Bitcoin mining, like its real-world counterpart, uses a lot of power. Exactly how much constitutes “a lot” is a bit of a debate. The most accepted answer comes from cryptocurrency tracking site Digiconomist, which estimates bitcoin mining eats up about 3.4 GW or around 30 terawatt hours per year on average — at least, that was the estimate for 2017. The number is widely expected to continue to rise. However, some say that puts the power consumption needs of bitcoin at half the Digiconomist figure, and some say that nearly doubles it.
For those not used to thinking about electricity by the gigawatt, the estimates mean this: Even at the low end, bitcoin mining uses as much power as a nation state. The debate is whether that nation state is small (Lithuania-sized), medium (Morocco-sized) or medium-large (Israel-sized).
Use of power is not very evenly distributed. Miners use a lot of power and thus set up shop where the cost of power is cheap. At the end of 2017, a handful of Chinese provinces and the country of Georgia were home to 75 percent of the world’s bitcoin mining, while only 3 percent was happening in the U.S.
Frankly, whenever miners arrive, communities aren’t so willing to roll out a red carpet — because, as neighbors go, miners are kind of a fizzle.
“Once the bitcoin power is burned, it is never coming back,” Tyler Cowen, an economist at George Mason University, told The New York Times.
He compared the modern bitcoin boom to the California Gold Rush of yore — but a far less useful version, because bitcoin uses a lot of resources to produce something that’s not really all that useful at the end of the day and has no value at all except for the value an international pool of speculators have assigned to it. Mining gold, he noted, at least produced a substance capable of being used to fill teeth. Bitcoin doesn’t even have a dental application to call its own.
For the mayor of Plattsburgh, New York, Colin L. Read, bitcoin is something of a public nuisance for the community, as miners have started showing up in droves to set up companies that can make use of the town’s unusually low power costs.
Plattsburgh is an unusual location in the U.S. because it has a guaranteed supply of cheap electricity following the construction of power-generating dams on the St. Lawrence in the 1950s.
Which means bitcoin mining operations have come running and “are plugging into that power supply like a swarm of hungry mosquitoes,” according to the mayor. Today, 10 percent of the city’s power is being eaten away by bitcoin miners, which has forced the city to buy extra electricity on the open market, at rates up to 100 times higher than its base cost.
Mold-Rite Plastics, also located in the city and drawing about 10 percent of its power, employs about 200 people. The bitcoin mining companies don’t hire anyone when they come to town — except security guards.
The miners, the mayor noted, run up the cost of power for the community. Everyone has to pay more to offset the additional power the community needs to buy, and although the bitcoin miners are getting a better deal then they otherwise would have, the rest of the community is paying more than they would if the miners weren’t there.
Included entities now paying more for power thanks to bitcoin mining — all town offices, community schools, every other business in the community and the local hospital.
Meanwhile, in Quebec — also a city with unusually low energy costs — bitcoin miners aren’t running up the costs of local services, but they are preventing the city from bringing in additional revenue streams, which it had intended to bulk up service offerings. Power usage in Quebec had been very stable until recently — and flat — such that the city was generating past its need and considered selling its power to the state of Massachusetts, a move which would allow the state to deliver on its goal of bringing more green power sources, while Quebec would get a revenue bump.
But bitcoin came to town, and, according to an official who spoke to the NYT, miners are delighted to use that power themselves. As was the case in Plattsburgh, bitcoin miners didn’t bring much in the way of revenue opportunities with them.
We should note: This is the good version of bitcoin being a bad neighbor — because in this version, they at least legally register and make their intention to use a cheap power source clear.
The less scrupulous participants in the Wild West of cryptocurrency acquisitions aren’t making their presence known; they’re quietly hacking other people’s computers and using them to mine cryptocurrency.
The latest round of this so-called crypto-jacking was reported this week when a hacker or gang of hackers broke into a Tesla-owned Amazon cloud account and used it to “mine” cryptocurrency, security researchers said.
“We weren’t the first to get to it,” Varun Badhwar, CEO and co-founder of RedLock, the security firm that found the breach after discovering the exposed credentials on the web, told Fortune. “Clearly, someone else had launched instances that were already mining cryptocurrency in this particular Tesla environment.”
The schemes have seen a resurgence in popularity, as cryptocurrency prices have soared over the past year. Earlier this month, websites for the U.S. federal court system and the U.K.’s National Health Service roped their visitors into similar virtual money-minting operations, as have Aviva, the British insurance firm, and Gemalto, the Dutch digital security company.
The experts agree: As long as bitcoin is trading north of $10,000 a unit, crypto-jacking will likely continue to rise. “Crypto-jacking is the new malware,” one researcher noted this week.
If that sounds extreme, Symantec reported this week that crypto-jacking is up 1200 percent year over year in the U.K., so perhaps it’s less hyperbolic than it appears.
To sum up the hit parade this week: Bitcoin eats a tremendous amount of power, often to the great annoyance of the localities they’re extracting it from, and that is a good case. A bad case is when bitcoin miners just steal the power from the unwitting to mine a digital currency that has seen its per unit price rise and fall by a thousand dollars in the last 60 days or so.
Oh, and in case you forgot: Bitcoin mining is also destroying space exploration and making it impossible for us to find extraterrestrial life.
Bitcoin may still be sizzling, but economic fizzling sure seems to follow in its wake. It seems unlikely anyone will be making like Fred Rogers anytime soon, asking if bitcoin wants to become its neighbor.
Square-ing up to big sellers: Square checked off a lot of boxes toward continued growth when it reported earnings earlier in this week. Notably, the company gained steam with larger sellers, above the $125,000 in annual business mark, and where 47 percent of gross payment volume came from. Merchants with more than $500,000 in annual volume made up around 20 percent of Square’s top line in the quarter, up from 16 percent last year. Cash App is showing strength too, as there are 7 million active users. Square has clearly turned the corner beyond hardware, with a sharp focus on services.
Brick-and-mortar retail: May not be dead yet, per Macy’s results, which showed some positive traction — and positive comps. That comes on buoyant holiday spending, where consumers opened their wallets to the very end of the quarter — enough so that same-store sales were up 1.4 percent. Good cheer all around, while digital continues to gain in the double-digit percentages.
Mom ‘n pop to sell out? Due to tax reform, many small businesses (SMBs) may opt to sell the ranch — or the salon or the tax advisory service. Projections come via the International Business Brokers Association (IBBA), along with M&A Source and the Pepperdine Private Capital Markets Project. Findings show that nearly three-quarters of surveyed advisors and brokers predict sales of SMBs to trend higher in the U.S. in 2018. The reasons: a realization of higher profits and smaller down payments required from buyers. Those professionals largely attributed the trend to tax reform and the Small Business Administration’s decision to lower minimum down payments from 25 percent to 10 percent.
Credit card debt, the overdue kind: Hits a seven-year high, as consumers were behind on more than $12 billion in card debt, by at least three months — which is not a good sign, per data from the Federal Deposit Insurance Corporation (FDIC), and points to being maxed out.
Open banking not taking off yet: In the U.K., trust still remains an issue when sharing data. Accenture warns that 69 percent of the U.K. population may not give the go-ahead when it comes to sharing data and may, in fact, hobble the GDP boost that some expect to come as a result of the new rules.
Mobile wallets: Almost all companies want a hockey stick when it comes to growth. But mobile wallet operators? S-shaped. S for slow? Adoption, depending on where you look, has been uneven at best. Apple Pay is a prime example. It’s not where the company wants it to be (or where, maybe, it should be, after all this time) and only 17 percent of folks who have installed it use it.