Power-guzzling crypto miners racing to find cheaper energy sources | S&P Global Market Intelligence

Even after bitcoin mining activity plunged in recent months, the cryptocurrency network consumed almost as much energy as the entire nation of Chile and more than double what households and businesses in Denmark consume in a year, according to real-time estimates.

Such high power consumption explains why the operators of the lucrative and sprawling data centers used to verify, process and record cryptocurrency transactions are racing to find cheap power to keep their costs down. if the energy is clean, much better.

Reading: Some bitcoin miners moving cheapenergy

China cracked down on its massive bitcoin industry in June, citing environmental and regulatory concerns. The decision accelerated an exodus of crypto miners heading to new and affordable nations like Kazakhstan, Russia, and Canada.

Cryptocurrency miners are also moving their operations to US mines. uu. energy producers. states like pennsylvania, texas and wyoming. the United States. This year it overtook Russia to become the second largest market after China for miners of Bitcoin and other much smaller cryptocurrencies known as altcoins, according to the Cambridge Bitcoin Electricity Consumption Index.

“The trend is clearly for the US to gain market share,” said Anton Dek, co-author of the respected index.

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While Chinese provinces worried that energy-intensive bitcoin mining hubs would undermine their climate goals, texas has used incentives such as generous demand response programs for large industrial and commercial customers to entice crypto miners into the lone star state.

Under such programs, miners who offer to turn off their computers and reduce their power consumption by at least 100 kWh on days when power demand peaks can expect to receive tens of thousands of dollars annually from the state. such arrangements can offset what commercial miners lose by shutting down their computers and reducing energy costs.

Demand response programs work like a magnet for bitcoin miners, said katie coleman, a texas energy attorney and an expert on the state’s electric market.

“Electricity is the biggest overall cost for most of these facilities,” Coleman said. “texas provides unique opportunities for demand response providers compared to other regions that are not completely deregulated and have a different mix of resources. it is a huge draw not only for bitcoin mining but for any energy intensive industry “.

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Cryptominers use computers to solve mathematical puzzles needed to complete “blocks” of verified transactions, which are then added to a chain of blocks. those with the most powerful and fastest systems have the best chance of being rewarded with digital coins.

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A single bitcoin transaction requires 1,695 kWh of electricity, roughly what is a US average. uu. home uses in 58 days, according to digiconomist, a platform run by dutch economist and blockchain expert alex de vries. that same transaction produces 805 kilos of carbon dioxide, equivalent to the carbon footprint of 1.8 million visa transactions, estimates de vries.

“what texas doesn’t need is 1 million mining machines running 24 hours a day,” said de vries. “they had that power outage last winter, their network just isn’t stable. so how would bitcoin mining not affect their power supply?”

Even if miners sometimes shut down their computers as part of their demand response agreement, it will ultimately be the Texas taxpayers who pay them to do so, de Vries said.

the market value of bitcoin exceeds 860,000 million dollars

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In China, bitcoin miners relied on a combination of clean hydropower and fossil fuel sources like coal. In Kazakhstan, which gets half its power from coal and the rest from oil and gas, individual miners will have a larger carbon footprint than their Chinese peers because they don’t use hydro, industry analysts say.

It is unknown to what extent changes in the crypto industry and its departure from China will increase or reduce its energy consumption and emissions.

If miners move out of China, settle in new locations and restart operations, the hashrate will go back up, dek said, using an industry term that describes the computational processing power of a cryptocurrency network. If bitcoin’s price goes up, energy consumption will also tend to go up, she added.

With a market value of over $860 billion, bitcoin was trading above $46,000 on August 1. 11, its highest level in several months. meanwhile, grid power usage is on the rise again. but crypto miners are also finding new partners in energy producers and providers.

a new purpose for wasted gas

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for example, oil and natural gas companies are under increasing pressure from investors to address emissions and are aware of plans by the biden administration to crack down on methane leaks at existing facilities after that regulations on new and modified production and processing sites be reinstated in June. The main ingredient in natural gas, methane is 82 times more potent a greenhouse gas than carbon dioxide for 20 years after its release.

A new crop of entrepreneurs is helping oil and gas companies address the problem by finding ways to generate cheap power for bitcoin miners using excess oil and gas that would otherwise have to be burned and ventilated, releasing greenhouse gases in the process. As an added incentive, lawmakers in North Dakota and Wyoming recently passed bills exempting oil drillers from gas taxes they offer to bitcoin miners who set up near their wells.

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ez blockchain mobile crypto mining unit comes with a 1.5mw natural gas powered power generator.

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“We can help them monetize their gas,” said Sergii Gerasymovych, CEO and co-founder of ez Blockchain, which implements mobile crypto mining hubs at most small oil and gas production sites. “crypto is basically cleaning up what the other guys have left behind, doing everyone a favor over the last couple of years.”

the ez smartbox solution offered by the company from gerasymovych also includes a mobile 1.5 mw natural gas generator. crypto miners using ez smartbox pay a starting price of $75 per kw, not including mining equipment. Although the gas generator will emit some carbon dioxide and other harmful volatile organic compounds, the overall environmental impact is up to 60% less than if drillers had flared or vented the methane into the air, Gerasymovych said.

Nuclear plant operators are also seeing opportunities in the rapidly growing cryptocurrency industry to help boost the economics of their struggling plants.

talen energy corp. on Aug. 3 announced that he formed a partnership with Terawulf Inc. develop up to 300 mw of fossil fuel-free mining capacity at the susquehanna nuclear power plant in pennsylvania. Once operational in 2022, the new facility will benefit from one of the lowest electricity costs enjoyed by publicly traded bitcoin mining companies in the US. uu., the new partners promised.

And in July, Energy Harbor Corp announced a similar agreement to provide electricity from its nuclear fleet at standard power. the data center hosting company claims to have over 1000 mw of power capacity in development for crypto miners who will pay $30 per mw or less for power.

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