Category Archives: Bitcoin Mining

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Can Bitcoin Save a Canadian Ghost Town?

The Canadian mill town of Ocean Falls on British Columbia’s central coast has seen its population shrink from 5,000 to just a handful of residents, becoming a ghost town, but Bitcoin mining might be bringing back the good old days.

Ocean Falls is a community on the Central Coast of British Columbia, Canada. Formerly a large company town owned by Crown Zellerbach, it is only accessible via boat or seaplane, and is home for a few dozen full-time residents, with the seasonal population upwards of 100.

It became the classic tumbleweed ghost town of western movies after the paper mill which supported a buzzing small community, finally shut down in the late 1970s, seeing the town’s population desert Ocean Falls for more lucrative prospects.

Since then it’s remained home to a few, only buoyed by some seasonal interest during a few months in the Canadian summer. But that’s changing. From this summer, sounds began to emanate from the old deserted mill; the first heard in almost half a century. These were not the buzz of a saw though, but the distant hum of electricity; the sound of Bitcoins being created.

Ocean Falls has now become home to a mini Bitcoin mining industry, utilizing the dam which used to provide the mill’s 13 MW of power, enough also to power the two nearby towns of Bella Bella and Shearwater. The electricity was always more than enough to supply the power needed for the three towns, so now the surplus is being put to good use.

The idea was the brainchild of Kevin Day, a crypto enthusiast who first came across the name Ocean Falls watching a documentary in the State capital of Vancouver eight years back. His newly acquired interest in crypto later drove him to consider mining Bitcoin, and the ghost town came to mind once again.

Day started up the company Ocean Falls Blockchain (OFB), telling his investors he would be buying 6 MW of energy from Boralex, the private utility that owns the dam, by the end of 2018, bringing in about USD 5.7 million in annual revenue from the Bitcoins created. Plans were to then expand out from Ocean Falls with predictions that OFB would have over 17,500 Bitcoin mining units by 2012 by increasing its energy consumption to 30 MW of power.

In true Canadian pioneering spirit, Day shipped in hundreds of Bitmain Antminer S9 mining units and a half ton transformer, transported from Vancouver by truck, then barged up the river the rest of the way. He then constructed his lab using the paper mill complex as an operations area then installed huge fans for cooling. The project was born and the mill brought back to life.

It’s unlikely that a handful of computer operators will bring the old town back but there is life in the place now. Keith Cockell, son of one of the original dam operators in the 1950s and 1960s, is back in town and doing his father’s job now. He likes what he sees:

“There’s been a lot of years where we’ve been waiting for someone to come along… the day we fired up, the miners started going, there was the humming, and I said to Kevin, “It’s a good feeling seeing that extra power being used”.”

Toni Ziganash, who runs a boarding house from the old bank building in town, would love to see a local economy bringing back the public:

“We have a very ageing population here, and when I say ageing, that means 70 and up. So there’s not a lot of energy. There’s not a lot of enthusiasm for anything new, to tell you the truth… So I would just like to attract some younger people to come in.”

Day pulled his server’s switches in July. It remains to be seen what awaits Ocean Falls, and if this could be the start of something special, revitalizing an economy frozen in time.

 

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New ASIC with 7nm Architecture Boasts 20+ billion transistors

The Japanese company GMO Internet Group announced on Wednesday the launch of their bitcoin application specific integrated circuit (ASIC) miner built on a 7nm architecture. They are aiming for the new compact chip design to launch on the 6th of June and for mass production of the B2 miner to lead to the shipping of the final product in October.

The company claims to have already mined a total of 906 bitcoin and 537 bitcoin cash as of April, with current CoinDesk prices that amount to almost USD 8 million in cryptocurrency.

New entries are welcome in the market as according to Bernstein, “Bitmain accounts for as much as 80% of bitcoin application specific integrated circuits (ASICs)”. Bitmain has generated between USD 3 billion and USD 4 billion in profits in 2017. The Beijing-based company rivals profits of one of the market leaders Nvidia, who specializes in chipset design and manufacture. Nvidia’s market cap was USD 147 billion, turning profits of USD 3 billion in 2017. With mining technology reaching similar levels to that of well-established companies it puts into perspective the rate of growth that the market is experiencing. Bitmain has achieved what Nvidia took several decades to achieve in a brief window, this is partially down to the rapid increase in the value of bitcoin. This year they announced their Ethereum ASIC which is going to add to their already expanding profits.

Bitfury Group is also generating competitive revenue with its bitcoin mining operations, and software services turning over USD 93.7 million revenue in 2017’s financial year.

7nm architecture and hardware accelerators

Samsung revealed earlier this year that it is due to start manufacturing ASIC chips in January 2018. Intel has been developing some of its own technologies, claiming their hardware accelerator could create a power reduction of as much as 35 percent.

“Because the software and hardware utilized in Bitcoin mining uses brute force to repeatedly and endlessly perform SHA-256 functions, the process of Bitcoin mining can be very power-intensive and utilize large amounts of hardware space. The embodiments described herein optimize Bitcoin mining operations by reducing the space utilized and power consumed by Bitcoin mining hardware.”

The 7nm Architecture will be the latest advancement in the bitcoin mining sector as well as the computer industry with four-fold efficiency. 7nm semiconductors contain 20+ billion transistors, whilst fitting on your fingertip they are still capable of performing complex computations. Samsung and IBM are also researching and developing these 7nm chips. With 7nm chips on the horizon, this then sets the future for 5nm semiconductors and a move closer to the end of Moore’s Law.

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Less Than 20% of Bitcoin Left to Mine

With over 80% of Bitcoin already mined, the increased scarcity is likely to lead to the appreciation of the currency.

The 17 millionth Bitcoin was mined last month

There is, of course, a finite supply of Bitcoin; last month a milestone was reached as the 17 millionth Bitcoin was mined. There are only 21 million Bitcoins to be mined in total.

Despite the fact that it has taken just nine years to mine 17 million Bitcoin in the market, it is estimated that the remaining currency will not be all be mined for over a century. The exact year being suggested is 2140.

This is due to the algorithms solved in the mining process becoming more difficult, and the reward for Bitcoin miners also decreasing. The initial reward for each block mined started at BTC 50 but was scheduled by founder Satoshi Nakamoto to halve every 210,00 blocks mined.

Currently, miners are rewarded with BTC 12.5 per block, with this expected to halve in the next two years. As Bitcoin users and miners can track approximately when this halving is supposed to occur, it is thought that this does not significantly decrease the valuation of Bitcoin.

In order to sustain the network once Bitcoin mining eventually becomes nearly unprofitable, transaction fees paid by network users will be used to subsidize their activities. As more users enter the network and more Bitcoin is actively traded, this will help make up for the decreasing block reward.

Benefits of scarcity

As scarcity will make it more difficult and expensive to obtain Bitcoin, this both encourages holders to retain their assets and new users to enter the market sooner rather than later, driving the demand higher.

Essentially, as with any asset, it is a matter of ‘utility + scarcity = value’. A whole host of factors are encouraging new investors into the market, one example being Japan legally recognizing Bitcoin as tender last year.

The popularity of Bitcoin with the younger generations is spurring the widespread adoption of the currency. A recent survey polling millennials found that 27% would choose Bitcoin over traditional stocks.

 

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Crypto Miners Look to Norway and Sweden for Energy Savings

Cryptocurrency miners are reportedly looking to move their operations to Norway and Sweden, with hydroelectricity and other renewables from more developed European countries allowing for cheaper electricity tariff’s beneficial to profits as electricity is the main overhead. Iceland has been a popular location due to the low temperatures which naturally dissipate the heat that is generated.

What is mining?

Cryptocurrency mining consists of two main processes. Verifying and adding transactions to a block in a blockchain, and solving highly complex cryptographic puzzles with a ‘Proof-of-Work (PoW) algorithm. In a typical PoW blockchain such as Bitcoin, the first of competing hardware to find the solution is rewarded with cryptocurrency. As more miners join the network, growing computational power results in an increasing solving difficulty, requiring more powerful, energy-intensive hardware to mine currencies.

Problems associated with large-scale IT solutions

As with any large IT solution, mining can be energy intensive and has large power requirements. The local power grid needs to be able to cope with the peaks and troughs of the total energy draw in the area. Local powerline infrastructure also needs to be able to cope with heavy loads of power on the lines.

Vast amounts of heat are generated due to resistance in current computer components as they are made of copper. In order to improve the shelf life of the components, cooling is required. Cooling will come in the form of fans or air conditioning, which again requires more power.

With general power needs growing for an expanding population, there is a need to continue to develop more efficient production and distribution methods. Bitcoin mining is an expanding area as well. As per Digiconomist’s Bitcoin Energy Consumption Index, Bitcoin’s current estimated energy consumption is already at 60.24 TWh.

Green power solutions for miners

Currently, China contributes to around 70% of cryptocurrency mining due to its relatively cheap electricity. Growing pollution concerns from coal-fired power have resulted in legislation being introduced to restrict mining in cities such as Beijing. This has led to miners seeking out new locations to set up operations.

In Norway, hydropower contributes to more than 99% of electricity, while Sweden uses a combination of hydropower/nuclear at a 40/40 split.

Both Norway and Sweden have encouraged their countries to welcome cryptocurrency mining. It makes commercial sense, as energy providers will be attracted to the consistent power draw of mining operations that tend to run round the clock. Cheaper renewable power, cooler climates that aid cooling requirements and friendlier crypto legislation in these countries are proving enticing to mining companies.

Future power requirements

If the growth in cryptocurrency energy consumption continues at current rates, it will quickly become unsustainable. Credit Suisse estimates that if Bitcoin’s price were to reach USD 50,000, we would see an increase in the electricity consumption by ten times. With a wider adoption of blockchain among our other growing energy requirements, we will need to take steps towards greener energy solutions.

Rising mining power requirements could stimulate more growth in renewables as more portable variations are quicker to set up compared with nuclear alternatives. Localized renewable power solutions also require less infrastructure compared with nuclear, which often needs to be situated near a water source.

The power requirements of mining have the ability to have a knock-on effect on other markets. Higher demand for renewables will create more jobs and competitive markets lead to innovation.

 

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Intel Pursues Patent for Bitcoin Mining Hardware Accelerator

Leading tech firm Intel is looking to patent a hardware development that would accelerate the process of Bitcoin mining chips, as revealed in recently published documents.

Accelerating Bitcoin mining

The application for the patent was submitted to the US Patent and Trademark Office in September 2016, with the details made publicly available on 29 March 2018. The formal request seeks to patent specifically a “Bitcoin Mining Hardware Accelerator With Optimized Message Digest and Message Scheduler Datapath”.

Intel outlines the benefits of the mining hardware accelerator in the application, detailing the process by which the software can increase the efficiency of Bitcoin mining. The hardware is described as consuming less electricity than standard software used for mining, increasing the economic efficiency.

Acquiring a patent such as this addresses the problems associated with conventional Bitcoin mining. As addressed in the application, the hardware utilized in the mining process ”uses brute force to repeatedly and endlessly perform SHA-256 functions”. This results in the process of Bitcoin mining being both power-intensive and employing large amounts of hardware space.

The hardware accelerator reportedly offers to reduce the space used, as well as cut the amount of power consumed during mining by up to 35% against a general-purpose processor.

Intel’s links to Bitcoin

This latest event follows previously reported connections between Intel and Silicon Valley bitcoin mining startup, 21 Inc. Intel originally developed chips for the fledgeling company, although plans to incorporate these chips into other Intel products never reached the market.

In March 2015, Intel reportedly listed a job application citing they needed a researcher to “investigate hardware and software capabilities that advance the performance, robustness, and scalability of open, decentralized ledgers.”.

A patent applied for by Intel in December 2017 illustrates the company’s focus again on the energy-intensive process involved in genetic sequencing. This patent does not, however, focus explicitly on mining any form of cryptocurrency.

If a leading industry company such as Intel should choose to invest further in the development of Bitcoin or blockchain innovations, the potential impact could be significant.

 

 

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Ethereum Markets React to Rumored ASIC Miners

Rumors surrounding a new Ethereum mining rig from leading mining hardware provider Bitmain have resulted inEthereum prices dropping below a one-week high of USD 585. Ethereum isn’t the only blockchain network wary of new Application-Specific Integrated Circuit (ASIC) mining tech, with Monero already set to resist ASIC mining earlier this week.

Rumors with substance

The stories sparked up when CNBC reported a statement Susquehanna analyst Christopher Rolland had written to clients:

“During our travels through Asia last week, we confirmed that Bitmain has already developed an ASIC [application-specific integrated circuit] for mining Ethereum, and is readying the supply chain for shipments in 2Q18. While Bitmain is likely to be the largest ASIC vendor (currently 70-80% of Bitcoin mining ASICs) and the first to market with this product, we have learned of at least three other companies working on Ethereum ASICs, all at various stages of development.”

Traditionally, Ethereum has been mined using GPUs, but the new ASIC from Bitmain would result in even higher entry barriers for the casual miner. The most devoted of crypto enthusiasts see this as an antithesis to the blockchain ideology; ASIC mining rigs are often at the centre of controversies and are far more expensive than the GPUs used primarily by gamers, outclassing them in mining power.

Cause for controversy

While ASIC chips have been Bitmain’s powerhouses for mining Bitcoin and Bitmain’s mining pools account for significant portions of all the processing power on the global Bitcoin network, they are still finding themselves coming up against a great deal of resistance.

The shakeup comes down to the technology creating such high barriers that lead down a road of centralization. On top of that, GPU mining competition could be threatened by the new hardware, potentially causing GPUs to become obsolete, forcing miners to move to other newer cryptocurrencies despite the fact that GPU mining has proven profitable for Ethereum miners so far.

Even Monero appears to be taking on Bitmain. Earlier in the month, Bitmain announced the latest rollout of purpose-built Monero mining rigs, the Antminer X3. This, according to a post made by Monero, opens plenty of issues for the network and does not fit with its network ethos.

It is not clear what the ASIC boom will bring to the competition of the global mining arena, but the contentious tech could spell an end for GPU cryptocurrency mining and perhaps the majority Ethereum GPU mining.

 

 

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