No blackout with bitcoin minors!

Blackout in Spain is an opportunity to recall that the Bitcoin industry could certainly have made it possible to avoid the disaster.

Bitcoin, how many GW?

As a sign, the University of Cambridge has just published a report in which it qualifies the bitcoin industry of “Key contributor to network resilience” by offering the network manager a “Strategy focused on demand”.

The results are based on a survey of 49 bitcoin minors representing 48 % of the overall calculation power (hashrate). Note that North American minors represent 80 % of the sample, twice as much as their real weight worldwide.

Verdict: the overall annual electricity consumption of the Bitcoin network revolves around 140 TWh and generates 40 MTCO2E of greenhouse gas emissions. This corresponds to an electrical power of 7.3 GW, comparable to that of the Czech Republic.

But surprise, it appears that the durable energy sources are ultimately in the majority (52.4 %). Hydroelectricity arrives first (23.4 %), followed by wind (15.4 %), nuclear (9.8 %) or solar energy (3.2 %). Fossil fuels are mainly natural gas (38 %) and coal (9 %).

In all, the Bitcoin industry consumes 0.54 % of global electricity production. Another precious information, minors say they pay on average $ 0.045 per kWh. This friend's price suggests that it is mainly electricity which would be otherwise wasted, that is to say that produced by the ENR.

So much for raw figures. As underlined in the introduction, the report Also highlights the asset of the Bitcoin industry to balance electrical networks. The Spanish government would do well to read …

Indeed, bitcoin minors offer more resilience to sudden breakdowns, the reason being that they can disconnect from the network instantly.

A luxury fuse

The balance of the electrical network by demand appears more and more essential to accommodate the development of intermittent energies and the puzzle that they represent for network managers.

Historically, the frequency of the network was maintained at 50 Hz by increasing or reducing the production of “advanced” plants. These power plants are designed to start and stop quickly during requests or in case of impromptu breakdowns. These are typically dams and gas power plants.

However, in Spain, gas represented only 3 % of electricity production at the time of blackout. It was 73 % for wind and solar that has priority. Unfortunately, it seems that the pre -eminence granted to renewable is largely responsible for blackout:

And this is where Bitcoin minors come into play as an adjustment variable by demand. They offer a load shedding solution to network operators to balance the demand for electricity in real time. No other industry can react so quickly.

The report also stresses that 57 % of minors were erased on request in 2023, making a total of 888 GWh to the network. This electrical symbiosis works so that the Manager of the Texan Network (ERCOT) recently canceled the construction of several gas power plants due to the 3 GW that minors can return to the network at any time.

The icing on the cake, the miners are a significant financial windfall for energy -consuming people who cruelly need money to finance the energy transition.

Bitcoin vs methane

The heat produced by the Bitcoin industry can also be recycled. Urban heating, greenhouse cultivation, heating of public swimming pools, etc. There is something to do since heat production generates 40 % CO2 global emissions.

Many projects are underway, especially in the Scandinavian countries:

The great advantage that minors have is to be able to settle almost anywhere. A Starlink satellite connection is enough to connect to the network.

This agility allows in particular to take advantage of gas when it is a by-product of oil extraction. It is a gas that would otherwise be burned with a torch or worse, released in the atmosphere for lack of being able to transport it to civilization.

This methane (CH4) is burned in CO₂ to reduce the greenhouse effect. CO₂ is indeed 80 times less impactful than methane over a period of 20 years. However, the combustion rate is often closer to 90 % than 100 %, for various reasons like wind.

The alternative is to convert gas to electricity to power the machines of bitcoin minors. Combustion is then close to 99.9 %. Systematically deploying BTC minors would help fight global warming since 140 billion cubic meters of natural gas are straysted each year (357 MTCO₂E).

According to the report, 3.3 % of the electricity consumed by minors comes from this type of gas. In other words, the share of lasting energies consumed by the Bitcoin network is not 52.4 %, but rather 55.7 %.

What do BTC minors do?

If you are still there, it is because the subject interests you particularly. Retracting lessons:

It is useful to properly represent things to separate the Bitcoin network in two. On the one hand the transactions, and on the other the work of minors.

Cryptography is however the cornerstone of the whole. A wallet is not much other than a pair of private and public keys. We speak in the jargon of public key cryptography (or “asymmetrical”).

Clearly, bitcoins (figures, etc.) are “hung” to public keys generated from a private key. These public keys are commonly called “bitcoin addresses” which are used to receive bitcoins. Only the corresponding private keys make it possible to move bitcoins to another public key, AKA make a transaction.

These transactions are gathered in “mined” blocks every ten minutes on average. This process (Proof of Work) is the other big side of the Bitcoin network. It requires significant IT resources that protect the network against “Sybil” type attacks.

POW requires heavy investments in ASICs that cannot be used for something other than bitcoin. An attack on Bitcoin is therefore economically impracticable since it would cost billions of dollars.

Still there? So let's go further.

A block is made up of a header containing some essential data such as the hash of the previous block (hence the blockchain expression), a horoditing, a nonce, the root of the Merkle tree, etc. And then, obviously, a few thousand transactions.

Go to this article for a full description: Bitcoin-What do we find in a “block”?

Proof of Work

The POW consists in varying a nuncio frantically (that is to say an arbitrary number) which, once chopped by the cryptographic algorithm Sha-256 with the header of the block, produces a hash.

This hash is concretely a number. “Mining a block” means finding a hash less than a target number by trials and errors. The target is permanently adjusted to maintain the pace of a block every ten minutes approximately.

It takes an average of 480,000 billion billion tests to undermine a block and receive the award of 3,125 BTC. It is a gigantic number which represents almost 70 times the number of grains of sand in the Sahara desert. Or seven times the estimated number of stars in the observable universe.

Once the hash is found, the nodes check that he respects all the rules of the protocol. Otherwise, the block is rejected and the minor loses money.

These rules include, without limiting itself, that the hash of the block be less than the target value; that all transactions are valid; that the amount of the award paid to the minor is exact; that the header contains the hash of the previous block, etc.

Let's finish with some information gleaned in Cambridge's report on ASIC manufacturers. The three main ones (Bitmain, Microbt and Canaan) control 99 % of the market. Bitmain alone builds 82 % of ASICs.

We also learn that in June 2024, the average efficiency of ASICs on the industry scale was estimated at 28.2 d/th. Or an improvement of 24 % from one year to the next.

Bitcoin, the next international reserve currency

Beyond the answers given to certain energy and environmental problems, Bitcoin statelessness is above all a reserve currency in power. According to Vaneck, China and Russia began to set a fraction of their Bitcoin transactions…

The CEO of Blackrock has not said something else in his annual letter to investors. Larry Fink thinks that the dollar will lose the status of global reserve currency for the benefit of Bitcoin if the United States does not absorb its budget deficit.

As such, the international investment company Vaneck has made small calculations. Buying one million bitcoins would allow the United States to reduce American public debt by 35 % by 2049.

The largest Russian minor, Bitriver, believes that in this context, “The development of the mining industry is strategically important for the major global financial powers, including Russia”.

Uncle Sam will most likely start accumulating bitcoins before the end of the year. There is no longer a lot of time to accumulate it before nations around the world enter the race …

Do not miss our article on this subject: The USA ready to abandon the “exorbitant privilege” for Bitcoin?