News Markets News
Hydropower: The Key to Bitcoin Mining in the Future?
By Nathan Reiff
A new green energy company claims to have the answer to a problem plaguing the digital currency industry. As cryptocurrencies like bitcoin continue to grow in price and popularity, they have put larger and larger demands on the world's energy supply. Although the currencies are digital, they nonetheless require massive amounts of electricity and computing power to mine.
The surge in electricity consumption has caused some concern among developers and investors alike, particularly at a stage when digital currencies seem to be close to breaking through into the mainstream worlds of investment and business. Now, an Austrian company claims to be able to use hydropower in order to fuel the energy needs of the industry.
HydroMiner GmbH Raised $2.8 Million
The company, called HydroMiner GmbH, raised about $2.8 million in funds through an initial coin offering in November, according to a report by Bloomberg. The startup plans to use the cash to install high-powered computers at hydropower plants. The result will be that the company will be able to utilize the energy produced at those plants to mine for new digital currencies, reducing both costs and pollution as a result.
According to co-founder and CEO of HydroMiner Nadine Damblon, "a lot of people are worried about the high energy consumption of cryptocurrencies. It's a huge factor."
This isn't surprising, given that the electricity used by the computing systems supporting the blockchain technology which undergirds bitcoin has risen by 43% just since the beginning of October 2017.
For perspective, that total usage, which amounts to about 28 terawatt-hours per year, is more than the national power usage of the country of Nigeria, with its 186 million inhabitants. What's more, much of the energy being used is produced with fossil fuels.
Miners Face Increasing Barriers to Profitability
One other reason that hydropower may be beneficial is the steep slope of profitability that miners are experiencing. According to analysis by Citigroup, miners may need the price of bitcoin to reach as little as $300,000 per coin by 2022 in order for the mining operations to remain profitable. This estimate is based on current growth rates for mining and for the electricity consumption associated with it.
In the face of these steep barriers, HydroMiner and other companies like it are likely to find many strong supporters in the mining community. Damblon explains that the company "mine[s] only with renewable energy. There will be more blockchain adoption if the energy problem can be handled this way." As bitcoin continues to climb in price, alternative energy sources for mining may become increasingly desirable.
Cryptocurrency Strategy & Education
What's the Environmental Impact of Cryptocurrency?
The Economics Of Solar Power
Why Mining Cryptocurrencies on Your Own is Pointless
All About the Bitcoin Cash Hard Fork
How Do Cryptocurrency Mining Pools Work?
Bitcoin Mining, Explained
Breaking down everything you need to know about Bitcoin Mining, from Blockchain and Block Rewards to Proof-of-Work and Mining Pools.
Litecoin mining is the processing of a block of transactions into the Litecoin blockchain.
Blockchain Explained
A guide to help you understand what blockchain is and how it can be used by industries. You've probably encountered a definition like this: "blockchain is a distributed, decentralized, public ledger." But blockchain is easier to understand than it sounds.
Bitcoin Definition
Bitcoin is a digital or virtual currency that uses peer-to-peer technology to facilitate instant payments. Bitcoin is a digital currency created in January 2009. It follows the ideas set out in a white paper by the mysterious Satoshi Nakamoto, whose true identity has yet to be verified.
Trumponomics describes the economic policies of U.S. President Donald Trump, who won the November 8, 2016, presidential election on the back of bold economic promises to cut personal and corporate taxes, restructure trade deals and introduce large fiscal stimulus measures focused on infrastructure and defense.
Mining validates transactions on the cryptocurrency network and is used to add newly found coins to circulation