2021 OCTOBER
BITCOIN SAGA
Written by : Andrew Sia
Introduction
Those bitcoin enthusiasts prize the cryptocurrency as beyond the reach of any government, but the ironic is up to three-quarters of the world’s supply has been produced in just one country, the authoritarian China where the government push to curtail output is now causing global bitcoin turbulence.
The amount of electricity needed to power the large numbers of computers used to create new bitcoin are at odd in every level. The 24/7 number crunching that is required to create, or “mine” as it is commonly addressed to, for the bitcoin relies on ample supplies of cheap electricity and equipment, which in this case is referring to the computers.
China’s bitcoin miners took the advantage of an under regulated and overbuilt electricity-generating sector. They set up mining operation next to the hydropower station in the mountainous Sichuan and Yunnan provinces where turbine churns snowmelt and seasonal downpours into electricity. And when river slowed down the flow, miners packed their computers and headed north to the coal-rich Xinjiang and Inner Mongolia to continue their mining.
Mining operations in China has the lack of any technical knowledge but focus only on the bitcoin it can produce can always find in the cheap warehouse shacks as data farms. Mining operations can be found with tens of thousands of computers wired together solving complex computational puzzles.
The bitcoin mining activity ranks among China’s ten biggest power users, alongside with steelmaking and cement production. The energy it consumes is bigger than the entire nation of Italy.
The bitcoin history in China happened in 2013 when an earthquake that shook southwestern Sichuan province, and among millions of donations that arrived as the relief, gifts of bitcoin from a foundation owned by Jet Li, the Chinese kung-fu actor, was the most extraordinary that caught the people’s attention. During that year, a team of technology enthusiasts in Beijing began to design computers specifically for creating new bitcoin. They formed the Bitmain Technologies Limited and use parameters published by bitcoin’s unidentified architect.
The Chinese regulators led by the state-controlled Xinhua news agency, dubbed the bitcoin as something no more than privately manufactured money circulated in the internet. The People’s Bank of China forbade the country’s banks from handling cryptocurrency. Since there was no specific policy on the output of bitcoin, the miners kept mining away.
Because cryptocurrency mining involves increasingly difficult match problems, every new unit of the crypto requires more time and energy than the one mined before.
Lately, bitcoin has been brought to the world’s attention, but still there are few governments who have embraced bitcoin. Beijing has expressed its intention to release its own e-currency and its attitude towards cryptocurrency is still unclear. The miners are looking for more predictable regulatory countries to do their mining, knowing that China can take this as an opportunity to corner the world market by pouring the nation’s resource into it.
In one of the Bitmain’s largest overseas orders to date, Las Vegas based Marathon Digital Holdings Inc., ordered 70,000 machines in a bitcoin farm in Texas.
The last we heard about bitcoin mining in China that its government is shutting down everything from payment providers using bitcoin to cryptocurrency and now it is going after bitcoin miners. It is concentrated in Sichuan province which accounts for 90% of the China’s bitcoin mining capacity. Miners provide the computer power necessary to run the bitcoin blockchain. They solve complex equations to verify transactions and keep the network humming along. The incentive is coming from their devotion of their time and processing power is their daily bitcoin reward. The miners are selling their business at a discount now.
Bitcoin’s Impact on the Environment
The researchers at Cambridge University showed an “insane” spike in bitcoin’s electricity usage this year. New bitcoins can only be created or “mined” through an intensive computational effort that requires an unfathomable amount of energy. And roughly 70% of the mining is done in China and we have reasons to believe that a big part is coming from Xinjiang. Also China’s power is still heavily reliant on coal that is the cause of the greenhouse emissions.
Miners are rewarded for cracking the mathematical problems that unlock new coins. And a new block of coins is generated, on average, once every ten minutes. Those competing miners must run ever faster.
In the Finger Lakes region of upstate New York, an idled power plant is up and running again to power the bitcoin mining. Then there is the influx of miners in Plattsburgh, NY, that drove up the cost of electricity dramatically.
Also, the region of the Finger Lakes in the upstate New York is remote and out of the way, makes it an ideal place for bitcoin mining.
The world is already talking about the cutting back of the carbon emissions; the sudden surge of electricity for the reason of mining for a virtual currency is becoming ironic.
It is found that many of the bitcoin miners in China are setting up shops in places with abundant and cheap hydropower, and much of it is under-utilized.
We already know that computer ‘mining” and transfer of bitcoin requires a great deal of energy which comes from burning fossil fuels. Now it is encouraging the development of sustainable energy for the “mining”.
The Dark Side of the Cryptocurrency
The general impression for the cryptocurrency has not been that great. Its mystery created an image for those who are doing the money laundry and the illegal blackmailing deeds. And besides, its value can fluctuate from an hour to the next into something that can wipe out the value completely.
Cryptocurrency works hand in hand with ransomware to make it more damaging.
Ransomware is a software for extortion of money and it is used by hackers and illegal syndicates. It is a form of malware that encrypts computer files and holds them for ransom.
One of the recent cases was the Colonial Pipeline hack that tried to bring the East Coast of the United States onto its knees.
Not too long ago we have read the nation’s largest meat processor became target of hackers demanding ransom. But increasingly brazen perpetrators, often based in Russia, are targeting physical infrastructure and demand ransom to unlock critical systems.
Last year there were 2,500 cases of ransomware, an annual increase of 66%. In 2020, ransomware victims paid hackers $350 million in cryptocurrency, and many victims paid without reporting the incident, the damage was understated.
There is no way to stop ransomware except to ban the cryptocurrency as ransomware cannot succeed without it. Before cryptocurrency, the blackmailers have to set up shell companies to receive credit card payments, or receive ransom payment in prepaid cash cards, both cases would not leave a trail.
These days there is even a new business model that the developers sell or lease ransomware to crooks who are not technical savvy themselves to receive ransom quickly and safely.
The FBI advises victims not to pay hackers, but many feel that they have no choice but to pay. It created a small industry known as “ransomware negotiators”. These negotiators and the insurance companies that they partner with, will help people navigate the world of cyberextortion. The average ransom payment was $220,000 during this time. But many cases would go unreported.
But some systems like the nuclear power plants are holding great dangers and we have to make sure that it is more secure and don’t have any weak links to avoid being espionage.
On Capitol Hill, there is the Congressional Blockchain Caucus with around 30 members who decided not to interfere by putting the regulatory control, but allows it to evolve the same way like the internet did. This gives the crypto industry more time to organize for lobbying going forward and I think that it is a mistake not to interfere, especially after the Colonial Pipeline incident.
The cryptocurrency firms who are serving the US customers are supposed to be subject to the same anti-money-laundry requirements just like the rest of the financial institutions. It was only until late last year the Treasury Department’s Financial Crimes Enforcement Network proposed a rule for reporting, verification and ask for record-keeping requirements for the cryptocurrency transaction.
To mention that cryptocurrency can endanger the global warming is a very weak statement, but to expose its crime and the activities that it can cause is the main focusing point. Being innovative does not always mean good to the civilization. Cryptocurrency is a typical example that when it ends in the hand of the outlaws, it can turn against the civilized world.
The Latest About the Bitcoin Miners
China has been the largest producer of bitcoins, accounted for half of the world’s output. Recently it has crackdown the bitcoin mining, which is an energy-intensive operation because of Xi’s expression to start to reduce the carbon emissions. But it is perhaps more for the country to push against the cryptocurrency and move towards its own official-backed digital yuan. This has left the international bitcoin miners reaping a windfall after China’s announcement.
And because of China’s quitting, existing miners have more to share among themselves to produce. According to the data website Blockchain.com the bitcoin mining globally halved after China’s withdrawal.
Miners from China have tried to migrate to neighboring countries such as Mongolia and Kazakhstan, but many are unable to transport the equipment across the border. The governments in these countries are also skeptical about the bitcoin miners.
Bitcoin mining has a severe environmental impact and it accounts for 0.4% of the world’s energy consumption. For instance, it is using more electricity annually than countries like Italy, Finland or Belgium. This is in accordance to the Cambridge Bitcoin Electricity Consumption Index.
The miners in China were relying on coal-powered energy, but the other countries are depending on the abundant sources of renewable energy.
Bitcoin miners create new coins by using powerful computers to solve mathematical puzzles. But these days the price for the servers and the computers have come down significantly and it is difficult to fill up the vacuum after China left.
2021 OCTOBER
BITCOIN SAGA
Written by : Andrew Sia
Introduction
Those bitcoin enthusiasts prize the cryptocurrency as beyond the reach of any government, but the ironic is up to three-quarters of the world’s supply has been produced in just one country, the authoritarian China where the government push to curtail output is now causing global bitcoin turbulence.
The amount of electricity needed to power the large numbers of computers used to create new bitcoin are at odd in every level. The 24/7 number crunching that is required to create, or “mine” as it is commonly addressed to, for the bitcoin relies on ample supplies of cheap electricity and equipment, which in this case is referring to the computers.
China’s bitcoin miners took the advantage of an under regulated and overbuilt electricity-generating sector. They set up mining operation next to the hydropower station in the mountainous Sichuan and Yunnan provinces where turbine churns snowmelt and seasonal downpours into electricity. And when river slowed down the flow, miners packed their computers and headed north to the coal-rich Xinjiang and Inner Mongolia to continue their mining.
Mining operations in China has the lack of any technical knowledge but focus only on the bitcoin it can produce can always find in the cheap warehouse shacks as data farms. Mining operations can be found with tens of thousands of computers wired together solving complex computational puzzles.
The bitcoin mining activity ranks among China’s ten biggest power users, alongside with steelmaking and cement production. The energy it consumes is bigger than the entire nation of Italy.
The bitcoin history in China happened in 2013 when an earthquake that shook southwestern Sichuan province, and among millions of donations that arrived as the relief, gifts of bitcoin from a foundation owned by Jet Li, the Chinese kung-fu actor, was the most extraordinary that caught the people’s attention. During that year, a team of technology enthusiasts in Beijing began to design computers specifically for creating new bitcoin. They formed the Bitmain Technologies Limited and use parameters published by bitcoin’s unidentified architect.
The Chinese regulators led by the state-controlled Xinhua news agency, dubbed the bitcoin as something no more than privately manufactured money circulated in the internet. The People’s Bank of China forbade the country’s banks from handling cryptocurrency. Since there was no specific policy on the output of bitcoin, the miners kept mining away.
Because cryptocurrency mining involves increasingly difficult match problems, every new unit of the crypto requires more time and energy than the one mined before.
Lately, bitcoin has been brought to the world’s attention, but still there are few governments who have embraced bitcoin. Beijing has expressed its intention to release its own e-currency and its attitude towards cryptocurrency is still unclear. The miners are looking for more predictable regulatory countries to do their mining, knowing that China can take this as an opportunity to corner the world market by pouring the nation’s resource into it.
In one of the Bitmain’s largest overseas orders to date, Las Vegas based Marathon Digital Holdings Inc., ordered 70,000 machines in a bitcoin farm in Texas.
The last we heard about bitcoin mining in China that its government is shutting down everything from payment providers using bitcoin to cryptocurrency and now it is going after bitcoin miners. It is concentrated in Sichuan province which accounts for 90% of the China’s bitcoin mining capacity. Miners provide the computer power necessary to run the bitcoin blockchain. They solve complex equations to verify transactions and keep the network humming along. The incentive is coming from their devotion of their time and processing power is their daily bitcoin reward. The miners are selling their business at a discount now.
Bitcoin’s Impact on the Environment
The researchers at Cambridge University showed an “insane” spike in bitcoin’s electricity usage this year. New bitcoins can only be created or “mined” through an intensive computational effort that requires an unfathomable amount of energy. And roughly 70% of the mining is done in China and we have reasons to believe that a big part is coming from Xinjiang. Also China’s power is still heavily reliant on coal that is the cause of the greenhouse emissions.
Miners are rewarded for cracking the mathematical problems that unlock new coins. And a new block of coins is generated, on average, once every ten minutes. Those competing miners must run ever faster.
In the Finger Lakes region of upstate New York, an idled power plant is up and running again to power the bitcoin mining. Then there is the influx of miners in Plattsburgh, NY, that drove up the cost of electricity dramatically.
Also, the region of the Finger Lakes in the upstate New York is remote and out of the way, makes it an ideal place for bitcoin mining.
The world is already talking about the cutting back of the carbon emissions; the sudden surge of electricity for the reason of mining for a virtual currency is becoming ironic.
It is found that many of the bitcoin miners in China are setting up shops in places with abundant and cheap hydropower, and much of it is under-utilized.
We already know that computer ‘mining” and transfer of bitcoin requires a great deal of energy which comes from burning fossil fuels. Now it is encouraging the development of sustainable energy for the “mining”.
The Dark Side of the Cryptocurrency
The general impression for the cryptocurrency has not been that great. Its mystery created an image for those who are doing the money laundry and the illegal blackmailing deeds. And besides, its value can fluctuate from an hour to the next into something that can wipe out the value completely.
Cryptocurrency works hand in hand with ransomware to make it more damaging.
Ransomware is a software for extortion of money and it is used by hackers and illegal syndicates. It is a form of malware that encrypts computer files and holds them for ransom.
One of the recent cases was the Colonial Pipeline hack that tried to bring the East Coast of the United States onto its knees.
Not too long ago we have read the nation’s largest meat processor became target of hackers demanding ransom. But increasingly brazen perpetrators, often based in Russia, are targeting physical infrastructure and demand ransom to unlock critical systems.
Last year there were 2,500 cases of ransomware, an annual increase of 66%. In 2020, ransomware victims paid hackers $350 million in cryptocurrency, and many victims paid without reporting the incident, the damage was understated.
There is no way to stop ransomware except to ban the cryptocurrency as ransomware cannot succeed with it. Before cryptocurrency, the blackmailers have to set up shell companies to receive credit card payments, or receive ransom payment in prepaid cash cards, both cases would not leave a trial.
These days there is even a new business model that the developers sell or lease ransomware to crooks who are not technical savvy themselves to receive ransom quickly and safely.
The FBI advises victims not to pay hackers, but many feel that they have no choice but to pay. It created a small industry known as “ransomware negotiators”. These negotiators and the insurance companies that they partner with, will help people navigate the world of cyberextortion. The average ransom payment was $220,000 during this time. But many cases would go unreported.
But some systems like the nuclear power plants are holding great dangers and we have to make sure that it is more secure and don’t have any weak links to avoid being espionage.
On Capitol Hill, there is the Congressional Blockchain Caucus with around 30 members who decided not to interfere by putting the regulatory control, but allows it to evolve the same way like the internet did. This gives the crypto industry more time to organize for lobbying going forward and I think that it is a mistake not to interfere, especially after the Colonial Pipeline incident.
The cryptocurrency firms who are serving the US customers are supposed to be subject to the same anti-money-laundry requirements just like the rest of the financial institutions. It was only until late last year the Treasury Department’s Financial Crimes Enforcement Network proposed a rule for reporting, verification and ask for record-keeping requirements for the cryptocurrency transaction.
To mention that cryptocurrency can endanger the global warming is a very weak statement, but to expose its crime and the activities that it can cause is the main focusing point. Being innovative does not always mean good to the civilization. Cryptocurrency is a typical example that when it ends in the hand of the outlaws, it can turn against the civilized world.
The Latest About the Bitcoin Miners
China has been the largest producer of bitcoins, accounted for half of the world’s output. Recently it has crackdown the bitcoin mining, which is an energy-intensive operation because of Xi’s expression to start to reduce the carbon emissions. But it is perhaps more for the country to push against the cryptocurrency and move towards its own official-backed digital yuan. This has left the international bitcoin miners reaping a windfall after China’s announcement.
And because of China’s quitting, existing miners have more to share among themselves to produce. According to the data website Blockchain.com the bitcoin mining globally halved after China’s withdrawal.
Miners from China have tried to migrate to neighboring countries such as Mongolia and Kazakhstan, but many are unable to transport the equipment across the border. The governments in these countries are also skeptical about the bitcoin miners.
Bitcoin mining has a severe environmental impact and it accounts for 0.4% of the world’s energy consumption. For instance, it is using more electricity annually than countries like Italy, Finland or Belgium. This is in accordance to the Cambridge Bitcoin Electricity Consumption Index.
The miners in China were relying on coal-powered energy, but the other countries are depending on the abundant sources of renewable energy.
Bitcoin miners create new coins by using powerful computers to solve mathematical puzzles. But these days the price for the servers and the computers have come down significantly and it is difficult to fill up the vacuum after China left.