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Mining bitcoin is a hugely energy-intensive endeavor; now Coinmint is our next door neighbor

 


The former plant known as the Alcoa East Facility complex is being converted into one of the world’s largest bitcoin mining centers. Coinmint is currently engaged in revamping Alcoa’s 1,300 acre plot that was once used for aluminum smelting and responsible for one of the largest toxic cleanups in the United States.

Coinmint is taking advantage of low electricity cost related to ‘mining’ bitcoins. Locally, Massena is well known for its access to clean and cheaper hydroelectric power.

Coinmint announced it would invest up to $700 million in its new location creating an estimated 150 jobs over the next 18 months. The company signed a 10-year lease with Alcoa on December 1, 2017, with the option to renew. At the time, bitcoin was worth nearly $11,000 and has since dropped about 30 percent in value. On Tuesday, June 12, 2018, one bitcoin is worth $6735.43 in U.S. dollars.

With operations already underway at the former Alcoa East Facility complex, Bitcoin is projected to be at full capacity within a year. The 435 Megawatt mining center is expected to be the world’s largest digital currency data processor, based on capacity, according to Coinmint.

Cryptocurrency “mining” is essentially math done by high-powered computers. In order to trade bitcoin, transactions need to be verified through complex math equations, then and added to what’s known as a “distributed ledger.” In return for solving equations “miners” receive bitcoin.

A Coinmint spokesperson pointed out that each computer used to “mine” generates 1400 watts - the same as one hairdryer. With hundreds of thousands of these hot machines operating at once, Coinmint considers the Massena area ideal for reducing their air-conditioning costs.

Mining ‘bitcoin’ is a very energy-intensive process; by one estimate, bitcoin requires 215 kilowatt-hours of energy for each transaction. According to Morgan Stanley data, the total energy consumption of the bitcoin network consumes as much electricity as 2 million U.S. homes.

And, according to Elite Fixtures data it cost more to mine bitcoin than to buy one outright. The cheapest place to ‘mine’ bitcoin is Venezuela, at $531 per coin and the most expensive is in South Korea, at $26,170 per coin. The average cost to mine one bit coin in the United States is $4758 per coin.

The U.S. is 40th (of 115 countries) on a scale of cheapest to the most expensive places to mine bitcoin. Louisiana is the least expensive state costing $3224 per bitcoin and the most expensive state, in contrast, is Hawaii where the cost of electricity brings mining costs up to $9,483.

Based on typical electricity rate, the average cost to mine one bitcoin is $6151 in New York State.

While Coinmint will use hydroelectricity, many of the world’s bitcoin mines use a tremendous amount of fossil fuel via computers, servers, and cooling air conditioners, generating as much concern over the environment and its rapid push towards climate change as the energy they use to create one bitcoin.

Some estimates say bitcoin’s energy impact is more than that of a small country. The Bitcoin Energy Consumption Index shows that global digital “mining” of bitcoin consumes more energy than 159 countries. Nearly 10 U.S. households can be powered for one day by the electricity consumed for a single bitcoin transaction, according to the group, Digiconomist.

In other words, it takes a whopping 29.05 TWh (terawatt hours, equal to one million megawatt hours) annually to operate the energy-hungry computers and networks that power bitcoin transactions. That’s about 0.13 percent of total global electricity consumption.

The 435 Megawatt Coinmint mining center is expected to be the world’s largest digital currency data processor, based on capacity.

 

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