Alongside the Bitcoin ‘gold rush’, another race is heating up: to find the cheapest source of electricity to power it.
Sadly, going down pit with axe in hand will not net you any Bitcoin. What’s required is serious processing power. While enhanced ASIC technology will shortly be available to the general public, reducing the need for quite such a large roomful of processors, the energy required to run a mining operation will remain considerable, if not vast by comparison to the average household bill.
Scouring the World
Owners of mining operations are engaged in a game: to find the cheapest electricity possible for their operation to maximize the profit from mining.
This often means scouring the entire planet and operating the machines remotely from another location. Austrian expat Alex Wilhelm is one such example. A Tokyo resident, Wilhelm currently has a fleet of processors whirring away in an old stone room of his childhood home in Tattendorf, near Vienna.
While the national grid here does not offer the best rates globally, Wilhelm no longer has a headache over power costs as electricity is donated to him by his father using a prewar water turbine. In addition to being free, it could also well be the world’s most environmentally friendly mining operation.
“Basically you’re turning electricity into money,” Wilhelm told Bloomberg, “If the electricity price goes up the math stops working.”
Indeed, cold cash is not the immediate goal of mining projects at current prices. Their owners are more optimistic about Bitcoin gathering value once more and stabilizing, rather than cashing out in the short-term. “If you’re mining at this stage, you’re not doing it to make dollars, you’re doing it because you believe it will go up,” Wilhelm says.
So, where should all the other miners be looking to bring their bills down and widen profit margins? Bloomberg reports on the small village of Moses Lake, Washington, where electicity prices are currently US$0.017 per kilowatt hour, far below the US$0.1 average.
It has come to the attention of Robert Van Kirk, CEO of MyRigSpace.com - a company offering hosting for Bitcoin mining apparatus. Based in Portland, they currently pay US$0.05 per kilowatt hour, while billing customers at US$0.09, so it is no surprise that Van Kirk is eyeing up a potential migration.
“When we move out there we will offer electricity to our customers free of charge,” a message on the website states, potentially leaving just the hardware-dependent monthly fee to be passed on to customers.
For those private miners wanting to continue on a large scale, though, it may well be that we see Bitcoin communities converging on insignificant parts of the world and filling them with servers. It will be interesting to see, should BTC stabilize in the next few years, how its environmental credentials can be improved and whether this will influence its appeal to the mass market.
In a blog post
last month, data journalist Fred Trotter referred to Bitcoin as a “black hole of resources”.