The freezing temperatures around the United States had a surprising effect on bitcoin mining, especially in Texas. When the temperatures dropped, bitcoin mining ceased because it became less profitable.
What is bitcoin mining?
According to Investopedia, “Bitcoin mining is the process by which transactions are officially entered on the blockchain. It is also the way new bitcoins are launched into circulation.”
While it’s technically possible to mine at home, you need top graphics processing units (GPUs) to mine bitcoin successfully. These GPUs can run from between $1,000 to $2,000. Much of today’s mining happens with application-specific integrated circuits (ASIC). Mining typically takes place in mining farms or pools. The mining pools are run by third parties for groups of miners.
Unfortunately, the energy required for this process is vast. According to CoinGecko, “As a solo miner, an average of 266,000 kilowatt-hours (kWh) of electricity is required to mine a single Bitcoin (BTC). This process would take approximately seven years to complete, demanding a monthly electricity consumption of about 143 kWh.”
For that reason as well, most serious bitcoin mining is done by professional organizations, which fortunately have become smarter about energy usage by tapping into excess energy from power plants and building or buying their own renewable energy sources, helping to keep a stronger percentage of bitcoin mining away from pure, dedicated fossil fuel power generation.
There are still some other areas for continued improvement, too, as Investopedia also noted that “large mining firms generate a large amount of electronic waste (e-waste) as they continually upgrade their equipment to meet the ever-growing hashing speeds needed to remain competitive.”
Why is bitcoin mining affected by the weather?
According to CoinPedia, U.S. bitcoin mining accounts for at least 36% of the global market, with Texas responsible for 17% of that.
Texas experienced colder-than-normal weather, with temperatures dipping to 32 degrees Fahrenheit on Jan. 22. As temperatures drop, there is more electricity demand, which raises prices. Bitcoin relies on low energy prices to be profitable, so this disrupted the industry.
Additionally, when temperatures drop this cold, the demand shifts to dirty energy sources, which have more volatile prices than cheaper energy sources.
CoinPedia reported, “The Bitcoin Difficulty Adjustment chart indicates that many miners had to temporarily shut down operations due to the high energy costs.”
CoinPedia also noted that on Jan. 26, the “Bitcoin market experienced its first negative difficulty adjustment in four months, largely caused by the cold snap and its effects on mining operations.”
It’s not just bitcoin that’s an issue on increasing energy demands. Emerging technologies, such as artificial intelligence, are increasingly requiring large amounts of computer power to run. As more people start using the technologies and they grow, the amount of power needed will increase.
Transitioning mining operations to be powered by cheaper energy sources, such as community solar, solar panels, and offshore or onshore wind, would help reduce the reliance on dirty energy sources.
Join our free newsletter for good news and useful tips, and don’t miss this cool list of easy ways to help yourself while helping the planet.
