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Bitcoin Accounts for Over 80% of All PoW Mining Rewards

Bitcoin mining

  • New data shows that Bitcoin’s share of total crypto mining rewards has risen 250% in 2.5 years

According to new data, the dominance of Bitcoin in the mining world has been steadily increasing, rising 250% since the middle of 2017. Now Bitcoin’s share of total crypto mining rewards is over 80%.

Bitcoin miners are paid > 15 million dollars/day as incentive to secure the network

This makes up > 80% of total miner salary across all major PoW coins

Since mid-2017, Bitcoin’s miner salary share has increased ~250% and is nearing pre-Ethereum levels pic.twitter.com/8OkSwrfIDf

— Yassine Elmandjra (@yassineARK) January 10, 2020

In other words, over 80% of all the money earned by crypto mining is earned by Bitcoin miners, while all types of altcoin mining have decreased to below 20% of global mining revenue. This has been led by a drop in the profitability of Ethereum mining, which at one point had a larger mining share than Bitcoin, but has now nearly completely withered up. Also, Litecoin, Zcash, and Bitcoin Cash mining has lost dominance in the mining world as well.

Overall, this data shows that Bitcoin has once again become the king of crypto mining, like it was during most of the history of cryptocurrency. Essentially, Bitcoin lost its mining dominance during the initial coin offering (ICO) boom of 2017, but now the ICO boom has ended and Bitcoin is back on top.

 

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World’s Largest Bitcoin Mining Farm Being Built in Texas

  • A new 100-acre Bitcoin mining farm operated by Northern Bitcoin AG will have 1 GW of power capacity

The common saying is that everything is bigger in Texas, and apparently that applies to Bitcoin mining farms too. The world’s biggest mining farm is being built by Northern Bitcoin AG on a 100-acre plot of land in Texas. It will have 300 MW of power capacity when it initially opens, and eventually 1 GW of capacity before the end of 2020. This is three times larger than the world’s current biggest Bitcoin mining farm which is operated by Bitmain and actually located in Texas as well.

Japanese internet provider GMO Internet, which is heavily involved in Bitcoin mining, and Japanese financial services provider SBI Holdings have agreed to attract more investors to the project and to process Bitcoin transactions once the farm is operational. Basically, Northern Bitcoin AG is operating the farm on the behalf of large investors in order to protect itself from wild price swings, and GMO Internet and SBI Holdings are helping with that.

Apparently there is abundant and cheap wind energy in Texas, which is why the world’s largest Bitcoin mining farms are popping up in the region.

 

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Bitcoin Hash Rate Hits New All-Time High of 119 EH/s, Up 176% in 2019

  • Bitcoin mining hash rate hits new all-time high of 119 EH/s

The Bitcoin mining hash rate hit a new all-time high of 119 EH/s on New Year’s Eve and has increased 176% during 2019 despite a relatively bearish second half of the year. This new hash rate record is equivalent to 119,000 PH/s, 119 million TH/s, 119 billion GH/s, or 119 trillion MH/s. This is a tremendous amount of mining power, especially considering that there was a time when Bitcoin’s hash rate was only a handful of MH/s.

A higher hash rate is equivalent to a more secure network, and therefore the Bitcoin network is more secure than ever before. Further, an increasing hash rate suggests that miners are anticipating Bitcoin’s price to increase, and are willing to mine Bitcoin for little to no profit now in expectation of their Bitcoin becoming much more valuable in the future.

Indeed, the block halving is coming in May 2020, and each block halving in the past has coincided with a major Bitcoin rally, likely due to the block halving drastically reducing the market supply of Bitcoin.

 

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China Global Bitcoin Hash Rate Share At New High of 66%

  • China now controls 2/3 of the total Bitcoin mining hash rate

A report from CoinShares has found that China’s share of the global Bitcoin mining hash rate has increased to 66%, which is the highest level recorded since CoinShares began publishing these reports in 2017. Further, over 50% of the global Bitcoin mining hash rate is concentrated in a single province, Sichuan, which is located in southwest China and has abundant hydroelectric power resources.

Other mining hotspots in China include Xinjiang and Inner Mongolia. CoinShares’ speculates that China’s hash rate has achieved new heights due to the widespread deployment of top of the line mining rigs, and this especially makes sense since the top Bitcoin mining manufacturers in the world are located in China, including Bitmain, Canaan, and MicroBT.

Notably, the government of China was close to banning cryptocurrency mining, but decided not to last month, at least for now. It could be argued that having so much of Bitcoin’s hash rate located in a country that does not favor Bitcoin could be a centralization concern. Theoretically, the Chinese government could seize the Bitcoin mining operations across the country and take over the Bitcoin network if they desired to.

As for the other 34% of the global Bitcoin mining hash rate, it is concentrated in the United States, Russia, and Kazakhstan.

 

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Bitcoin Mining Rig Maker Canaan Seeks $100 Million US IPO

Canaan, a Bitcoin mining technology manufacturing company based in Hangzhou, China, is aiming to become the first public company in the cryptocurrency mining sector via a USD 100 million initial public offering (IPO) in the United States. This is according to an amended application filing submitted to the Securities and Exchange Commission (SEC). The USD 100 million IPO price is actually a downward revision from an IPO price of USD 400 million when the application was first submitted to the SEC in late October.

Canaan is the second-largest manufacturer of cryptocurrency mining rigs and is the primary rival of Bitmain. Aside from producing mining technology, Canaan also produces artificial intelligence (AI) technology and supercomputers.

Notably, Canaan has tried before to go public via an IPO in both China and Hong Kong. These attempts were rejected by regulators due to market uncertainty. Likewise, Bitmain has tried to launch an IPO as well, but the 2018 crypto bear market caused its application to be rejected.

It remains to be seen if the SEC will accept Canaan’s application, and the IPO price may be lowered further before a final listing occurs, especially because regulators are more likely to approve the IPO if it raises less money since that is equivalent to less risk for investors.

 

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Bitcoin Mining Technology Approaching the Quantum Tunneling Limit

Bitcoin Mining Technology Approaching The Quantum Tunneling Limit

Bitcoin Mining Hash Rate Has Seen Nearly Exponential Growth Long Term

The Bitcoin mining hash rate has seen an explosive and nearly exponential increase long term, rising through 1 GH/s in July 2010, 1 TH/s in 2011, 10 TH/s in 2012, 1 PH/s in 2013, 100 PH/s in 2014, 1 EH/s in 2016, 10 PH/s in 2017, and as high as 80 PH/s in July 2019, equivalent to 80 million TH/s and 80 billion GH/s. This rapid rise in mining hash rate has been partially fueled by the price of Bitcoin increasing from USD 0.01 in 2010 to over USD 10,000 currently, causing people around the world to compete to get a share of the lucrative Bitcoin mining block reward, which amounts to over USD 100,000 every 10 minutes currently. The other reason that Bitcoin’s hash rate has been rising so rapidly is that the demand for mining technology has caused manufacturers to develop mining rigs with the newest, most powerful, and most efficient technology.

For example, 7 nm chips, meaning the transistors on the chip are 7 nm in size, are the most powerful chips used commercially today. By November 2018, Bitmain had already released mining rigs which utilize 7 nm chips. This was a major jump for the company, since previously 16 nm chips were the best that Bitmain offered. Currently, the most powerful mining rig that Bitmain produces is the Antminer S17 which has a hash rate of 53 TH/s, and this far exceeds the Antminer S1 which had a hash rate of only 0.18 TH/s.

We are officially announcing the release of our new 7nm miners which possess industry-leading hash rates designed to mine with the SHA256 algorithm. Two models will be offered, the Antminer S15 and T15. Available for purchase on 11/8. pic.twitter.com/m6HbWGZS1O

— BITMAIN [Not giving away ETH] (@BITMAINtech) November 6, 2018

Chips with Smaller Transistors Fueling Hash Rate Growth

This massive increase in hash rate is due to mining rigs using chips with smaller and smaller transistor sizes, up to the present-day, cutting-edge 7 nm chips. A very important aspect of decreasing the transistor size is that exponentially more transistors can be fitted onto a single chip, which increases the energy efficiency of mining rigs. For example, the Antminer S1 has an energy efficiency of 0.0005 TH/J, while the Antminer S17 has an energy efficiency of 42 TH/J. This represents an 8.4 million percent increase in energy efficiency from the Antminer S1 to the Antminer S17.

The increase in energy efficiency that results from mining rigs using chips with smaller and smaller transistors is what has paved the way for the explosive rise in Bitcoin mining hash rate. This is because the profitability of Bitcoin mining is primarily determined by the electricity cost, so if energy efficiency had not drastically increased from smaller transistors, then the profitability per hash rate would be much lower. Thus, the total Bitcoin mining network hash rate would be much lower in the absence of transistor size decreases.

Quantum Tunneling Suppressing the Evolution of Transistor Technology

Transistors will have to become smaller and smaller on chips in order to sustain the nearly exponential long term increase in Bitcoin mining hash rate. However, quantum tunneling is a problem for chips with transistors smaller than 7 nm.

Quantum tunneling can be explained by the concept of wave-particle duality. Essentially an electron, which is the fundamental building block of all computer systems, is both a particle and a wave simultaneously. For transistors of 7 nm and bigger an electron stays in its appropriate channels, and the computer functions properly. However, for transistors smaller than 7 nm, the wave nature of an electron can cause it to literally pass through barriers in a transistor, causing leakage of electrons.

In simple terms, if a transistor is small enough, then an electron can teleport through the physical barriers in a transistor. This results in the computer not functioning properly.

The immediate effect already being felt due to quantum tunneling is that Moore’s Law is breaking down. Moore’s Law states that the number of transistors on a chip doubles every two years, leading to an exponential long term increase in computer processing power. However, as transistor sizes decrease below 7 nm it is taking longer and longer to research, develop, and mass produce the evolved next generation of transistors.

For example, transistors from 22 nm to 7 nm use fin field-effect transistor technology (FinFET), but 5 nm transistors required a completely new technology called multi-gate field-effect transistors (MuGFET). The most cutting-edge 3 nm transistors, which are still in the research and development stage, have required yet another breakthrough called gate-all around field-effect transistors (GAAFET). Samsung aims to manufacture 3 nm transistors by 2021, although this is just a projection since it takes years to perfect new transistor paradigms.

Notably, 3 nm transistors are only expected to bring a 20% increase in power and performance, versus the 30% to 40% increase seen during previous transistor evolutions.

Essentially, scientists are developing completely new technologies in order to combat quantum tunneling and to try to stay on pace with Moore’s Law, but the time it takes to develop smaller transistors is increasing, and most importantly, these next generations of transistors are bringing lesser improvements in energy efficiency and processing power.

The Exponential Increase in Bitcoin Mining Hash Rate May Slow down Due to Quantum Tunneling

Therefore, Bitcoin mining technology appears to be approaching an imminent roadblock due to quantum tunneling, and this could slow down the rise in Bitcoin mining hash rate. That being said, Bitcoin mining hash rate also depends on Bitcoin’s price, so if Bitcoin’s price manages to rise strongly long term, then the hash rate could still increase nearly exponentially. On the other hand, if Bitcoin’s price increases slowly over the long term, then the hash rate would essentially plateau.

Also, it is possible that scientists could perfect quantum computing, which would allow Moore’s law to continue. That being said, quantum computing is still in its embryonic stages, and major technology companies are generally focused on making smaller classical transistors in order to increase the power and performance of computers, at least for now.

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Is Bitcoin Mining Detrimental to the Environment? What Are the Solutions?

Is Bitcoin Mining Detrimental To The Environment? What Are The Solutions?

The Bitcoin mining hash rate hit a new all-time high this past month of 80 EH/s, which is equivalent to 80,000,000 TH/s. This hash rate represents an ensemble of mining rigs spread all over the world that are performing hashing operations 24/7, in order to secure and sustain the Bitcoin network and to earn profits via block rewards. Bitcoin mining is highly competitive, and as long as Bitcoin’s price continues to rise long term, then Bitcoin’s hash rate will only increase from here.

China has recently proposed to eliminate Bitcoin mining, saying it uses an incredible amount of electricity and is wasteful. This would have a major impact on the distribution of Bitcoin mining in the world since most Bitcoin miners are located in China. That being said, China has not banned Bitcoin mining yet.

Also, speculation that Bitcoin mining contributes to global warming has led to numerous Twitter posts like the one below.

Study: Bitcoin Mining Could Push Global Warming Over the 2C Threshold https://t.co/F4kch36Qa7 via @WattsUpWithThat

— Marlene Katz (@marlene676) July 25, 2019

The following article investigates whether Bitcoin mining truly is detrimental to the environment, as well as explores the solutions that could mitigate environmental damage.

A Single Mining Rig Can Release 14.8 Metric Tons Of CO2 Per Year

To put Bitcoin mining energy usage into perspective, the Antminer S17 uses 2,385 Watts of power to generate 53 TH/s, which is equivalent to 20,893 Kilowatt Hours (kWh) used per year. This is 100% more than the 10,400 kWh an average American household uses in a year.

A calculator provided by the Environmental Protection Agency (EPA) indicates that the 20,893 kWh used per year by an Antminer S17 requires 34.2 barrels of oils, 1,662 gallons of gas, or 16,152 pounds of coal to be burned, releasing 14.8 metric tons of Carbon Dioxide (CO2) into the atmosphere as well as other pollutants.

The Basic Science Of Anthropogenic Global Warming

Anthropogenic CO2 emissions are the primary cause of global warming. This is because CO2 is a greenhouse gas, meaning that it blocks thermal radiation emitted by the Earth from escaping into space, causing the average temperature of the Earth to increase.

Chart showing CO2 measured at Mauna Loa Observatory courtesy of the Earth System Research Laboratory (ESRL) and the National Oceanographic and Atmospheric Administration (NOAA)

There is no doubt that the amount of CO2 in the atmosphere is increasing significantly long term due to human activities, as shown by measurements of atmospheric CO2 on top of Hawaii’s Mauna Loa Volcano, and this long term rise in CO2 corresponds to a long term rise in Earth’s average temperature.

The question is how much of total global CO2 emissions can be attributed to Bitcoin mining?

Bitcoin Mining Accounts For Roughly 0.1% Of Total Global CO2 Emissions

Assuming that the entire Bitcoin mining network is comprised of Antminer S17s, it would take 1.51 million Antminer S17s to yield the 80 EH/s hash rate of the Bitcoin network. This would consume 31.5 billion kWh of electricity per year, releasing 22.278 million metric tons of CO2 into the atmosphere every year.

According to the United States Geological Survey (USGS), the automotive and industrial sectors of the economy release 24 billion tons, equivalent to roughly 22 billion metric tons, into the atmosphere each year. A more comprehensive estimate is that humans release 40 billion metric tons of CO2 per year. This means that CO2 emissions from Bitcoin mining account for approximately 0.05% to 0.1% of total human emissions.

This calculation makes a couple of critical assumptions. It is assumed that all Bitcoin mining rigs are Antminer S17s when in reality there are many different types of rigs. The Antminer S17 is top of the line, and probably more energy efficient than most mining rigs, so the amount of electricity usage and CO2 emission due to Bitcoin mining is likely underestimated in this example.

A website called Digiconomist attempts to estimate the CO2 emissions of the Bitcoin network by estimating the total amount of money that miners spend on electricity, and this is derived from total Bitcoin mining revenue via a series of assumptions.

Digiconomist estimates that Bitcoin’s energy consumption is between 39.7 billion and 73.1 billion kWh per year, releasing 34.7 million metric tons of CO2 into the atmosphere per year. it also estimates that Bitcoin’s total energy consumption is similar to the nations of Venezuela and Austria.

Based on the data discussed in the article so far, it seems safe to say that Bitcoin mining uses tens of billions kWh of electricity per year, releasing tens of millions of metric tons of CO2, although this is only a tiny fraction of the amount of CO2 emitted by all human activities.

Renewable Energy Decreases The Environmental Impact Of Bitcoin Mining

However, an incorrect assumption that is used for both the Antminer S17 and Digiconomist calculations, is that Bitcoin mining solely relies on fossil fuels for electricity. Solar power, wind power, geothermal power, nuclear power, and hydrothermal power are all clean energy sources that can be used to power Bitcoin mining.

For example, Soluna purchased a 37,000-acre swath of land in Western Sahara, an ideal location for generating electricity via wind power. Soluna hopes to have installed 36 megawatts of power generating capacity by 2020 and to have 900 megawatts installed within the next 5 years. All of this electricity will be used by an on-site cryptocurrency mining farm.

Another example is Northern Bitcoin, which uses the hydrothermal energy of a glacial fjord to power an underground Bitcoin mining farm. Additionally, the coldness of the fjord significantly reduces cooling costs.

In fact, a CoinShares study from June 2019 claims that 74.1% of Bitcoin mining is powered by renewable energy. The study found that Bitcoin mining concentrates near sources of abundant renewable energy, such as hydrothermal power in China and geothermal power in Iceland since electricity costs are lower in such regions.

Proof of Capacity (PoC) And Proof of Stake (PoS) Reduce Energy Usage

Aside from reducing the environmental damage caused by Bitcoin mining via the use of renewable energy, cryptocurrency miners can also choose to mine a different cryptocurrency with a more energy-efficient algorithm.

For example, Proof of Stake (PoS) does not require any mining rigs and barely uses any electricity. This is why the Ethereum Foundation is planning on switching Ethereum to PoS eventually, since that would get rid of the Ethereum mining community, and would reduce the environmental impact of the Ethereum network to basically zero.

The caveat is that PoS generally centralizes power into the most wealthy holders of a cryptocurrency since the amount of cryptocurrency in a wallet determines the amount of voting power. This is less ideal than the highly decentralized Proof of Work (PoW) algorithm that Bitcoin uses.

A better option than PoS is Proof of Capacity (PoC), which uses hard drives to mine cryptocurrency. PoC uses practically no electricity in comparison to PoW, but simultaneously maintains a decentralized network of miners, versus PoS which gets rid of the decentralized network of miners.

The best example of a PoC cryptocurrency is Burstcoin, and another cryptocurrency called Chia is planning on using PoC once it launches.

To be clear, it is highly unlikely that Bitcoin will ever stop using PoW, since PoW is essential for the decentralization of the Bitcoin network. Miners do have the option however of mining a different cryptocurrency that uses far less electricity.

Bitcoin Mining Has A Relatively Small Impact On The Environment, And There Are Solutions To Further Reduce This Impact

In summary, Bitcoin mining releases roughly 0.1% of total man-made CO2, which means it is responsible for a small fraction of anthropogenic global warming. However, it is still important to try and reduce CO2 emissions from Bitcoin mining. Also, when fossil fuels are burned, other toxins besides CO2 are released. One solution is renewable energy, which is widely used by Bitcoin mining farms and drastically lowers the environmental impact of Bitcoin mining. Another solution is to mine cryptocurrencies that have algorithms which are less energy intensive, such as PoS or PoC.

As for the future, it seems likely that the energy consumption of Bitcoin mining will increase long term, but this does not have to translate to increased environmental damage, as long as Bitcoin miners gravitate towards renewable energy sources.

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Iran Says US is Sabotaging Its Bitcoin Mining

Iran Says US is Sabotaging Its Bitcoin Mining

An Iranian state official has said that the US government is directly responsible for sabotaging Bitcoin mining activities in Iran.

Local news outlet Fars has quoted Iran’s Assistant Minister of Industry, Trade and Supply, Saeed Zarandi, who said that the Trump administration had previously lobbied to get the Asian pariah state out of international payment systems such as SWIFT. But now, it has shifted its eyes onto crypto mining, since it seems to be capable of circumventing financial sanctions placed on Iran

This all stems from the fact that the Republic of Iran has one of the cheapest power costs in the world, thanks to a big subsidy from the government that brings it down to as low as USD 0.03, compared to an average price of 14 cents in the USA.

Since Bitcoin mining relies on cheap electricity to turn a profit, Iranians are looking to do just that, so much so that even older rigs were reportedly profitable there, drawing investment from external business people. The spike in interest led to recent instability in the power generation capacity, forcing government forces to investigate these power cut sources, leading to closure and confiscation of mining rigs.

Ali Akbar Karimi, an economic committee member of the Iranian Parliament spoke of his concern:

“Mining cryptocurrencies has become a common and widespread activity in Iran, and it consumes considerable power which has caused problems for the country, especially in the hot season.”

This comes on the back of a warning from the state to Bitcoin miners that they would soon be forced to pay “real prices” for electricity.

However, this did not mean they wanted to stamp out Bitcoin, and the accusation now is that the US is responsible for exchanges like LocalBitcoins and Binance withdrawing support for Iran.

 

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Bitcoin Miners Enjoy Bumper Month in June

With the recent boom in crypto prices across the board — the past few days of retracement notwithstanding — miners will be celebrating big, especially since Bitcoin appreciated by over 40% in June alone.

One such miner based in the United Kingdom, Argo Blockchain, had even trumped its own optimistic expectations, according to its Q2 2019 report released today.

Argo had already revealed that the year’s uptake of Bitcoin price had benefited its operations, but now this unexpected windfall would mean their previous estimates have been significantly improved. In just June itself, they almost doubled the mining results from May with a margin over 80%. The mining operator confirmed:

“The Company now expects to generate 161 BTC, or GBP 1.38 million (USD 1.74 million) of cryptoassets, in June based on a BTC price of USD 10,817.16 USD as of 30 June 2019. This is an increase of approximately 101% from the Company’s May mining results and represents a mining margin of roughly 81%. The Company considers that this demonstrates that the Company is one of the most efficient miners in the market.”

All this has happened despite Bitcoin still being a way off its all-time high of USD 20,000, with hashpower reaching new levels never seen before. This also means that the Bitcoin network mining difficulty has never been higher, ensuring that the network is at its most secure level ever, and becoming more so with each passing day.

Companies involved in the mining industry are increasingly competitive as well, seeking more and more efficient ways to maximize profits. In Germany, Northern Bitcoin made a new purchase of 5,000 ASIC miners as part of expansion plans, while Argo itself has committed to accept a new shipment of 2,500 units by the end of September.

The report added:

“Mining yields from existing hardware in operation have improved in line with a strongly rising Bitcoin (BTC) price, which has increased by approximately 24% since the last operational update on 3 June 2019.”

 

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Iran Blames Bitcoin Miners for Unstable Power Grid

Iran Blames Bitcoin Miners for Unstable Power Grid

Local Iranian media are carrying reports that say the state is putting the blame squarely on Bitcoin miners for causing an unstable condition for national power grids, as the surge in electricity usage is currently unsustainable.

Energy Ministry spokesperson Mostafa Rajabi Mashhadi was quoted as saying that a 7% spike in power usage just in the past month has not gone unnoticed, warning:

“A bulk of that unusual increase is because of the activity of bitcoin miners… making the grid unstable and causing problem for other users.”

He went on to say that crypto used large amount of electricity because of the way they were set up, with the network incentivizing people to provide computing power to solve increasingly complex cryptographic puzzles in order to find new blocks and add verified transactions. The more difficult the complexity of the network, the more computing power is needed to solve these puzzles, and the more secure the network becomes (as the more difficult it is to obtain enough computing resources to try and hijack the network via a 51% attack).

This entire process is known commonly as mining, and Bitcoin mining has never been more complex, with each year since its existence over 10 years ago adding to the amount of electricity consumed to power highly specialized mining rigs.

Reportedly, each Bitcoin mined in Iran uses the same power as 24 Iranian households do over an entire year.

The state believes that most miners are now operating from factories, agricultural sites, government offices and mosques — which all run on subsidized energy. Supposedly, investors from nearby Armenia but as far away as France and Ukraine are now investing in the local mining industry.

Iran spends about USD 1 billion annually on electricity subsidies so it may want to crack down as economic sanctions bite deep. Mashhadi has promised:

“Bitcoin miners will be identified and their electricity will be cut.”

 

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