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Cryptocurrency Mining Is a Significant Component of ICT Electricity Consumption

We've tracked the growing environmental impact of cryptocurrencies like Bitcoin since 2013. Use of cheap hydro and geothermal electricity, which have a lower GHG footprint, has been a key feature of much bitcoin mining. Now, people are stealing whatever electricity wherever they can.

The BCC reported in February about an indirect electricity theft -- trying use a supercomputer to mine bitcoins. "Russian security officers have arrested several scientists working at a top-secret Russian nuclear warhead facility for allegedly mining crypto-currencies. The suspects had tried to use one of Russia's most powerful supercomputers to mine Bitcoins..."

In November, the BBC reported on a direct electricity theft. "A Chinese headmaster has been fired after a secret stack of crypto-currency mining machines was found connected to his school's electricity supply." The report quotes Matthew Hickey, a cyber-security expert at Hacker House. "Sadly, stealing electricity is one way that people have tried to maximize their revenue - by avoiding those costs it can drastically improve returns on a mining operation."

Meanwhile, more legitimate mining operations are chasing cheap energy from Niagara Falls to Iceland.

CNBC reports that the small American city of Plattsburgh, NY (pop. ~20,000) has placed an 18-month moratorium on new cryptocurrency mining due to excessive energy consumption. "Thanks to hydropower and subsidies, some parts of New York state offer electricity rates that can compete with the hot Chinese bitcoin mining market, while naturally lower temperatures reduce the costs of cooling facilities." Plattsburgh receives a fixed allocation of electricity from a shared hydroelectric project. Mining operations are consuming too much of that allocation, resulting in "...a surge in electricity demand that has raised energy bills for residents. "

Authorities are moving to address the issue. "...the New York State Public Service Commission said Thursday that electricity costs for "high-density load customers" — primarily cryptocurrency companies — will increase beginning this month, while costs for customers using less electricity will normalize." Will this discourage cryptocurrency mining in New York?

The CNBC article gives insight into the economics of cryptocurrency mining. "Plattsburgh's electricity rate as of January 2010 was as low as 2.37 cents per kilowatt-hour for large commercial customers using more than 6,000 kilowatt-hours a month...The general rule of thumb for those wanting to compete with Chinese miners is to keep electricity costs at 4 cents or less...The average U.S. rate is 10.27 cents per kilowatt-hour, and 14.47 in New York state broadly..."

Iceland emerged in the 21st century as a major site for data center operations due to inexpensive renewable energy and low-cost cooling. BBC reports that, "This year, electricity use at Bitcoin mining data centres is likely to exceed that of all Iceland's homes." There is no end in sight for Iceland's Bitcoin boom. The BBC says a local analyst has calculated, "If Iceland took on all of the proposed Bitcoin mining ventures, there simply wouldn't be enough electricity to supply them all."

2017

Digiconomist has posted an analysis of Bitcoin electricity consumption. It estimates annual Bitcoin energy consumption from mining and transactions to be 24 TWh, enough to power over 2,200K US households. (By contrast, the electricity required for a year's worth of VISA transactions is about that of 50K US households.) This is ~2% of total ICT electricity consumption. At an estimated daily growth of 65 GWh, Bitcoin has become a major driver of ICT energy consumption.

Digiconomist suggests an option for more sustainable virtual currencies. "Proof-of-work was the first consensus algorithm that managed to prove itself, but it isn’t the only consensus algorithm. More energy efficient algorithms, like proof-of-stake, have been in development over recent years. In proof-of-stake coin owners create blocks rather than miners, thus not requiring power hungry machines that produce as many hashes per second as possible. Because of this, the energy consumption of proof-of-stake is negligible compared to proof-of-work. Bitcoin could potentially switch to such an consensus algorithm, which would significantly improve sustainability. The only downside is that there are many different versions of proof-of-stake, and none of these have fully proven themselves yet. Nevertheless the work on these algorithms offers good hope for the future."

2013

The New York Times profiled in December 2013 a large Bitcoin mining company called Cloud Hashing. The article notes, "The computers that do the work eat up so much energy that electricity costs can be the deciding factor in profitability."

The New York Times cites research giving the scope of Bitcoin mining's energy needs. "Today, all of the machines dedicated to mining Bitcoin have a computing power about 4,500 times the capacity of the United States government’s mightiest supercomputer, the IBM Sequoia, according to calculations done by Michael B. Taylor, a professor at the University of California, San Diego. The computing capacity of the Bitcoin network has grown by around 30,000 percent since the beginning of the year." A purpose-built Bitcoin mining machine from CoinTerra, for example, consumes ~1.7kW and requires liquid cooling. It is not surprising that the company promotes that its "...team brings tremendous experience in power efficient circuitry...to the exciting new frontier of ASIC Bitcoin mining hardware."

Cloud Hashing's solution does not surprise me. The company located its computers in "...Iceland, where geothermal and hydroelectric energy are plentiful and cheap. And the arctic air is free and piped in to cool the machines, which often overheat when they are pushed to the outer limits of their computing capacity." We have written extensively about companies using Iceland for green data centers. Iceland's renewable energy is low carbon and ICT energy consumption can be reduced through free air cooling. Cloud Hashtag sites is operations in the Icelandic facility of Verne Global.

There is an twist to the Green ICT angle. "Cloud Hashing is now preparing to open a mining facility in a data center near Dallas...The higher energy costs — and required air-conditioning — in Texas are worth it for [founder] Abiodun. He wants his operation to be widely distributed in case of power shortages or regulatory issues in one location." Dallas is a questionable location from a Green ICT perspective, because there are a number of United States locations whose advantages are more like Iceland than Dallas. Wyoming is one example.

Follow-up: After I opined that the New York Times article might raise Green ICT awareness, the paper featured four comments on the original article on page 5 of the 29 December Business section. One went straight to the point, "...that much computing power has only a very real effect: to waste energy and release greenhouse gases galore as these computers churn away."

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