The Miners

In the days of yore, the picture that comes to mind at the mention of the word miner is that of a man whose face is likely covered in dirt, with big boots, a safety jacket and a helmet with a light source mounted on it . To complete the picture he would obviously have to be carrying some sort of digging or mining tool such as a pick axe.

In today's high tech world, the scope of mining has gone beyond that of extracting precious metals or gems from the earth. It is particularly different and on a whole new level when in pertains to crypto currency.

Miners, Proof of Work and Hash rate

In the world of crypto currency miners are not human beings but rather they are computers on the block chain network which are in constant competition to solve a complex mathematical problem or puzzle.

The mechanism of competition to solve the puzzle is what is referred to as proof of work.

This is part of the process of validation of transactions made on the network. The reward for being the first to correctly provide the answer is new Bitcoins and network transaction fees.

Hash in simple terms is each attempted guess a miner makes to provide a solution or solve the mathematical problem.Hash rate is the number of hashes or guesses by each miner per second. The network hash rate is therefore the combination of the rates at which all miners on the network are making guesses to provide a solution to the puzzle.

The difficulty of providing a solution to the puzzle is usually adjusted in response to the network hash rate to maintain a specific rate for one block at 10 minutes interval. As the price of Bitcoin and other crypto currencies increases so does the hash rate and difficulty requiring miners to upgrade to utilizing more powerful mining platforms or equipment.

Evolution of mining platforms

In the early days of Bitcoin mining, the mining platforms were standard central processing units (CPU). The miners at that time carried out mining more like a hobby. Those days have long gone by. As the years went by and the difficulty of mining increased, miners has to upgrade their platforms accordingly to match the pace of the difficulty.

This necessitated a migration from conventional CPUs first to more powerful graphics processing units (GPU). This too was insufficient with time prompting a move to field programmable gate array (FPGA) and more recently to application specific integrated circuits (ASICs). The evolutionary trend is summarized below.

CPU -> GPU -> FPGA -> ASICs

The competition between miners in an attempt to be the first to 'win' the reward for solving the mathematical puzzle has given rise to a challenge which continues to haunt miners till date. This is the challenge of energy consumption.

Energy consumption by miners and climate change

The use of powerful mining equipment which are very powerful computing hardware results in lots of electricity or energy consumption. Because of the large amounts of energy consumed and the positive trend in the price of Bitcoin, some individuals had rather overzealously predicted that miners would be consuming almost all of the electricity produced in the world by 2020. The year 2020 has just ended and this prediction did not come to fruition.

Just past mid 2019, the Cambridge Bitcoin Electricity Consumption Index (CBECI) which is an online tool was launched and it estimated that the global Bitcoin network consumes about 7 GW which would amount to around 64 TWh per year. This estimated value is reported to be more than what Switzerland is expected to consume (58 TWh) within the same time interval.

This estimate by CBECI puts global Bitcoin energy consumption to be about 0.25 % of global electricity or energy consumption. Other studies have rather given a range of 20 - 80 TWh. This estimated range is about 0.1 - 0.3 % of global electricity consumption. These high electricity consumption rates is one of the reason for high transaction fees charged by miners.

In a July 2019 BBC report, a Bitcoin expert stated that apparently the energy cost per transaction on the Bitcoin network is more than what is used by a combination of all the banks in the world. This indicates that miners have an energy consumption issue which needs to be addressed in order to reduce the carbon foot print of mining in climate change. This is estimated to be about 0.03 - 0.06 % of energy related CO2 emissions.

For further reading on mining , energy consumption and other related issues see the reference links below

IEA: Bitcoin energy use-mined the gap

BBC

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