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The vast popularity of cryptocurrencies like Bitcoin will lead to blackouts and higher electric bills unless something changes fast. Digital currencies are not controlled by the big banks yet, but rather by a network of users who an incredible amount of electrical power while processing tracking, verifying transactions and building complex blockchains.
Cryptocurrency mining; the process by which digital currencies are created, does in fact use vast amounts of electricity. And it’s growing. The amount of electricity used in Bitcoin mining increased by 610% between April 2017 and April 2018, data from Digicomist indicates. Bitcoin miners worldwide now use enough electricity to power 5.5 million American homes.
Disturbingly, Bitcoin (BTC) is just one cryptocurrency; experts think there are now more than 1,000 cryptocurrencies on the market. Those digital coins are attracting a lot of money; over $600 billion was invested in the cryptocurrency market at the end of 2017, Coindesk’s State of Blockchain report estimated. That means the cryptocurrency market is now worth more than the national economy of Argentina – a country of 43.85 million people.
Cryptocurrency Mining is Big Business
Digital currencies have become one of the most lucrative investments around. Coindesk estimated that all significant cryptocurrencies increased in value by more than 1,000% in 2017.
Bitcoin’s price increased from around $900 a Coin at the end of 2016 to a high of approximately $20,000 at the end of 2017, Coindesk estimated. Bitcoin’s price fell to $7,967 on April 16, 2018, but Bitcoin trading volume hit a record high on April 12, MarketWatch reported.
Such gains are attracting big money to cryptocurrency. George Soros and the Rockefeller family have announced plans to invest in altcoins in April 2017. Much of the investment will go into cryptocurrency mining which is very lucrative.
Observers think the biggest cryptocurrency miner; China’s Bitmain, made more money than the computer chipmaker NVIDIA, one of the most lucrative tech stocks, CNBC reported. NVIDIA’s income increased by 54.61% to $2.911 billion during 2017, Bitmain might have made a profit of $3 billion to $4 billion in 2017.
How Cryptocurrency Mining Threatens Electricity Supplies
Bitmain is one of the companies identified as a threat to the electricity supply in the nation of Iceland. Bitmain operates mining farms; datacenters that harvest cryptocurrency and sells computers designed for mining or mining rigs to investors.
Iceland’s residents are worried that cryptocurrency miners will use up most of their island’s very cheap electricity, The Washington Post reported. The fear is that miners might use so much electrical power that they might monopolize the island’s limited electricity supply.
Cryptocurrency Mining popular in the US
Cryptocurrency mining is not widespread in the United States yet, but it’s coming.
The Eastman Kodak Company unveiled plans to sell a cryptocurrency mining rig called the KashMiner to the public in January. Kodak plans to install mining rigs at its headquarters in Rochester, New York, to augment the company’s income.
News stories did not say how much electricity the KashMiner uses, but if it becomes popular, it can cause shortages or blackouts. If Kodak is successful, other companies might follow its lead.
Cryptocurrency mining by individuals is already extremely popular in the United States. There is a severe shortage of computer-graphics cards; that are used in mining, at retailers like Best Buy, Ars Technica reported in January. The shortage developed because of all the people trying cryptocurrency mining.
Individual mining is hard to stop because almost anybody with a computer, an internet connection, and a graphics card can do it. Even though it is easy, miners can make several hundred dollars a month.
Another threat is that largescale commercial cryptocurrency mining might start in areas of the US with cheap electricity such; as Washington State, or Louisiana. Major miners have ignored North America so far, but CNBC reported Bitmain has plans to mine in Canada.
Watch out for Cryptocurrency Mining
Cryptocurrency mining has not caused significant power grid blackouts yet, but it could happen. In fact, it can happen in any country where inflation destroys the buying power of the currency while increasing the value of cryptocurrencies. This currency issue has already happened in Venezuela.
Households and individuals should prepare for such shortages by installing their own backup power systems. People that mine cryptocurrency should definitely invest part of their profits in a backup power system so they can keep mining during blackouts.
