Bitcoin consumes 'more electricity than Argentina'
"Mining" for the cryptocurrency is power-hungry, involving heavy computer calculations to verify transactions.
Cambridge researchers say it consumes around 121.36 terawatt-hours (TWh) a year - and is unlikely to fall unless the value of the currency slumps.
Critics say electric-car firm Tesla's decision to invest heavily in Bitcoin undermines its environmental image.
The currency's value hit a record $48,000 (£34,820) this week. following Tesla's announcement that it had bought about $1.5bn bitcoin and planned to accept it as payment in future.
But the rising price offers even more incentive to Bitcoin miners to run more and more machines.
And as the price increases, so does the energy consumption, according to Michel Rauchs, researcher at The Cambridge Centre for Alternative Finance, who co-created the online tool that generates these estimates.
“It is really by design that Bitcoin consumes that much electricity,” Mr Rauchs told BBC’s Tech Tent podcast. “This is not something that will change in the future unless the Bitcoin price is going to significantly go down."
The online tool has ranked Bitcoin’s electricity consumption above Argentina (121 TWh), the Netherlands (108.8 TWh) and the United Arab Emirates (113.20 TWh) - and it is gradually creeping up on Norway (122.20 TWh).
The energy it uses could power all kettles used in the UK for 27 years, it said.
However, it also suggests the amount of electricity consumed every year by always-on but inactive home devices in the US alone could power the entire Bitcoin network for a year.
In order to "mine" Bitcoin, computers - often specialised ones - are connected to the cryptocurrency network.
They have the job of verifying transactions made by people who send or receive Bitcoin.
This process involves solving puzzles, which, while not integral to verifying movements of the currency, provide a hurdle to ensure no-one fraudulently edits the global record of all transactions.
As a reward, miners occasionally receive small amounts of Bitcoin in what is often likened to a lottery.
Jun-6-2021 01:51:32 PM
Crypto Mining Booms on Cheap, Subsidized Energy in Argentina
While numerous countries have experienced booms in crypto mining this year, ultra-low utility rates and the resurgence of capital controls are helping supercharge profits for miners in the South American nation. For many experts, it’s yet another example of Argentines’ perennial ability to bend the nation’s heterodox policies to their advantage.
“Even after Bitcoin’s price correction, the cost of electricity for anyone mining from their house is still a fraction of the total revenue generated,” said Nicolas Bourbon, who has experience mining digital currencies from Buenos Aires.
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Cryptocurrencies have long been trumpeted in Argentina as a way for locals to hedge against cyclical economic crises, including repeat currency devaluations, defaults, hyperinflation, and now, a three-year recession made worse by the pandemic. In addition to cheap power, the return of foreign-exchange controls in recent years have given Argentines banned from buying dollars even more incentive to mine digital tokens, as surging demand for non-peso assets has sent the value of Bitcoin skyrocketing to almost 5.9 million pesos in unofficial markets as of Sunday, versus about 3.4 million pesos at the official rate.
Miners are benefiting from the country’s longstanding residential electricity subsidies, a policy intended to win political points with voters yet one that’s increasingly fueling tension within the ruling left-wing Peronist coalition.
Despite Argentina being a net importer of gas, consumer electricity bills are only about 2% to 3% of an average monthly income, compared to about twice that in other Latin American markets like Brazil, Colombia or Chile, according to Ezequiel Fernandez, an analyst at Balanz Capital Valores in Buenos Aires.
Moreover, with inflation running at about 50% annually and currency restriction permitting individuals to legally convert just $200 per month, rampant demand for any store of value is fueling a plunge in the peso in parallel markets, where it’s now about 70% weaker than the official rate.
“The crypto that miners generate is typically sold at the parallel exchange rate, but the energy is paid for at a subsidized rate,” Bourbon said. “At the moment, revenues are very high.”
Read more: There’s a Crypto-Mining Machine in Every Home in Caracas
International mining firms are sensing opportunity. Last month, Canada’s Bitfarms Ltd. said it secured a deal to tap directly into a local power plant to draw as much as 210 megawatts of natural gas-powered electricity, in a bid to run what would be the largest Bitcoin-mining facility in South America.
Consumer electricity bills in Argentina are lower than regional peers
Source: Balanz Capital Valores
Note: Values based on average retail customer energy usage of 300kwh/month
“We were looking for places that have overbuilt their electrical generation systems,” Bitfarms President Geoffrey Morphy said in an interview. “Economic activity in Argentina is down, and power is not being fully utilized. So it was a win-win situation.”
To be sure, industrial power demand is not fully covered by subsidies. But the $0.022 cents per kilowatt hour price Bitfarms says it will pay for the electricity is far below the wholesale market rate of around $0.06 per kilowatt hour for industrial customers not connected to the local grid, according to Fernandez of Balanz Capital.
“For certain power generators with easy access to gas, selling excess power to Bitcoin miners during part of the year makes sense, especially if the power generator somehow avoids foreign-exchange controls by getting paid in hard dollars outside of Argentina, or in Bitcoin,” Fernandez said.
A spokesman for Argentina’s energy ministry declined to comment on the deal, as did a spokesman for Argentina’s tax agency.
Regardless of Bitcoin’s volatility in the coming months, mining in Argentina will almost certainly remain profitable for individuals as long as the government is footing at least part of the electricity bill.
“Miners know the subsidies are ridiculous,” Bourbon said. “They simply take advantage of it.”
Jun-6-2021 01:45:23 PM
African Fintech Start-up Chipper Cash Raises $100 Million — CEO Says No Crypto Services for Nigeria
The New African Fintech Unicorn
Other notable participants in this Series C round include Deciens Capital, Ribbit Capital as well as the Jeff Bezos backed Bezos Expedition. Following the conclusion of this Series C funding round, Chipper Cash has now raised a total of $143.8 million in just a year. As a consequence, some observers now estimate Chipper Cash’s valuation to be between one and two billion dollars.
Notably, with this capital raise, Chipper Cash becomes the latest African fintech firm to attract the interest of leading venture capital firms. Other African fintech start-ups that similarly received support from major VC firms include Flutterwave, Tymebank and O Pay.
Crypto Services and the CBN Prohibition
Chipper Cash’s significant capital raise in a short space of time came as it expanded the range of products it offers. According to a report, the fintech firm now offers cryptocurrency trading options as well as other business payment solutions. The report also quotes Ham Serunjogi, the fintech’s CEO explaining some of the factors that prompted Chipper Cash to add new services. He said:
Our approach to growing products and adding products is based on what our users find valuable. As you can imagine, crypto is one technology that has been widely adopted in Africa and many emerging markets. So we want to give them the power to access crypto and to be able to buy, hold and sell crypto whenever.
Nevertheless, the CEO clarifies that Chipper Cash is not currently offering crypto-related services to its clients in Nigeria. He cites the Central Bank of Nigeria (CBN)’s anti-crypto directive as the sole reason why the fintech firm cannot extend its cryptocurrency-related services to Nigerians.
Serunjogi meanwhile says his company is still “looking forward to any development in Nigeria that allows it to be offered freely again.”
Jun-6-2021 01:40:59 PM