The Rise of Specialized Mining Equipment on Bitcoin ...

Will crypto mining kill polar bears?

Bitcoin mining uses as much electricity as a small country. Many people hate it for this reason, its one of the more popular arguments against crypto currencies. Will crypto mining kill polar bears? I think not. I think it will help save polar bears. "Bear" with me.
Germany produces a significant part of its electricity from renewable energy: wind and solar. As we all know, these sources are intermittent and seasonal, as is demand. When the share of renewable energy in the overall energy mix becomes large enough, the result is inevitable: temporary and seasonal overcapacity. This isnt just theoretical, energy prices in germany and the UK where effectively negative last Christmas: http://www.businessinsider.com/renewable-power-germany-negative-electricity-cost-2017-12//?r=AU&IR=T
As explained in the above article, this isnt a rare freak occurrence, its expected and this will have to be become much more common if as a society, we want to transition away from fossil fuels. Because to do that we need (much) more renewable energy sources. A study I saw for Germany calculated they needed at least 89% more capacity, just to handle peak loads. But that also implies an incredible amount of overcapacity when demand isnt anywhere near peak, or when supply is above average due to favorable weather. Storing excess renewable electricity, in most places is very expensive and inefficient. So much so that its rarely even done. This is a major problem. Wind turbines are therefore feathered, solar panels turned off, excess electricity dumped in giant electrical heaters, offered for free or even offered at negative prices. Renewable energy may have become cheaper than other forms per KWH, but thats only if when you can sell all of your production. And its only true if the consumption occurs near the renewable energy source and not 100s or 1000s of kilometers further. Building capacity that can only be used 50% or even 10% of the time, or building infrastructure to store surplus electricity is still very expensive, as is transporting renewable energy over long distances.
I know what you're thinking. Mining wont help here, because mining intermittently is something that seems crazy today; miners keep their expensive machines on 24/7. But thats only because today, the overall cost structure of a (bitcoin) miner is heavily tilted towards hardware depreciation. Particularly for anyone paying retail prices for mining asics. This will change completely, because of two related reasons:
1) mining efficiency improvements will taper off.
Mining asics have been progressing extremely rapidly, from being based on CPUs and FPGA's, to using 20 year old obsolete 180nm process technology in the first asics, to state of the art 16nm chips today. This has resulted in at least a million fold improvement in efficiency in just a few years, which in turn lead to hardware investments that needed to be recovered in a few months or even weeks (!) before they were obsolete. Opportunity cost has been so high, that miners have literally chartered 747s to transport new mining equipment from the manufacturer in China to their datacenters in the US.
This cant and wont last. 12nm and 7nm asics are about to be produced, or are being produced now. It doesnt get better than that today, and it wont for many years to come. Moore's law is often cited to show efficiency will keep going up. That may be true, but until now the giant leaps we have seen had nothing to do with moore's law, which "only" predicts a doubling every 18 months. Moore's law is also hitting a brick wall (you cant scale transistors smaller than atoms), and only states that transistor density increases. Not that chips become more efficient or faster, which increasingly is no longer happening (new cpu's are getting more cores, but run at comparable speeds and comparable power consumption to previous generations).
What all this means is that these upcoming state of the art mining asics will remain competitive for many years, at least 3, possibly more than 5 years, and thus can be used and written off over that many years. But they will still consume electricity during all those years, shifting the overall costs from hardware to electricity.
2) Mining is still too profitable (for anyone making their own asics) and mining hardware is therefore still too expensive (for everyone else)
Miner hardware production rate simply hasnt yet been able to keep up with demand and soaring bitcoin prices. This leads to artificially low mining difficulty, making mining operationally profitable even with expensive electricity, and this also leads to exuberant hardware profit margins. You can see this easily, just look at the difficulty of bitcoin. When the price dropped by 70%, did you see a corresponding drop in difficulty? No, no drop at all, it just keeps growing exponentially. That only makes sense because we are not yet near saturation, or near marginal electricity costs for bitmain & Co. Its not worth it yet for them to turn off their miners. Its not even worth it yet for residential miners. Another piece of evidence for this, is bitmains estimated $4 billion profit. But mining is a zero sum game, over time, market forces will drive hardware prices and the mining itself to become only marginally profitable. We're clearly not close to that -yet. You might think so as a private miner, but thats only because you overpaid for your hardware.
Lets look at todays situation to get an idea. An Antminer S9 retails for $2300 and uses ~1300W at the wall. If you write off the hardware over a year, electricity and hardware costs balance out at an electricity price of $0.2/KWH. Anything below that, and hardware becomes the major cost. But how will that evolve?
As difficulty keeps going up, bitcoin mining revenue per asic will decline proportionally, until demand for mining asics will eventually taper off. To counter that, prices of asics will be lowered until they approach marginal production costs, which by my estimate is closer to $200 than $2000. Let say a 1300W S9 equivalent at that point gets sold at $400 leaving bitmain a healthy profit margin; that would mean each year a miner would spend 5x more on electricity than on hardware. Hardware will remain competitive for more than a single year though. Say you write it off over 3 years, now you're spending 15x more on electricity than on hardware. Intermittent mining like 50% of the time, but with free or virtually free electricity will become economical long before that.
By now, I will hopefully have convinced you of the viability of mining with intermittent excess renewable energy; intermittent mining with renewable energy will not only become viable, it will become the only way to do it profitably. Renewable energy at the source is already cheaper than any carbon burning source. Even in Quatar, they install solar plants because its cheaper than burning their own gas. Its transporting and storing the electricity that usually is the problem. Gas can easily be transported and stored. Wind and solar energy can not. And thats a massive problem for the industry. But mining doesnt need either. You can mine pretty much anywhere and anytime. All you need besides electricity, is a few containers and an internet connection for a solar plant or wind farm to monetize excess energy.
Moreover, mining is a zero sum game, a race to the bottom. As long as its profitable for green energy providers to deploy more hardware (which will be true as long as they can at least recover their hardware investment), difficulty will go up. Until it becomes unprofitable for anyone who has to pay for his electricity. No one gives oil, coal or gas away for free, so anyone depending on those sources of electricity, can not remain competitive. If bitcoin price were to go up so much, that there isnt enough renewable electricity production in the world to accommodate the hashrate, bitcoin miners will simply install more solar and wind farms. Not because of their ecological awareness, but because it makes the most financial sense. And during peak demand periods, why wouldnt they turn off the miners and sell their electricity to the grid for a premium?
Basically crypto mining would fund renewable energy development, and solve the exact problem laid out in the article linked above: provide overcapacity of renewable energy to handle grid peak loads, without needing any government funding or taxation on carbon based sources, without needing expensive and very inefficient energy storage. From the perspective of a green energy producer, energy storage, like a battery or hydrogen production, is just an expensive and intermediate step between producing electricity and getting paid for that electricity. Crypto mining will do the same thing, converting excess electricity in to cash, only much more efficiently.
TL:DR, deploying more renewable electricity overcapacity is both very expensive and very necessary if we want to save polar bears. Financing for these large scale green energy projects will either have to come from tax payer money to store or subsidise the largely unused excess electricity, or it will come from crypto mining. Market forces will drive crypto mining to use the cheapest energy. Renewable energy already is cheaper per KWH than carbon based power, and nothing is cheaper than excess and thus free (or negative value) renewable energy. Bitcoin mining's carbon foot print will therefore become ~zero. If you take in to account the effect of financing and subsidizing large scale renewable energy development that can also be used to supply the grid during peak demand periods, its carbon footprint will be hugely negative.
BTW, if you wonder what Blockchains LLC is going to do with 61K acres near Tesla's factory; my guess is solar plants and crypto mining. Expect to see renewable energy development and crypto mining to merge in to one single industry. Check out envion to get a glimpse of this future. Im not endorsing their token as an investment, I havent researched it at all, but the market they are going after is a very real one and its about to explode.
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How To Reduce Energy Consumption In The Midst Of Crypto Popularity

How To Reduce Energy Consumption In The Midst Of Crypto Popularity
Electrical energy has become an integral part of everyday modern life. It’s used to power our bulbs and home appliances, trains, and even charge electric vehicles. Globally, its use is rising rapidly as different economies across the globe develop. Therefore, there is a growing need for energy which in turn continually drives the demand for electricity generation. For years now, most of the electricity consumed on a global scale has been generated from three energy sources: fossil fuel, nuclear, and hydro. Renewable energy sources such as photovoltaic (solar power), offer an alternative, albeit small, a share of the world’s electricity. However, our energy sources can have significant environmental impacts.


Cryptocurrency Mining, Then Versus Now
Back in the day, 2009 to be precise, Bitcoin mining was nothing more than a lucrative hobby for several crypto enthusiasts. Miners could leverage their CPUs to mine Bitcoin as they were enough. It was possible because the only hardware needed for mining was a simple computer and the number of miners was significantly low. In fact, in the early stages, Hal Finney and Satoshi were the only ones mining BTC through the use of several computers simultaneously. Satoshi mined 1,000,000 Bitcoins in the first week of the project, courtesy of several computers.
At that time, the difficulty of mining was extremely low. However, over time, the problem has shot up drastically courtesy of Bitcoin’s rules and a change in new and advanced mining hardware. At the start, individuals would use CPUs (Central Processing Units) to mine BTC. CPUs represent the electronic circuitry within a computer.

Back in 2009, a miner would generate bitcoins at a rate of 50 per block. Gradually, people made the shift to GPU mining which was comfortable and lucrative to use. Due to this, GPU mining became extremely popular, and in 2011, people started using them. Soon after, the mining difficulty increased, and by June 2011, people began using FPGAs (Field Programmable Gate Arrays). Shortly after that, in 2013, FPGAs gave way to ASICs (Application Specific Integrated Circuits) that have made BTC mining industrious.
Currently, the Bitcoin mining process requires about 73.04 TWh of computational power to solve complex mathematical equations per year. This equates to about 0.33% of the total global electricity consumption. One Bitcoin transaction on average consumes about 916 KWh of electricity that could power about 31 US households. Mining is no longer lucrative for individual miners as setting up needs specialized mining rigs that are expensive to buy and operate.

For instance, it would set a single Bitcoin miner back around $15,861 to mine one bitcoin in the Cook Islands near New Zealand. The cost rises to about $16,209 in the Solomon Islands located near Papua New Guinea. The prices of mining one Bitcoin further rise in Bahrain, Niue, and South Korea with amounts of $16,773, $17,566, and $26,170 respectively.

Mining creates enormous electricity bills through energy consumption and cooling (and that’s on top of the cost of mining equipment and, nowadays, a facility to house your rows and towers of machines). The current BTC network is estimated to be consuming about 2.55 gigawatts (GW) of electricity annually which is enough to power a whole country. For context, the entire state of Ireland consumes an average of 3.1 GW of electricity.

Potential Consequence of High Non-Renewable Energy Usage
Greenhouse Gas Emissions
The most well-known impact of increased non-renewable sources usage is the production of greenhouse gases mainly CO2 that is believed by many to contribute to climate change (though much of this is politicized hype). Different types of non-renewable energies produce different levels of greenhouse gases. For example, coal provides the highest amount of CO2 emission. It’s important to note that CO2 is plant food (and plants produce oxygen), is what every breathing creature emits when exhaling, and climate change (formerly Global Cooling, formerly Global Warming) is not agreed upon by scientists to be caused by human activity, as there are a myriad of other, likely much more influential factors, such as solar cycles. It’s also worth noting that climate change has always happened, with warmer and colder periods, and what has been hyped up in the last decade is a tiny percentage of what humanity has witnessed, without industry. Predictions of the world ending disastrously in a few short years if we don’t do something politically have fallen flat.
It is worth noting that the above factor will also depend upon how efficient the engines using these fuels are, and filtering systems to reduce emissions. Modern technology can produce very efficient, low emission engines which use fossil fuels.

Token Creation (PoW/PoS/DPoS)
Proof-of-Work (PoW) is a term that’s usually used to denote the kind of concept that the Bitcoin network uses to validate and add transactions to the blockchain. It involves the use of ASICs in mining to solve complex mathematical algorithms otherwise known as PoW problems. Although PoW is excellent against cyber-attacks, it has a major limitation of high electricity consumption. Furthermore, mining rigs require top computing hardware that’s expensive to attain. Some of the projects using the PoW consensus algorithm include Bitcoin, Monero, Ethereum, Ethereum Classic, Bitcoin Cash, Zcash, Litecoin, and DogeCoin. Ethereum is intended to make the change from PoW to PoS via the Casper protocol.

Proof-of-Stake (PoS), on the other hand, is an alternative way of validating transactions or blocks. It was engineered as an alternative to the PoW process that consumes an immense amount of energy. Unlike Proof-of-Work, coins are no longer mined but are forged or minted. Block validation is done by a select group of individuals known as validators. They are chosen depending on the age and amount of stake they hold within the blockchain network. Some of the projects using the PoS algorithm include Dash, QTUM, NEO, NavCoin, Stellar Lumen, Zcoin, and Stratis.

Benefits of the PoS system include:
Less expensive hardware is required.

Transaction times are much faster.

It is energy efficient as it doesn’t consume a lot of energy.

Delegated Proof-of-Stake, otherwise known as DPoS, is a new and alternative protocol to both the PoW and PoS consensus algorithms. It’s mostly considered to be the most decentralized consensus model in existence today. This is mostly because every token holder has a degree of influence about what happens in the network. DPoS uses the power of stakeholder approval voting to promote consensus in a fair and democratic manner. Projects using DPoS include Lisk, Ark, Rise, Tezos, OxyCoin, Shift, Lightning BTC, and EOS, among others.

Conclusion
Blockchain projects around the world can help reduce energy consumption by taking alternative routes in the cryptocurrency mining process. First, blockchain projects can make the switch from the PoW system to the PoS system which is much cheaper and consumes less energy. Secondly, cryptocurrency miners can make the switch to cleaner and friendly renewable sources of energy such as solar energy. Lastly, blockchain networks can incentivize miners to use renewable energy resources by offering additional rewards for those that utilize them.
submitted by JustPowerIT to JustPowerIT [link] [comments]

Why isn't solar the ideal power source for mining (eventually)?

I'm no expert, but I couldn't help thinking about this amidst all the debates about "mining will eventually be very centralized!" "Bitcoin wastes a lot of power!" etc. So hear me out, see if this makes sense:
  1. Solar is already, on a per joule/watt-hour basis, cheaper than coal. It's going to get even cheaper. A LOT cheaper. So cheap, IIRC in most parts of the developed world panels are no longer the majority of the cost, but support infrastructure/distribution hookups took over.
  2. The main obstacle to using solar en masse is that it's intermittent. Many proposals to mitigate (batteries, superconductive long distance grid, etc.), but few scale cheaply. Solar is also really spread out, requiring large amounts of land to generate, making land acquisition (if centralized) or distribution (if decentralized on rooftops) a problem.
  3. When the dust settles - when ASIC development gets slower and more predictable - mining rigs will be commoditized and cost lowered to material bill, electricity cost will overwhelmingly dictate the marginal cost of mining. Solar is ideal for this (see #1)
  4. If rig cost doesn't matter much and operators can afford to leave machines idle, say, 50% of the time, then the intermittent nature of solar doesn't matter to mining. One can simply switch off the rigs when the sun doesn't shine. The mining network will live on as the sun always shines somewhere in the world.
  5. Solar is inherently spread out - good for decentralization, as it's hard for any single entity except large states to acquire huge swaths of land, and it's even less likely anyone can acquire a majority of the world's land.
  6. Converting electricity to money (coins) on site greatly alleviates the distribution/transmission problem, as connecting to the blockchain (with rooftops, simply existing connections; in rural parts, perhaps even via satellite? Balloons?) is way cheaper than pulling high-voltage towers all the way to the cities, or upgrading the grid to do acrobatics with rooftop generation. IIRC this is why people took liberal advantage of geothermal energy in Iceland to mine Bitcoins instead of pulling a transmission cable all the way to Europe, no? Perhaps the Saharan countries can finally do something profitable and scalable with all that desert land...
As far as I can see this is a match made in heaven: Some of solar's problems don't matter for bitcoin (intermittent nature), and some actually solve bitcoin's problem (distributed nature, hard to gain majority, cheap if uncoupled for storage and distribution).
So... what are you thoughts? I apologize if someone else has gone through these points before, but even in that case I'll still want to know what you guys think about it in light of recent debates.
Edit: Typos.
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12-10 23:33 - 'Lets have a discussion about energy consumption in bitcoin mining and what that means towards the carbon footprint today.' (self.Bitcoin) by /u/Cryptolution removed from /r/Bitcoin within 1-11min

'''
There was a [very good coindesk article in July 2014]1 that broke down the carbon footprint of the bitcoin mining network. At the date of the article, our hashrate was 146,505 TH/s. Now that we are at above 13 exahashes/s this represents a 94 fold increase hashing power.
[Here is the cost breakdown chart from the coindesk article]2 .
As you can see from this image, the carbon footprint of bitcoin in 2014 is a tiny fraction compared to the carbon footprint of the traditional banking system. Yet at a 0.78 Billion per year cost in 2014, at a 94 fold increase of power that would now be 73.32 billion, which would make bitcoin 9.52 billion more in electricity costs.
But this is trying to extrapolate data in a non-accurate way. In order to understand why this is inaccurate, we must look at how all of this technology works and how technology has scaled upwards while decreasing electricty consumption.
The bitcoin network at 13 exahashes is roughly 130 times greater than the largest super computer (Sunway, 93 petahashes per sec in china, see [top500.org]3 )
So when you make that statement, you think "wow, bitcoin must use a lot of energy to be 130 times more powerful than the largest super computer network!"
But, its not apples to oranges. These super computer networks are non-specialized hardware (comparably to bitcoin) in that they have generalized computing capabilities. This means that these systems require more standardized hardware so that they can preform a large amount of different computing functions.
So, for example, the largest Sunway supercomputer @ 93 petaflops (roughly 1/130th the power of the bitcoin network) preforms its calculations at 93,014.6 petahashes @ 15,371 kW = 93014000 Gh @ 15370000 watts. Doing the maths, this comes out to a 0.16524 W/Gh.
The AntMiner S9 currently operates at 0.098 Gh ....so nearly double the energy efficiency of what the most powerful super computer network in the world operates at.
You have the Dragonmint miner coming out Q1-Q2 in 2018 which uses 0.075J/GHs ....a 30% efficiency increase over the Antminer S9.
And next year japanese giant GMO is launching into the bitcoin mining business, stating they will be releasing a 7nm ASIC design, which is more than double the efficiency of the current 16nm design the Antminer S9 uses. This will mean a more than doubling of energy efficiency. They said they have plans after the release of the first product to research "5nm, and 3.5nm mining chips"
So, what is the point of understanding all of this? Well, you have to understand how technology scales (think Moore's law) to understand how we can achieve faster computational speeds (more exahashes per second) without increasing the carbon footprint.
So if you look at a proof of work chart, you'll see it has scaled linearly upwards since the birth of bitcoin. And it would be logical to assume that the more hashes per sec thrown into the network, that it would equate to more power being spent. Yet this is not true due to advancements in ASIC chip design, power efficiency, and basic economic fundamentals.
You see, as new miners come out, because they are more efficient, people can run much faster mining rigs at much lower cost. This immediately adds much more hashing power to the network, which decreases the profitability of old miners. And to give you an idea of how much more cost efficient these are, lets look at Antminers products.
S9 - 0.098 W/Gh
S7 - 0.25 W/Gh
Avalon6 - 0.29 w/Gh
You can see the S9 is 3 times more power efficient than the Avalon6. That translates to "It costs 3 times more to operate this equipment". That aint no small difference.
These differences, combined with energy costs are what forces miners to stop running old hardware and to upgrade to newer models or exit mining completely. So as new mining equipment hits the market, old less efficient mining rigs go offline. The amount of hashes per sec continues to climb, yet the actual power usage of the entire network does not scale at the same rate that the hashes per sec scale at, due to increased energy efficiency.
The question that I would like to see answered by the community is this -
What has changed between now and 2014 in terms of total watts consumed? How can we calculate the real carbon footprint of todays bitcoin mining network compared to this data from 2014?
What equipment was running in 2013-2014, what were their W/Gh and how many of these machines do we speculate are still running vs more efficient mining rigs powering the network today? What is the Th/S differences between these mining rigs, and how much more power do we contribute towards the network today because of these optimized rigs?
Mining is not my specialty and there are going to be many people here who are better suited to tackling these problems.
I think these questions need to be answered and articulated because these are questions that im starting to see a lot from the mainstream as criticism towards bitcoin. I know the generic answer, aka "Bitcoin mining still uses a fraction of the cost that the entire global banking system does", but we really need to do better than that. We need to examine the different power types used in bitcoin mining -
How much of bitcoin mining is from hydroelectric? Nuclear? Wind? Solar? Coal? Natural Gas? What regions contribute the largest hashing power and can we evaluate whether these regions are Hydroelectric, Coal, Nuclear etc dependent?
If we are to articulate effective arguments against those who naysay bitcoin over its carbon footprint, then we must do so with good data to backup our positions.
Hopefully the numbers above are accurate/correct. Honestly only spent a few minutes doing napkin math, so I expect there to be mistakes, please let me know and thank you very much all.
'''
Lets have a discussion about energy consumption in bitcoin mining and what that means towards the carbon footprint today.
Go1dfish undelete link
unreddit undelete link
Author: Cryptolution
1: https://www.coindesk.com/microscope-conclusions-costs-bitcoin/ 2: https://imgur.com/a/eKipC 3: ww**top500*org/*ists*2*17/11*
Unknown links are censored to prevent spreading illicit content.
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Is Mining on ASICs Worth It? - Mining Adventure Part 3 ...

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