Bitcoin mining, using sophisticated computers to create new bitcoins through the peer-to-peer blockchain network, is a costly endeavor that takes its toll on the environment and resources. That’s the widely accepted perception but is it possible to mine bitcoin more cheaply and in a less environmentally damaging way?
Northern Bitcoin, a German listed company, has begun mining bitcoin and other cryptocurrencies deep within a Norwegian former metal mine and claims it has slashed the price and energy costs of bitcoin mining.
Bitcoin miners around the world have unearthed more than $4.7 billion in revenue so far this year, according to Diar, a bitcoin and blockchain research firm, but due to sky-high electricity prices and this year’s fall in the value of bitcoin and other cryptocurrencies, profits are increasingly hard to come by.
The largest mining pool operator in the world, Bitmain, will soon be forced to averaging out electricity costs across all of its facilities, according to Diar.
Northern Bitcoin claims it can mine one bitcoin for as little as $2,753 in Norway’s Lefdal Mine, against a current market price of around $6,500 and giving it a profit per bitcoin of almost $4,000.
The Lefdal Mine, which last year opened as a data center hosting the likes of computing giant IBM, uses the cold water of the fjord to cool computers and the hydroelectric and wind power generated in the region to provide cheap, renewable electricity.
The mine, which was previously used to harvest the mineral olivine, had been closed for almost 10 years before being transformed to a sprawling underground data center that includes a self-sustaining water cycle.
Northern Bitcoin has found the Norway average for bitcoin mining is $7,700. It claims China has the lowest average of $3,100, along with Saudi Arabia. In Canada, the average cost of bitcoin mining is almost $4,000. At the other end of the scale, bitcoin mining costs almost $10,000 per bitcoin in Australia.
Northern Bitcoin, which in October ditched bitcoin mining for bitcoin cash in order to have a say in the up-coming bitcoin cash fork but plans to revert to bitcoin mining after that, hopes to eventually be mining 100 bitcoins per day—up from what the company described as “several bitcoins per day” before the bitcoin cash switch.
Meanwhile, bitcoin mining continues to attract attention for its huge energy consumption. The amount of energy required to mine one dollar worth of bitcoin is more than twice that required to mine the same value of copper, gold or platinum, according to a paper published in the science journal Nature.
One dollar’s worth of bitcoin takes about 17 megajoules of energy to mine, according to researchers from the Oak Ridge Institute in Cincinnati, Ohio, compared with four, five and seven megajoules for copper, gold, and platinum.
Last year it was estimated the power consumption of the bitcoin network was equivalent to that of the whole of Ireland, while another suggested it was producing the same annual carbon emissions as one million transatlantic flights.
“Energy consumption is really a critical part of the system, and the bitcoin network is a balanced economic system,” said Moritz Jäger, Northern Bitcoin’s chief technology officer. “The bitcoin miners are part of that system. They take a risk in order to participate and they play according to the rules. If they don’t, they won’t make money.”
“The energy consumption and the investment it requires is an important part of the system,” Jäger added.