A Reliable Bitcoin Mining Hosting Service Provider Matters, Lessons from Texas Power Outages
April 6, 2021 - Expert Commentary
Texas is not a place you would associate with significant snowfall.
Well, as part of a long list of unusual events in the past year, the lone star state froze over in mid-February.
So severe was the freeze that the state’s power grid suffered severe damages. This event elicited the expected political blame game. Some blamed it on climate change; other politicians blamed windmill inefficiency and more issues that will require a different forum to analyze fully.
The undisputed fact is that millions of people in Texas suffered.
Tucked among this population are Bitcoin miners. Several Bitcoin mining farms in Texas went offline because of the winter storm.
The farms had to stop operations because of power outages. Ethan Vera, the co-founder of Luxor Tech, a U.S.-based crypto mining company, confirmed that some miners, indeed, had to pause operations amid the disruptions.
At a time when Bitcoin prices are breaking records, this had to suck. Electricity is the heart and soul of Bitcoin mining. It not only fuels the Bitcoin mining hardware but also provides cooling for the heat they produce.
The Extent of Power Disruption
According to Vera, the hashrate generated from Luxor’s mining pool has decreased by 40 percent. This decline is representative of what mining farms in Texas experienced.
Texas is one of the largest states in the U.S. The surprising inability of its power grid to cope with the sudden cold snap raised national security questions. Some significant Bitcoin companies have significant operations in the state. One such company is Layer1 Technologies that started operating its Bitcoin factories in West Texas in early 2020.
This company has the backing of billionaire PayPal co-founder Peter Thiel. Some of the companies even sold their unused power back to the state. The power outage affected energy sources across the board. They include natural gas, coal plants, and even wind power.
The lone star state has a unique power grid. It is deregulated to favor private organizations that can generate and sell power.
The downside to these private companies is that they sell electricity on contracts with variable rates. These rates can reset and rise significantly during times when power generation is difficult. Some Texans woke up to the rude shock of having power bills that read into the thousands of dollars.
Imagine having a Bitcoin mining rig in such a setup. The stable and cheap sourcing of power is an absolute must in Bitcoin mining.
Somehow, Renewable Power Got the Blame
Without taking sides, it was noteworthy that windmills got some blame for the failures. The common line was that frozen wind turbines froze over and stopped generating power.
Well, for one, colder places do have plenty of windmills. There are windmills in Iowa, Canada, and even Denmark. All these places have experienced what Texas faced more times than one could count.
Additionally, wind power forms only a small part of the Texas power supply. The Texas Tribune reported that Wind only forms a fraction of the power grid.
The Electric Reliability Council of Texas estimates that 80 percent of the grid’s winter capacity is from natural gas, coal, and nuclear power. Wind power turbines indeed froze, but they were not the primary reason millions of Texans did not have power.
If the blame was to be properly apportioned, natural gas has to take the most blame. However, this unproductive blame game will only leave Texas vulnerable to the next freeze.
Instead, the focus should be on making the systems ‘winterized.’ Be it natural gas or windmills, the state has to ensure that its grid can operate during low temperatures. Blaming renewable power is a convenient way to avoid addressing the issues at hand.
The Need for A Stable Renewable Power Supply in Bitcoin Mining
That Bitcoin needs stable, cheap power is no secret.
This asset consumes tremendous amounts of energy because its mining process involves computer hardware crunching mathematical sums to try and earn the right to add the next block of Bitcoin transactions.
Perhaps, Bitcoin mining is power-intensive by design. It makes it difficult for a single entity or colluding group of actors to dominate the network
Bitcoin miners in Texas would know this need all too well. Without cheap and stable power, mining rigs immediately become unprofitable. Miners ordinarily shut down their rigs when such a problem arises.
Bitcoin mining is an energy-intensive activity. Some would even argue that it consumes too much. Regardless, those who have lower power costs can still have viable Bitcoin mining enterprises.
Can Renewable Power Save The Day?
Some miners have resorted to renewable sources of power to manage costs. In a country like China, the state has built dozens of dams in the past decade to boost power output. These dams provide cheap power that the mining farms can use to fuel their operations.
Hydroelectricity is renewable because it relies on the stored power of water behind a wall. The water flows through the dam at fast speeds, powering a turbine that generates electricity. Similarly, wind power can also generate cheap electricity in places where the government subsidizes costs.
The push to have more renewable power sources can be positive for Bitcoin miners. VBit utilizes cheap renewable power to make our costs manageable and improve the viability of the mining process.
Renewable power has obvious environmental benefits. The carbon footprint it takes to generate one kilowatt-hour (kWh) of electricity by a coal-fired power station is substantially more than that of a wind farm or hydroelectricity. Indeed, carbon fuels still provide better efficiency.
Therefore, Bitcoin mining can gain from more renewable power it will reduce scrutiny on this asset as a significant power consumer.
VBit Mining: A Bitcoin Hosting Provider with Stable Renewable Power
Texas has shown the need for stable power for mining. Additionally, the ever-rising power costs for Bitcoin mining make the use of renewable sources of energy necessary.
VBit Mining is a pioneer in this regard. We have data centers located in cooler parts of North America where power grids experience deep freezes frequently. Our power supply is more resilient to such weather patterns.
Besides, VBit Mining utilizes renewable energy.
We are doing our part in making Bitcoin mining more sustainable for the planet. Renewable power in these locations is cheaper and makes our running costs manageable. The management of mining costs is indispensable in mining.
These arrangements have allowed VBit Mining to provide Bitcoin hosting services for prospective miners. Natural cooling plays a vital part in cooling Bitcoin mining equipment. These logistics make a major difference in mining.
Accordingly, users can purchase equipment for us, which we source directly from Bitmain, and begin mining. VBit Mining plays a critical role for miners who want to mine without the extra logistics.