Bitcoin mining

When Satoshi Nakamoto created Bitcoin in 2008, he made sure that there would only be a total of 21 million bitcoins ever in circulation. This ensured that the Bitcoin system avoided inflation since the Bitcoin supply was fixed.

However, not all those Bitcoins are currently in circulation. This is because the rest need to be “mined” - but not by someone in a cave digging for Bitcoin. Instead, a miner is a small computer that’s made to solve mathematical problems. Once the problem is solved, the answer is inputted into the bitcoin network and in return, the miner gets an award. The reward is given for securing the network and chain of transactions. What started initially as a reward of 50 bitcoins for every solution, today the reward is only 6.25 bitcoins. This is due to the growing number of miners and fixed supply of Bitcoins.

To get the reward, a miner must try to crack a cryptographic puzzle by dedicating as much computational power to add a block of transactions to the public ledger. Of everyone who tries to mine a coin, only one account will be awarded. The computer with the most power has the highest chance of winning but that requires a lot of power. A miner requires 17 megajoules of energy to mine $1 worth of Bitcoin. That’s double the amount of energy needed during the gold rush for a miner to extract $1 of gold. As more miners try to extract Bitcoin, this makes the puzzles more challenging and more computational power is needed to be the fastest miner to solve the puzzle. Today’s S19 miner is able to handle 110 trillion computations in a second and uses ~3000 watts of power. The number of computations a miner can complete in a second is called the hash rate.

Today, Rockdale Texas is home to the largest crypto mining hub in North America. Riot Blockchain is a Bitcoin mining company that owns Whinstone, a Rockdale-based company running 30,000 miners every single day and this is just one of the many Bitcoin mines in Texas. This is because Texas is home to some of the lowest kilowatt hour prices in the region due to the deregulated energy market. This allows industry participants to compete to secure big crypto mining clients like Whinstone. In addition, investors from China are pouring investment in Texas mining facilities after the government banned cryptocurrencies in the country.

The demand for Bitcoin continues to grow as companies mine for the limited supply but the energy consumption poses the greatest risk to this industry. In the long term, 73 trillion watt hours annually is not sustainable when the reward is only making a few rich. In addition, natural resources like lakes and our atmosphere are being damaged to facilitate this process. With an S19 miner, you can make ~ 30 USD/day but is that worth the environmental cost bitcoin mining has on our planet?