronger ones while installing malware blockers and updating their network-attached devices.

Will 2021 Continue Where 2020 Left Off?

Cryptojacking has been one of the most famous malware variants for the past year. With more people and companies requiring effective internet connection and support, hackers have had a vast network of victims to take advantage of.

Last June, Russian cybersecurity firm Kaspersky reported that Singapore alone had seen a significant spike in the number of cryptojacking cases in the first quarter of the year. Per the report, January to March 2020 saw 11,700 cryptojacking complaints from the country – up from 2,900 in the first three months of the previous year.

Mexico saw a similar trend, where local news source El Economista confirmed that more individuals and firms had fallen victim to crimes like cryptojacking and ransomware attacks than ever before.

The report explained that several companies had complained about unknown entities accessing their cloud computing systems and using them for cryptocurrency mining. However, a cybersecurity expert also told the news medium that many of the firms don’t seem to know much about cloud security, to begin with.

Network File-Sharing Service Suffers Cryptojacking Attack

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Dec 31 2020

Bitcoin Analyst Argues that BTC Mining Is Not Wasteful, but Rather an Efficient Process to Secure a Highly Valuable Network

As Bitcoin (BTC) continues to set new highs, it became clear to many people that the digital asset could serve as a hedge against the traditional financial system. This year, many well-known investors, including Stanley Druckenmiller (a hedge fund manager with a net worth of $4.4 billion) have changed their mind about Bitcoin in the current macro-economic environment.

Druckenmiller thinks Bitcoin could serve as a hedge against US dollar depreciation and the ever-rising American stock market.

Sampo, a Bitcoin analyst, points out that stil, “not everyone has changed their mind, though, and the seemingly ever-present nay-sayers are also back.” They note that a popular or common argument against BTC is that it wastes too much energy. Although it’s true that mining BTC (or other proof of work cryptos) requires a very large amount of electricity, “the argument that it is a waste of energy has been debunked,” Sampo (a guest author/analyst) writes in a blog post published by LocalBitcoins.

According to Sampo, Bitcoin is “the ultimate cost-efficient way to spend electricity, and … [crypto] mining minimizes wasted energy and increases the use of sustainable energy solutions.”

At present, 900 new Bitcoins are created each day or every 24 hours. New Bitcoins are minted by using computing power to solve very complex mathematical problems. This requires large amounts of electricity. In fact, the total energy consumption of the BTC network is about 77 terawatt-hours (at the time of writing). This is even more than the total energy consumption of developed nations like Switzerland and the Czech Republic, Sampo confirms.

But since the total value of the BTC network has now surpassed the “total value of most major banks,” it’s clear that “a lot of energy is needed to secure the network,” Sampo claims. They argue that “all this immense energy is used to secure the safest value network ever created [so] it’s not wasted.”

Sampo further noted that “in practice, what it means to secure the Bitcoin network [is that] new bitcoins are created by validating blocks, which also contain the transaction information of all transactions on the Bitcoin network.” At the beginning, when the genesis block was mined, this “could be done with computer processors, CPUs,” Sampo notes.

But GPUs (graphics processing units in PCs) were a lot more efficient in solving the mathematical equations. And after the BTC network gained a lot more recognition, and Bitcoin acquired more value, hardware companies began producing ASICs – which are “optimized to solve the equations involved in mining Bitcoin,” Sampo explained.

GPUs may still be used for mining purposes, however, it’s quite difficult or even impossible to do it “profitably as an individual,” Sampo notes. They confirm that the process was “commercialized and optimized years ago.”

They added that the total hash rate of the BTC network is around 131.791 TH/s – which is an “immense amount of computing power protecting the network from outside attacks since any significant threats would require 51%, the majority of the hashing power, to force changes into the network.”

Sampo compares this to the hash rate of a typical gaming PC. They point out that “this is all very hypothetical, but let’s say that the potential hash rate of a low to mid-tier PC is approximately 23 MH/s.” Then “dedicating the GPU of this PC to bitcoin mining would account for 0.000017% of the current total hash rate of the Bitcoin network.”

Using these numbers, of the 900 new Bitcoins, “the daily share of this setup would amount to 0.000153 bitcoin, or 15,300 satoshis, currently worth $3.60.” When we “reduce the mining pool fees and the price of the electricity needed for running the PC 24/7, [then we can see that] this operation would be unprofitable.” More than likely, this setup would never be able to recover the initial investment.

This suggests that mining might be possible for individuals, however, it may not be profitable. But we can also see that a massive amount of energy consumed “protects the network” and “profitable mining requires optimal hardware, and optimal mining conditions,” Sampo states.

They added:

“Optimized hardware equals optimized returns. Cheap electricity prices equal optimized returns. When these two conditions are met, an optimal environment for Bitcoin mining is created, and Bitcoin mining incentivizes electricity users to minimize wasted energy. In other words, the game theory of Bitcoin mining eliminates actors who waste energy….mining favors countries with cheap electricity which usually equates to countries that are struggling financially, such as Venezuela. Unfortunately for Venezuelans, the industry has recently been forced into the national pool and even the Venezuelan army has started mining bitcoin.”

Sampo argues that if it were a waste of energy, then “why would governments do it?”

They further noted:

“Mining bitcoin is not only for countries where cheap electricity is available everywhere. Cheap electricity sources exist all around the globe, and they are the future trend in bitcoin mining. …oil and gas fields are using their excess energy to mine Bitcoin. This way, they can reduce their carbon footprint by utilizing the previously wasted energy. The same is true for hydropower plants and since renewable energy is an inexhaustible source of energy, these solutions have huge potential in powering the Bitcoin network in the future.”

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Oct 13 2020

Crypto Mining Firm HASHR8 Introduces Compass, which Matches Bitcoin (BTC) Miners with Affordable, Verifiable Hosting Facilities

HASHR8 Inc., a cryptocurrency mining and media firm that aims to support the “decentralized growth” of hashrate (or computing power used to secure digital currency networks) while enhancing the security of blockchains, has introduced Compass – which is a platform that will match Bitcoin (BTC) miners with verified hosting facilities across the globe.

According to a release, Compass is built to help people mine Bitcoin in a manner that they can generate more profits. The platform allows crypto miners to “secure competitive hosting agreements with the lowest-cost mining facilities worldwide, automating the process and eliminating broker fees.”

Bitcoin mining is a very competitive industry with relatively high entry barriers. As explained in the announcement, those who might be willing to “brave these conditions” still face the time-consuming or challenging process of sourcing their hardware from a reliable distributor. They also need to choose a good hosting facility and negotiate an affordable electricity rate.

According to HASHR8, this process can become quite overwhelming and it might also present significant counterparty risk.

Thomas Heller, COO at HASHR8, stated:

“Bitcoin mining is a global game now, and [we think that] Compass gives everyone the best opportunity to compete. Whether a miner wants to move from China to a facility with a better power rate or a fund wants to deploy their first 100 mining machines, Compass makes it easy.”

Compass has been designed to remove the different barriers to hosting and aims to offer a good user experience. Bitcoin miners may now acquire hardware and “seamlessly secure space in the world’s best facilities at competitive rates, and start profitably mining bitcoin much faster,” the announcement noted.

Whit Gibbs, CEO at HASHR8, remarked:

“Decentralization for Bitcoin comes through the democratization of mining. Irrespective of nations, most hashrate is controlled by a few dozen miners. We are excited to give everyone the ability to mine bitcoin profitably and truly decentralize the network.”

Compass reportedly has considerable hosting capacity that may be accessed from many data centers across the globe. Facilities have been listed from North America, China, Kazakhstan, and Iceland. When it is launched, Compass platform users will have the option to buy or enter into various hosting agreements and acquire hardware as needed.

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