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Crypto-mining
Three variables of Crypto mining business
A car engine requires oil, a plant requires water & humans require food. Without one, the other is not able to function. This applies to Crypto mining and energy. With no energy consumption there is no power. Having no power simply means your mining rig is useless. In order to generate new crypto you’ll need to connect your rig to a reliable energy source.
Now you may be thinking, Okay, I have an electrical outlet right next to me… How much energy does it take to mine crypto?
There are a lot of variables that need to be labeled before answering this question. The first is the type of hardware you are using.
Are you running a CPU, GPU or ASIC?
Each type requires a different amount of energy and produces a different output of hashpower. ASIC stands for application specific integrated circuit. This bitcoin mining machine is generally more advanced and more powerful than CPU and GPU mining. This BTC miner can calculate hashes 100,000 times faster than the best CPU.
Some popular coins mined with ASICs are Bitcoin, Bitcoin Cash, Verge and Zcash. The popular bitcoin mining and bitcoin cash mining Antminer S9 has a computing power of 14.5 Th/s and electrical power of 1350 Watt, consumes 32.4 kWh per day and 972 kWh per month. That is around the consumption of hairdryer which runs 24/7.
GPU mining (graphics processing units) is another type of crypto mining, it is more versatile because one can mine different types of coins at the same which is not possible while using ASICs for crypto mining. GPUs were originally designed for rendering 3D animations, videos and games and now those gaming rigs have become mini crypto farms at home. Some popular coins mined with GPUs are Ethereum, Monero, and Bitcoin Cash. CPU stands for Central Processing Unit that is a core of any computer.
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The vast majority of the CPU consists of the intel and AMD. This unit performs common tasks such as saving documents to your hard disk. Even though there is not much crypto mining can be done with CPUs there some popular coins which can be mined with CPUs, like Bytecoin, Electroneum and Aeon. To figure out their profitability they will need to use some bitcoin mining calculator or crypto mining calculator. Now going back to the variables that need to be filled in, the second variable is the power source. Where are you getting your power from? Not from the wall obviously. Energy is produced at power plants all around the country, then gathered at the power gathering facilities and sold to the grid, from the power grid it is transported by local utility to your outlet going through a few intimidate parties on its way.
So is crypto mining causing CO2 emissions? Well, yes, but no more than any other energy users, like me and you. According to Cambridge University, (pg 84) more than half of crypto mining facilities run on an energy mix that contains a share of renewable energy. For example in Illinois, home of EZ Blockchain, primary source of power is nuclear power source EIA.
The environmental impact your mining rig makes is dependent on your energy mix. In certain areas of the world such as Xinjiang, crypto miners rely 100% on the burning of fossil fuels for energy. This is uncommon throughout the world but is pretty common in Asia. Most countries in Asia have little to no regulations in regards to fossil fuel burning. However, mining farm operations in China travel to Sichuan during their wet season for cheaper hydroelectric power. During these wet seasons hydroelectric prices are three times cheaper than the dry season. In Sichuan electricity prices can be as low as one penny, while during the dry season they can be $0.04 USD.
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Cambridge University found that identified facilities draw on average 28% of their energy requirements from renewables
Among the types of renewables, hydroelectric power generated from the movement of water is the most common used for crypto mining. Now miners are looking for facility locations that have an abundance of low-cost renewable energy that is unused and stranded, which can usually be found near these renewable energy plants. Like China, mining facilities in the United States are also using hydroelectric power. Facilities in the State of New York have capitalized on the hydroelectric from the Valatie Dam while facilities in Washington are taking advantage of dams located on the Columbia River. One problem this relationship may encounter is overproduction.
If the production capability is less than the demand of the mining operation, it may result in an increase in local energy prices, ultimately hurting local businesses. Having an energy mix not only helps the environment but it can also save you money in the long term. The first and most obvious way renewables can save you money is by decreasing your electric bill.
The last variable I will mention is the crypto itself. What cryptocurrency are you mining? Each crypto utilizes a particular mining algorithm for it’s proof of work. The algorithm that is supported the most by hardware manufacturers is Ethash, which is used by the Ethereum network. SHA-256 & Equihash are tied for the second most supported. In today’s market there are a few companies to buy hardware from some well known manufacturers are Bitmain, Nvidia and Canaan.
Cambridge University’s research team found that there are 128 reported mining facilities around the globe. The crypto industry is primarily driven by companies based in North America, China, India and western Europe. Over the past few years there has been a substantial growth of mining activities in North America, but China remains to be the biggest hub. It is estimated that China controls around 70% of the markets Bitcoin and 73% of the world’s ASIC manufacturers are located in China.
As mining facilities continue to distribute throughout the world, this will make it more difficult for attackers to shut down mining facilities. Having facilities dispersed around the world will also decrease the impact that local economies and political parties play on the mining industry.
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