Latest news and thoughts on Bitcoin and cryptocurrency

Category Archive : Bitcoin

Bitcoin consumes more electricity than Finland!

About 91 terawatt-hours of electricity are consumed to process Bitcoin transactions in one year, half a percent of the total consumption in the world, writes the New York Times.

That is more than electricity consumption in countries like Finland, where about 5.5 million people live.

If you want to pay something with Bitcoin, the first part of that transaction is simple and fast: you open an account on an exchange platform, like Coinbase.

It allows you to buy that cryptocurrency in dollars. After obtaining a digital wallet, Bitcoin needs to be transferred to the digital wallet of the person to whom something is being paid.

Then the transaction must be confirmed by the Bitcoin network, in order for the recipient to be convinced that what he is receiving is not fake. This explains the functioning of the giant online database where this data is stored.

In fact, much of the electricity is consumed there. Around the world, companies and individuals known as Bitcoin miners are competing to confirm this transaction and enter them in a public book in which all Bitcoin transactions are recorded.

They basically play guessing, using powerful computers that expend a lot of energy to try to beat others in that competition. Because if they are successful in that, they will be rewarded with valuable newly created Bitcoin. In fact, this competition for newly created Bitcoin is called “mining”.

For a long time, money was thought of as something that could be held in the hand. Traditional currencies are not completely free to use. Banks, credit card networks, and other intermediaries can control the use of their financial networks.

As a rule, this should prevent money laundering. For example, if you want to transfer a large amount of money to someone, the bank will report it to the state, even if the transfer is in progress. That is why a group of free thinkers figured out how to avoid such controls.

In 2008, an unknown person or several of them under the name Satoshi Nakamoto proposed the creation of an electronic payment system similar to cash, without intermediaries. This is how the currently most famous digital currency, managed by a decentralized network of users, was created.

Today, one Bitcoin is worth about $63,000, but its value often varies. However, the consumption of a large amount of electricity was the reason for the emergence of initiatives for the use of clean electricity in mining, as evidenced by a special certificate.

Bitcoin use has been shown to be accompanied by many illegal activities, such as money laundering. U.S. authorities arrested the alleged main operator of the cryptocurrency website Bitcoin Fog in April on three charges related to money laundering.

America Dominates Bitcoin Market: Bans in China drive all cryptocurrencies out of the country

In September 2019, miners in China accounted for 75% of the total Bitcoin coin mining activity, and after the measures introduced by the Chinese government, the USA now becomes dominant with more than a third of the total power of the Bitcoin network.

Following the introduction of initial restrictive measures against Bitcoin miners in China, it was rumored that large mining farms were looking for a new location, in order to continue mining in peace.

Texas and Kazakhstan were in the story, as the most serious options.

Liberal Texas for BTC mining

Texas is known for liberal regulations for working with cryptocurrencies, as well as low electricity prices, which are two very important items when it comes to choosing a location for a new crypto-farm.

On the other hand, Kazakhstan is the most logistically logical choice, because it is a direct neighbor of China, and it has a large number of thermal power plants that rely on coal, which means a low price of electricity.

According to the Cambridge Bitcoin Consumption Index(CBECI), Bitcoin miners in the U.S. make up 35.4% of the total global BTC hash rate distribution.

According to the same source, Kazakhstan is second with 18%, followed by Russia with 11%, as a new player, whose market share is growing.

In essence, these three nations have achieved the largest market share since China imposed serious restrictions.

Mass migrations of miners

In June, in the midst of restrictions, the fifth-largest crypto-community of miners(mining pool) left the territory of China and moved its business to Kazakhstan.

At that time, accounted for 10.4% of the total validation of Bitcoin blockchain blocks.

It is also interesting that the CBECI index shows that the percentage of Chinese miners has dropped to 0%, which is simply unbelievable.

Given such a large number of miners, we are pretty sure that there is a good percentage of those who still mine Bitcoin, but below the radar.

Of course, one should be careful, because China, and realistically, no other country in the world looks favorably on those who do not respect the law, so the Malaysian police have confiscated more than a $1.3 million cryptocurrency digging machine.

In addition to the large migration of crypto-miners from China to the United States, American miners such as Argo Blockchain, Riot Blockchain, Marathon, and many others took advantage of the situation and bought large quantities of mining rigs from Bitmain and MicroBT, which regularly supplied the Chinese market.

In 2021, the aforementioned Riot Blockchain tripled its capacity from 2,457 Bitcoin coins excavated in 10 months.

Ohio and Texas as main oases

In addition to Texas, another potential destination is the state of Ohio, also due to the popular price of electricity, as well as the fact that BIT Mining, a company specializing in Bitcoin mining, has entered into a joint project to build a huge plant for 85 megawatt Bitcoin companies, with Viking Data Centers, which are developing data centers focused on crypto miners and the necessary infrastructure.

In this way, not only will Ohio get a large Bitcoin mining facility, but it will also provide the necessary infrastructure for all those interested.

Excavated Almost 90% of Bitcoin – What fate will befall the crypto-economy?

Bitcoin, the world’s largest and most famous cryptocurrency, has a limited supply of 21 million coins, with almost 90 percent of them already mined.

Analysts are already considering what fate will befall the crypto-economy once new coins are not issued.

Unlike other forms of money, including decree money, which can be printed at the will of central banks, Bitcoin has a limited supply of 21 million coins.

This means that there is or will be a total of only 21 million Bitcoins.

By August 2021, approximately 18.7 million Bitcoins were available, and only 2.3 million remained for mining, according to Investopedia data.

Supply restraint makes the world’s oldest cryptocurrency a restricted commodity and controls inflation that could otherwise result from an unlimited supply of coins.

Also, such a situation leads to an estimate that the year 2,140 will be the time when the last Bitcoin will be mined.

If this is taken into account, the question arises whether the Bitcoin network will remain functional even after that time.

Analysts say that the economy of Bitcoin must change in order for the network to remain operational.

Many predict that the cryptocurrency ecosystem could go through a process of transformation, just like its identity.

It was originally introduced as a medium of exchange for daily transactions but later found greater popularity as a means of investment.

Analysts also say that those who mine Bitcoins could join cartels, similar to those that control other commodities, such as the Organization of the Petroleum Exporting Countries (OPEC), which controls the oil market.

Another possibility presented by analysts is that Bitcoin could become a reserve asset, which would reduce the number of transactions on the crypto network because retailers and small trading companies would be replaced by large institutional and trading players.

They would run a smaller number of larger transactions, which would extend the time to find the last Bitcoin.

Finally, the protocol that applies to cryptocurrency can be changed to extend production once it reaches the 21 million mark.

However, that would reduce the value of already found Bitcoins, which coin owners will probably not accept.

Currently, however, Bitcoin scarcity and rising prices are attracting speculative investors, whose actions have led to value changes that discourage serious investors from cryptocurrency.

The price of Bitcoin this year plummeted from its highest value of $60,000 in February to half that amount over the summer to rebound to $55,000 per coin this week.

Still, some countries like El Salvador and Cuba see potential in the currency and are taking steps to make it a legal tender.