Some facts about Bitcoins (BTC):
The energy spent on mining Bitcoin in 2017 has surpassed the average electricity consumed yearly by 159 nations. Bitcoin energy mining problem can be addressed using renewable energy solutions.
One of the main objective of Bitcoin as cryptocurrency is to remove the government control authority or any other middleman from financial transactions.
Bitcoin (BTC), is the most important cryptocurrency, and it is based on blockchain as underlining technology. To generate Bitcoins (BTC) is a process called mining Bitcoins. A Bitcoin (BTC) can be divided into 100.000.000 elementary units. That facilitates an upwards trading of the currency as an entity. These days the Bitcoin (BTC) trades to almost $1 4.000 USD as an entity.
Small amounts of bitcoin used as alternative units are mill bitcoin (mBTC) and satoshi. Named in homage to bitcoin's creator, a satoshi is the smallest amount of bitcoin representing 0.00000001 bitcoin, one hundred millionth of a bitcoin. A millibitcoin equals 0.001 bitcoin, one-thousandth of a bitcoin or 100,000 stashes.
The Bitcoins can be exchanged in normal currency like US Dollars, CA Dollars, UK Sterling, Euro and so on. The Bitcoin exchange must be guarded against intrusions which are quite frequent. Therefore some of the exchanges are using cold storage backed up and registered in multiple ledgers. The wallets, the open address used by owners of bitcoins, are used to allow for convenient deposits and withdrawals on a daily base operation.
Some facts about Blockchain:
Bitcoins have at their roots the blockchain technology. The blockchain technologies is about peer to peer interconnected users accessing the ledger-database in all users’ nodes, and replicate the information at their address as a verified master copy of the ledger with all the updated entries. If one of the users decided to place a new entry or modify an existing entry, the process is called to hash a block into the database ledger, thus that entry must be verified by other users and replicated at different nodes associated to the users. Only then it becomes valid and considered public information. Public in the sense it allows exchange and value modification and is offered for transactions between users.
The blockchain is the particular orchestration of three technologies: the Internet, private key cryptography and a protocol governing incentivization. Authentication and authorization, vital to digital transactions, are established as a result of the configuration of blockchain technology. The result is a system for digital interactions that do not need a trusted third party. The work of securing digital relationships is implicit.
In any digital transaction determining trust often boils down to proving identity (authentication) and proving permissions (authorization). Private key cryptography provides a powerful ownership tool that fulfills authentication requirements. Authorization – having enough money, broadcasting the correct transaction type, etc – needs a distributed, peer-to-peer network as a starting point. A distributed network reduces the risk of centralized corruption or failure.
Data can be stored on Blockchain in any of this combinations:
Unencrypted data, can be read by every Blockchain participant in the Blockchain and is fully transparent.
Encrypted data, can be read by participants with a decryption key. The key provides access to the data on the Blockchain and can prove who added the data and when it was added.
Hashed data, can be presented alongside the function that created it to show the data wasn’t tampered with.
Bitcoin mining as an energy-intensive consuming process
Bitcoin mining is the software and hardware-based process which supports the Blockchain technology. Bitcoin mining is a decentralized process which has two scopes: creates new bitcoins in each block, confirms transactions in a trustful manner with enough computation power devoted to the block. Enough computation power is used to solve the proof of work problem, that constitutes the trust signature necessary to authenticate that the hash placed into the block is legit. Mining difficulty is a measure of how difficult is to find a hash below the target value (a 256-bit number) during the proof of work. The average mining time per block is 10 min.
Bitcoin mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hash cash proof-of-work function.
The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoin into the system: Miners are paid any transaction fees as well as a "subsidy" of newly created coins. The bitcoin information is saved on the ledgers and is sent to the miner wallet to be used in the transaction or for safe keeping.
A couple of elements into the mining process; the enterprise of generating Bitcoin is very much an electric energy intensive consuming process; If the number of miner increases, the difficulty of validation increases. That in exchange increases the time of mining.
Bitcoin mining can be done either using own hardware and software or it can be done by purchasing mining capacity into the cloud mining.
By using own hardware Application-Specific Integrated Circuit (ASIC) miners have taken over completely. These ASIC machines mine at unprecedented speeds while consuming much less power than FPGA or GPU mining rigs. Several reputable companies have established themselves with excellent products.
Currently, based on price per hash and electrical efficiency the best Bitcoin miner is rated with the average number of Bitcoin for a month of mining. Here are the main miners: AntMiner S9 with average number of bitcoins for a month: 0.3603; Avalon 6 with average number of Bitcoin for a month: 0.1232; AntMiner S7 with average number of Bitcoin for a month: 0.1232;
Mining using cloud services has been marred by hacking and is less secure
Efficiency and cost of the mining operation are related to W/Gh and W/Th which are abbreviations for watts per gig hash and watts per tera hash. These metrics calculate how many hashes a miner can run per watt of electricity, and gives you the cost to operate. Mining hardware with lower W/Gh and W/Th are more efficient. Currently, the Antminer S7 and Avalon6 are the most efficient miners available for purchase, at 0.25 W/Gh and 0.29 W/Gh, respectively.
Because is such a frenzy in the crypto currency market, more miners are coming online and the system becomes more difficult to solve and fewer Bitcoin are introduced to the market by a single miner. Based on high computation power used by miners, the cost of electrical energy consumption is factoring in and can bring the cost of mining very high and therefore substantial sliming the profit margins.
As an example, some bitcoin operation with over 3000 ASIC miners in their mine is facing 1,250 KWh electricity intakes at a cost of $80,000 dollars a month. The benefit of such an operation is 20 BTC per day.
Renewable energy can mitigate the high operational costs paid for electricity
If solar power is cheaper than buying grid power, it can make sense to combine on-site solar power with mining operations. If the utility company perceives solar power as a negative supplier to the grid, the electric power can be used in BTC mining with very little to zero costs.
And as a backup, in case the BTC price is fading, the solar farm power generated can be sold to the utility company full profit at pick hours. A bitcoin mining operation pays for itself in about two years.
If the mining operation decided to go full offline that will lower the bar because, in many states or counties, offline does not necessarily come with any approvals. For example, Texas counties have no permit requirements for this type of project.
Other type of renewable energy resources in use:
Geothermal power, Genesis Mining a “cloud mining” operation and some other mining operators use geothermal power in Iceland, which is cheap and sustainable. The downside is geographical limited.
Hydropower, very cheap and in many cases, the hydro generators are abandoned considered absolutes. Hydrominer is the best example, it can mine any cryptocurrencies and will switch automatically based on which is profitable. Hydrominer is cloud miners, you purchase computational hashing power, you do not need to purchase, configure or manage the equipment. They are based in Austria, and as the startup, they rise founding using a very innovative ICO method (ICO stays for Initial Coin Offering). Their model can be replicated and as the main benefit, the locations where the computing rigs are placed are quite remote, more secure. China is investing massively in hydro mining operations.
Wind turbines, are less used being more expensive and request way more maintenance comparing to a solar farm. Turbines have a lot of moving parts, gearboxes, e.t.c., they are heavy. To become more efficient they combine solar and wind. Established in 2012, NastyMining is a sustainable operation based in Arizona that uses solar and wind energy to mine Bitcoin.