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Recently, in the bitcoin death list of the foreign website 99bitcoins, bitcoin was declared dead for the 300th time. This obituary is from May 30ForbesForbesArticle by Frances Coppola argues。
Bitcoins Need for Electricity Is Its Achilles HeelWithout sufficient electricity, bitcoin mining cannot continue; if mining cannot continue, bitcoin will die.
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Consumption of electricity, upgrade equipment, Bitcoin mining costs are getting higher and higher
Bitcoins insatiable need for electricity stems from its proof-of-work (POW) mechanism. Bitcoin miners need to solve complex mathematical puzzles to earn the right to validate blocks of transactions, and claim a miner reward of (currently) 12.5 new bitcoins plus transaction fees.
According to the POW mechanism, without any clues and logic, Bitcoin miners need to find the correct hash value through a lot of trial calculations. The more guesses miners make per second, the more likely they are to succeed.They do not necessarily need to have analytical and problem-solving skills,
All it takes is a very fast computer and unlimited electrical energy.
Miners must constantly update their mining equipment or fall behind. Right now, mining bitcoin requires mining rigs equipped with application-specific integrated circuits (ASICs), and these dont come cheap.
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Bitcoins are mined at Bitfarms in Saint Hyacinth, Quebec, on March 19, 2018. Credit: LARS HAGBERG/AFP/Getty ImagesAs with all hardware-intensive businesses, the miners with the most capital have an advantage. As a result, miners began to cooperate to share resources and benefit from economies of scale, thereby gaining market share.
Bitcoin mining is now dominated by three major mining pools, which collectively account for 55% of the total hash power.
For miners, the biggest cost is electricity. If the price of Bitcoin rises further, electricity consumption will also increase. Miners will work hard to earn rewards, but the difficulty adjustment rule makes the hash value longer and harder to guess, which also increases electricity usage, thereby increasing the cost of Bitcoin mining.
Currently, approximately 80% of Bitcoin mining is done in China. Growth was also seen in Iceland, Japan, Georgia, the Czech Republic, India, parts of the United States, and Venezuela. In fact, anywhere with cheap and plentiful electricity will have an advantage.Bitcoin Energy Consumption IndexAccording to the Bitcoin Energy Consumption Index (Proof of Work might be better called Proof of [Electricity] Waste.
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Bitcoin miners seem to think that the public grid is obliged to provide the electricity they need as long as they pay, but that is not the case.
In fact,In fact,January 2018, according toReuters reportsReuters reportsCaixinCaixin
magazine said local regulators would take action to ensure that bitcoin miners no longer receive preferential policies on electricity prices, taxes or land use.In the United States, local authorities are increasingly concerned about the impact of bitcoin mining on ordinary users. Because Bitcoin mining consumes more electricity than it can supply, New York StatePlattsburghForced to buy more expensive electricity, the city decided in March to ban new commercial cryptocurrency mining operations. Subsequently, Chelan County, Washington State alsostop
mining business.At the same time, there has been growing concern about the environmental costs of bitcoin mining.February,Italian state-owned electricity supplier
Refusal to supply electricity to Bitcoin miners for environmental reasons, arguing that intensive use of energy for cryptocurrency mining is unsustainable and does not conform to the low-carbon and sustainable business model pursued by the company.
At present, some electricity suppliers, such as Hydro-Québec, have adopted a rationing power supply model and only provide power to miners who meet their screening criteria.
Even private electricity providers need government licenses to supply electricity and are regulated by the government. They are also facing pressure from the domestic market to reduce electricity prices for ordinary households and businesses, and to reduce carbon emissions in the process of electricity production. It may not make commercial sense for them to power bitcoin miners.
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As miners increasingly crave cheap power sources, some are even trying to steal power. In April 2018, police in Tianjin, China, seized 600 bitcoin mining machines and other equipment after receiving reports of unusual electricity usage from the local power grid operator. South China Morning PostSouth China Morning Post
》 said: After investigation, it was found that the junction box of the electric meter of a suspicious user was shorted, which is a typical way to avoid billing.
Additionally, although on a smaller scale, device hijacking has become common, as in the case of bitcoin miners who attempted to steal local electricity by borrowing the CPU capacity of Coppolas computer, but were blocked by the computers firewall.So why dont miners choose to develop electricity sources themselves? Some are starting to do it, but its not easy: it takes a long time to build new hydropower plants, Bitcoin miners need electricity as quickly as possible, and
A bigger obstacle is land.
Bitcoin mining operations require a lot of electricity, and the coal mines, solar power, and power plants needed to develop that electricity all require large areas of land. However, land use rights anywhere are regulated by the government. Is the government ready to give more land to cryptocurrency miners for power generation? It seems impossible.As Bitcoins demand for electricity grows, there will be less and less cheap electricity available to Bitcoin miners. But,
they saidthey said
: Websites such as the Bitcoin Energy Consumption Index exaggerate the power consumption of mining; Bitcoin mining is not more expensive than traditional financial operations; mining only uses the remaining electricity of other users. In any case, Bitcoin mining is a beneficial activity that can bring prosperity to the local area.
Sadly, there is no evidence to back up their claim, and the statement that mining is just using surplus electricity is actually inaccurate.But even if Bitcoin miners are right,Bitcoin is still completely dependent on the governments electricity supply
