Showing posts with label Miners. Show all posts
Showing posts with label Miners. Show all posts

Could Paraguay's Bitcoin mining be harmful to the country's energy needs?

Bitcoin is notable for something other than initiating a revolution to decentralize monetary systems. Because of its proclivity for excessive power consumption, it is frequently referred to as a "dirty" investment. The authorities had already shut down the former bitcoin mining hubs in China owing to environmental concerns in May. Miners have scrambled to find more hospitable sites to set up shop, frequently resorting to unconventional tactics to meet their ESG objectives.

Until now, more powerful powers such as the United States and Russia have dominated the roost. However, a number of smaller and less expected crypto mining centres have sprung up throughout the world, Paraguay, a South American country, is one of them. According to recent reports, mining companies are becoming more interested in starting operations in the country. It's primarily due to the government's open-door policy.

For example, China's Future Fintech, which was invited to Paraguay by the country's Minister of Social Development, recently revealed plans to create a cryptocurrency mining farm. Shanchun Huang, the company's CEO, stated

"...because to its advantageous business policies and cheap energy rates, cryptocurrency mining operations in Paraguay have increased significantly in 2021." Because Paraguay has enormous hydroelectric power resources, bitcoin mining in the country might be fueled by environmentally beneficial pure hydroelectric electricity."

Invitations to use the country's underutilized hydropower have apparently been issued to a number of other businesses as well. Juanjo Bentez Rickmann, the CEO of Bitcoin mining startup Digital Assets, claimed in July that at least eight Chinese economic entities were interested in investing in the country. He also stated that one of these organizations has started the procedure, with the goal of installing 90,000 miners in the coming months.

Paraguay is climbing the ranks.

Paraguay presently produces 0.29 percent of worldwide Bitcoin mining capacity and is up against fierce competition from not just its neighbors, but also superpowers such as the United States and Russia. So far, the Russian government has kept its mining operations under wraps. States in the United States, on the other hand, have been eager to welcome miners. Both nations have used innovative methods to attain this goal while being carbon neutral, such as powering their activities with industrial runoff or flare gas. 

Kazakhstan, on the other hand, has been suffering from a severe energy deficit as a result of cryptocurrency mining's fast growth.

Others trying to reach their ESG targets are turning their backs on miners, while those with a plentiful supply of clean energy are leaping to seize the market. The Nordic area, among other countries, has long been suggested as a prospective mining site because to its frigid climate. Swedish financial authorities, on the other hand, are attempting to imitate China's mining prohibition. They're thinking about it so they can put their renewable energy to better use in other businesses while also emphasizing the downside of 'clean' crypto mining.

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Crypto mining is expected to bring these benefits to Laos.

Laos, with its hydropower potential and low electricity rates, is one of the most cheap places in Asia (excluding China) to mine Bitcoin. Furthermore, the landlocked country, which has a population of 7,416,475 people, appears to be aware of this. Investors and governments, on the other hand, may question if this is a feasible aim.

Countless billions and trillions

Laos appears to be realizing the potential for benefits in the crypto industry by allowing six firms to mine and sell bitcoin on a trial basis. The government wants to generate 2,000 billion kip [LAK] or two trillion LAK [approximately $192,971,600 at press time], according to local news outlets.

"Minister of Finance Bounchom Ubonpaseuth informed the National Assembly's 9th legislature on Monday that this new revenue stream will contribute to the 28,963 billion kip in total domestic revenue predicted for 2022."

According to the study,

"The government would be able to spend more on important programs thanks to a predicted increase in revenue of 3,754 billion kip (compared to 2021), including 2,000 billion kip received from Bitcoin mining."

But the most important question is if this is a goal that can be achieved. According to Arcane Research, Bitcoin miners have earned $13.6 billion so far in 2021. The Cambridge Bitcoin Electricity Index, on the other hand, indicated that in August 2021, America controlled 35.40 percent of the average monthly hash rate share, while Laos' participation was minuscule.

Furthermore, Arcane Research found that the cost of mining one Bitcoin using power in most places of America is $10,000 or less, whereas the cost in Laos is between $10,000 and $20,000. Furthermore, unlike the United States, regular citizens in Laos are not permitted to mine or sell cryptocurrency.

Water and development

Both crypto mining and blockchain development have a lot of promise in Laos. Laos' central bank has hired the Japanese fintech firm Soramitsu to investigate the country's CBDC alternatives. Soramitsu previously worked on Laos' neighbor Cambodia's Bakong digital payment solution.

In terms of crypto mining, according to the CBECI, Thailand's average hashrate share in August 2021 was 0.99 percent, while Vietnam's was 0.02 percent. Meanwhile, Laos has plenty of strong waterfalls that might help it launch its own mining project — and put it ahead of neighboring rivals like Malaysia.

Laos and China are two countries that share borders.

The two nations are important commercial partners, and a CBDC or multiple-CBDC bridge might reduce the cost and speed of cross-border remittances. After being pounded by COVID-19, Laos' venture into crypto mining might prove to be an extra source of support and international investment.

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Bitcoin and Ethereum rewards are being hoarded by cryptocurrency miners.

Miners are holding crypto worth billions of dollars. Bitcoin and Ethereum miners are not selling their mining profits, according to on-chain measurements and corporate production reports. Miners' crypto holdings have risen to fresh all-time highs.


Miners Refuse to Sell Cryptocurrency

The "HODL" technique seems to be used by crypto miners. The quantity of Bitcoin owned by miners has increased significantly, according to recently published output statistics from North American mining firms. Riot Blockchain, Marathon Digital, Bitfarms, Hut8, Argo Blockchain, and HIVE are among the mining companies that have amassed over 20,000 Bitcoin worth over $1.1 billion.

On-chain statistics on Ethereum also indicates an increase in the quantity of ETH owned. Miner balances have reached 532,750 ETH, according to the behavior analytics website Santiment, the highest level since 2016. As the second-largest cryptocurrency edged higher, the value of the hoarded ETH blew through all-time highs and is fast nearing $2 billion.

Rather than selling their mining rewards to pay operational expenses and finance growth ambitions, mining companies are turning to alternative sources of cash to avoid selling their crypto. For example, Toronto-based Hut8 recently filed for a $150 million public offering, wagering that the company's crypto assets will appreciate enough to compensate for the short-term price drop caused by diluting its shares.

Other businesses have begun to use their mining profits as collateral for loans. Argo Blockchain has closed a $25 million loan with Galaxy Digital Holdings using Bitcoin as security.

For North American miners, the last few months have been a once-in-a-lifetime chance to grow. Following Chinese crackdowns on cryptocurrency mining, the Bitcoin hash rate fell, lowering the mining difficulty by 28%. As a result, businesses that mined over the summer were able to produce record quantities of Bitcoin and Ethereum.

Miners' reluctance to part with their crypto assets reflects a prevailing positive attitude in the sector. The long-term positive potential of hanging on to Bitcoin and Ethereum seems to be too big for mining firms to pass up.

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Bitcoin was mined for the first time by a volcano.

El Salvador is close to launching full operations for its new bitcoin mining income stream, which will be the first time bitcoin has been mined from volcanic power sources.

El Salvador's president, Nayib Bukele, stated, "We're still testing and installing, but this is officially the first Bitcoin mining from the Volcanode."

A vehicle delivers a container full of asics to the volcanic power source facility, where those asics are installed, in a video broadcast on Tuesday.



This new energy source could help Bitcoin become more environmentally friendly, with future plans to tap into unused resources such as gas flaring, which is very harmful to the environment.

Because bitcoin can be mined from anywhere with an internet connection, asics facilities may be built on-site, saving gas that would otherwise be wasted.

Similarly, asics have been transported to the volcanic power source seen above, allowing for the use of potentially cheaper energy and therefore more competitive mining.

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El Salvador Takes ‘First Steps' Towards Bitcoin Mining Using Volcanoes

A tweet from the country's president seems to demonstrate the first steps toward mining Bitcoin using volcanic geothermal energy. El Salvador's president announced through Twitter video that the nation has begun a project to mine Bitcoin using geothermal energy derived from volcanoes.


President Nayib Bukele, a frequent Twitter user, shared the video with the phrase "First steps" and a volcano emoji yesterday.

The brief video, which has already received 1.8 million views, depicted a data center in the middle of a forest. The camera then focused on a worker inside the facility, who was connecting a cable to a Bitcoin mining equipment. The energy-intensive practice of utilizing powerful computers to validate transactions on the blockchain is known as bitcoin mining.

Bitcoin mining has recently come under fire because to the massive amount of energy it consumes. More and more mining firms are turning to renewable energy to power their operations.

El Salvador's state-owned power provider, LaGeo, announced in June that it will mine Bitcoin using "extremely inexpensive, 100 percent pure, 100 percent renewable, 0 emissions energy from our volcanos."


The concept was conceived by the country's millennial president, who took office in 2019. Despite Bukele's popularity in the nation (latest polls show he has an approval rating of over 80%), the president's Bitcoin Law has been attacked by the World Bank—as well as other Salvadorans.

El Salvador's President Introduces a Bill to Make Bitcoin Legal Tender

On Saturday afternoon, El Salvador made a big impact during the closing hours of the Bitcoin 2021 conference in Miami. El Salvador's President, Nayib Bukele, stated in a pre-recorded video that he...

Businesses in El Salvador must accept Bitcoin payments if they have the technology, according to the country's Bitcoin Law.

Citizens are not required to use it, but the government encourages them to do so: a state wallet called Chivo is available, and those who download it on their smartphone are rewarded with $30 in Bitcoin. Since utilizing the wallet, Salvadorans have posted pictures of their bitcoin presents on Twitter.

The wallet had some technological difficulties at initially, but Bukele says that it is currently used by more people than any other bank in the nation.

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In the last 24 hours, more Ethereum has been burned than has been mined.

EIP-1559 was introduced to Ethereum last month with the intention of slowing the rate at which the cryptocurrency's supply grew. The supply of ETH, however, has not increased in the recent 24 hours. It's becoming more and more slender.

Over the last 24 hours, the network has burned more Ethereum than it has produced, implying that there is less Ethereum accessible today than yesterday. This, according to Ethereum specialists, is a first.

EIP-1559 was a proposed Ethereum blockchain coding modification that would allow block sizes to be increased, allowing for more transactions to be sent across the network. Because NFTs and decentralized finance apps like loan protocol Aave and exchange Uniswap eat up the network's restricted resources, the Ethereum network has struggled with congestion.

A flat fee for each transaction was proposed as part of the plan. The base fee would be burned (i.e., removed out of circulation by being delivered to a wallet that can't be accessed) instead of continuing to flow to miners who validate network transactions. The goal was to lower the overall amount of Ethereum, which, unlike Bitcoin, does not have an end date. As a result, Ethereum's price should potentially grow in order to meet demand.

While EIP-1559 slows the growth of ETH supply, it does not necessarily diminish the amount of ETH on the market. Because miners keep the newly mined ETH with each block produced, this is the case. The overall supply of ETH increases as long as the amount of newly minted ETH exceeds the amount of base fees burned.

That isn't the case anymore, at least not in the present.

The supply growth went negative over a 24-hour period between Thursday and Friday. More ETH was destroyed than was issued to miners (12,500 to 13,000 ETH). During moments of higher demand for Ethereum transactions, the base cost may move upward, causing this. (Did you put your money into DeFi?) Buying NFT's? Gaming?)

According to Scott Lewis, co-founder of DeFi Pulse, and Evan Van Ness, co-founder of Week in Ethereum News, this is the first time Ethereum has gone deflationary.

According to EIP-1559 tracking website Ultrasound Money, since the code patch went into effect on August 5, almost 188,000 ETH has been burned. That works out to $736 million, according to Nomics' pricing.

The price of the currency has risen as a result of the move. Ethereum has increased by 56 percent in one month, from $2,516 on August 4 to $3,926 today.

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Around the world, Chinese Bitcoin miners have re-entered the fray, resuming a fierce battle with their American counterparts.

As miners continue to shift machines outside of China in the aftermath of the country's recent mining ban, bitcoin's network difficulty, a measure of the problems faced by those mining bitcoin, has increased by 13%, the second greatest increase of the year. Much of the mining capacity (usually in the form of server farms) has shifted to North America, although some has shifted to nations like Russia and Kazakhstan.

Contextualization

For example, the new difficulty is 17,600,000,000,000 (or 17.6T in shorthand), up from 13.7T only a month ago.

This is a 13% rise over the previous difficulty level, and it's the third time in a row that the difficulty level has been increased. The last two were up by 7.3 percent and 6%, respectively, following a 28 percent increase in Bitcoin's hashrate (a measure of the network's overall computational power) over the previous month, from 97 to 126 exahashes (EH).

Mining difficulty is a self-referential metric that indicates how difficult it is for Bitcoin miners to locate the next block in the network. Self-referential here refers to an internally measured unit that started at “1” and has grown enormously since Bitcoin's birth.

The hashrate of bitcoin has now regained around 85 percent from its low point following China's ban earlier this summer, highlighting the crackdown's extraordinary volatility. In July, when hashrate was at its lowest for 2021 at 84.79 million terahashes (TH/s), the network had its greatest downward adjustment ever, a 28 percent drop. Along with Chinese miners relocating, huge North American miners are plugging in machines that were ordered earlier this year and have now been delivered, resulting in a rise in hashrate.

In the mining business, any change of more than 10% is regarded significant, and this one will undoubtedly reduce mining profits at a time when they were on the verge of hitting new highs. Hashprice (a measure of mining profitability) plummeted 10% immediately after the modification, according to Luxor's Hashrate Index, from $0.39 per TH to $0.35 per TH. The yearly high was $0.415 per TH, which was achieved in April, when Bitcoin reached its all-time high.

Mining was highly profitable for active miners following China's mining prohibition, despite price reductions, as expected given the lower competition, particularly for those in the United States. Despite the fact that Bitcoin's price was 50% off its all-time high for the majority of the Summer, plugged-in miners were earning tremendous profits, as proven by the fact that many publicly traded mining businesses had their greatest second quarters ever this year.

Outlook

Given the complicated economics of mining and the fact that most of these stocks continue to trade more as a bitcoin proxy than based on their financials, it's reasonable to expect that this adjustment will have little impact on their prices, especially given the blockbuster revenues these companies saw in Q2 and the current level of mining profitability. That could change if and when traditional proxies, such as ETFs, such as the recently launched Viridi crypto mining ETF, become more widely available in the United States.

What is the Mining Difficulty of Bitcoin? Explainer

Mining difficulty is a self-correcting internal score that assesses and regulates the difficulty of mining a Bitcoin block.

Every two weeks, the difficulty adjusts (or every 2,016 blocks). Depending on how many miners are competing on the network, the network will ratchet it up or down. If more hashrate comes online during one of these two weeks (i.e., more miners are producing more computations to locate blocks than before), difficulty will adjust upward; if hashrate goes offline and competition decreases, difficulty will decrease.

The difficulty adjustment ensures that bitcoin blocks are generated in accordance with Satoshi Nakamoto's 10-minute average when the network was founded. Furthermore, it insured that no single actor outperformed the competition in the early days of the network, because if one miner used so much hashrate that they won too many blocks, the difficulty adjustment would retarget and make mining more difficult, reducing their profitability (and give other miners time to deploy more hashrate).

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