Bitcoin’s Growing Demand For Cheap Energy Revives Coal

  • Date: 29/04/18
  • Quartz

An Australian company has signed a deal to provide energy to a cryptocurrency miner by reopening a coal power plant. In and of itself, it’s a relatively small deal. But it’s a perfect example for a major change spreading through the crypto industry.

In January, Chinese cryptocurrency miners—which at the time accounted for more than 70% of all crypto mining—started hearing rumors (paywall) about a new policy coming out of Beijing. The government, it seemed, was worried about pollution from coal power plants, and it was asking state electricity producers to stop giving sweet deals to energy-hogging crypto companies. These companies options then were to move or expand their operations abroad.

Cryptocurrency mining consumes a lot of energy. Bitcoin mining, for example, is competitive, and miners who possess more computational power than their rivals stand a better chance of unlocking new bitcoins. As the price of bitcoin rises, the incentive grows for miners to invest in computational resources, and those resources require a lot of energy to keep running.

Since the rumors of regulatory uncertainties in China began circulating, every few weeks there has been some news about a crypto company moving or expanding outside the country, to parts of the world where energy is cheap. In January, Bitmain, the world’s largest crypto mining company, set up a hub in Switzerland, where there’s affordable hydropower. In February, energy companies in Iceland, where there is cheap geothermal power, were reporting surges in demand from crypto miners. Chinese crypto miners have also begun investigating Norway and Sweden (both of which have abundant, cheap hydropower) as potential places to expand. All these countries also offer cooler weather, which helps reduce the cost of keeping mining servers cool.

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Australia’s dirtiest coal plant to be reopened for Bitcoin mining

Bitcoin mining in Australia

One of Australia’s dirtiest coal plant which was closed in 2014 due to severe criticisms faced by environmentalists for producing more CO2 than any other coal powered station might now re-open to mine cryptocurrencies like Bitcoin, Litecoin etc

IOT an Australian tech based firm has partnered with Hunter energy to build a blockchain center inside the coal-fired power station to provide cheap electricity for the blockchain applications. The company stated that their plan could create a mini silicon valley in Australia.

Bitcoin mining in Australia costs nearly $10,000, but the highly polluting coal-mine might bring down the cost and potentially even lower than the price of Bitcoin mining in China at $3000.

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