Bitcoin Mining with Flared Gas and Waste Gas: A Sustainable Solution to an Environmental Challenge

Bitcoin Mining with Flared Gas and Waste Gas: A Sustainable Solution to an Environmental Challenge ByJan Wuestenfeld August 21, 2024 Recent Posts August 21, 2024/ Bitcoin Mining with Flared Gas and Waste Gas: A Sustainable Solution to an Environmental Challenge August 8, 2024/ Bitcoin Mining vs High Performance Data Centers and the Renewable Energy Challenge August 7, 2024/ The Renewable Energy Challenge: Powering Our World in Transition July 29, 2024/ Optimizing Bitcoin Mining: The Strategic Advantage of Location Load More End of Content. Introduction In the previous article, “Bitcoin Mining vs. High-Performance Data Centers and the Renewable Energy Challenge,” we explored the unique energy requirements of Bitcoin mining compared to high-performance data centers. Building upon that foundation, this article delves into the pressing issue of flared and waste gas in the energy sector and examines how Bitcoin mining presents a sustainable solution. Gas flaring, the practice of burning off excess natural gas during oil extraction, poses a significant environmental challenge by releasing greenhouse gases into the atmosphere, exacerbating climate change. This waste of valuable resources harms the environment and represents a missed opportunity for energy utilization. In this article, we will analyze the problem of flared and waste gas in the energy sector, investigate how Bitcoin mining can provide a sustainable alternative & assess the environmental and economic benefits of utilizing waste gas for mining. We’ll also discuss real-world case studies of successful waste gas utilization in Bitcoin mining, and address the challenges and potential solutions related to implementing this approach. By exploring the intersection of Bitcoin mining and waste gas utilization, we aim to illuminate an innovative solution that can mitigate the environmental impact of gas flaring while creating economic opportunities in the energy sector. The Problem of Flared Gas and Waste Gas Gas flaring is widespread in the oil and gas industry, particularly in areas with insufficient infrastructure to capture and transport natural gas. This process releases significant volumes of carbon dioxide (CO2) and methane (CH4)—a greenhouse gas far more potent than CO2—increasing global warming and contributing to local air pollution (methane gas is up to 80 times more potent than CO2 in terms of its global warming potential over a 20-year period). According to the Global Gas Flaring Tracker Report, in 2023, gas flaring resulted in the release of 381 million tonnes of CO2 equivalent, with a substantial part of that being attributed to methane gas, Based on the U.S. Environmental Protection Agency’s Greenhouse Gas Equivalencies Calculator, the climate impact of this gas flaring is equivalent to adding approximately 82 million passenger vehicles to the road for one year. Other industries add to the problem as well. Waste gas is produced as a byproduct of various industrial processes. In landfills, the decomposition of organic waste generates methane, often vented or flared due to insufficient infrastructure. Similarly, in agriculture, methane is released from livestock manure and other organic materials. Wastewater treatment plants also produce methane during the breakdown of organic matter. The environmental impact of these waste gases is substantial. They contribute to global warming and, in some cases, can create local health hazards. Traditional methods of managing waste gas, such as flaring or venting, are inadequate and often result in significant emissions. For perspective, landfill gas emissions are the third largest human-made methane gas emitter in the US, equivalent to 14%, according to the U.S. Environmental Protection Agency. Source: https://www.epa.gov/lmop/basic-information-about-landfill-gas (same as linked in the sentence above). Tackling these emissions is crucial for cutting pollution and meeting climate goals. Last year, in July 2023, the White House hosted the first Methane Summit, attesting to the topic’s importance. In some instances, the landfill waste gas and otherwise flared may be used to turn it into electricity for, for example, the local energy grids or other purposes. However, in many cases, this may not be economically viable, especially if they are located in remote areas, which may often be the case. Generate Income For Supporting Clean Computing Our team of experts are there to assist you Book a Call Bitcoin as a Solution: Turning Wasted Gas into Energy Bitcoin mining offers a unique solution to the problem of wasted gas, transforming an environmental liability into a profitable venture. As a location-agnostic energy demander, Bitcoin mining can utilize flared or waste gas to generate electricity, regardless of where it’s produced. Energy producers can capture and convert the gas into electricity on-site, which is used for power mining operations. This process reduces the environmental impact of flaring and monetizes what would otherwise be wasted energy. This means turning an environmental challenge into a revenue stream for energy companies. Energy producers can use Bitcoin mining to create a new revenue stream, offsetting losses from flaring. This approach is valuable in regions lacking infrastructure to capture and transport natural gas. By using portable Bitcoin mining units, companies avoid the need for expensive pipeline construction or other infrastructure investments. The environmental benefits of using flared gas for Bitcoin mining are substantial. Converting gas that would otherwise be flared or vented into electricity reduces the volume of greenhouse gases released into the atmosphere. Real-World Case Studies: Successful Implementations Several companies have already demonstrated the viability of using flared gas for Bitcoin mining. For example, Crusoe Energy Systems, a U.S.-based company, has partnered with oil and gas producers to deploy mobile Bitcoin mining units at flaring sites. These units capture flared gas, convert it into electricity, and use it to power Bitcoin mining operations, significantly reducing emissions while generating profit. Another notable example is Upstream Data, a Canadian company that provides on-site Bitcoin mining solutions for oil and gas producers. Their systems are designed to be easily deployed and can operate in remote locations, offering a practical solution for producers looking to mitigate the environmental impact of flaring while generating revenue. In Ireland, Scilling Mining, has partnered with Tom Campell to run a Bitcoin mining operation powered by an anaerobic digester that uses organic waste. The digester generates energy, part of which is fed into

Bitcoin Mining vs High Performance Data Centers and the Renewable Energy Challenge

Bitcoin Mining vs High Performance Data Centers and the Renewable Energy Challenge ByJan Wuestenfeld August 8, 2024 Recent Posts August 8, 2024/ Bitcoin Mining vs High Performance Data Centers and the Renewable Energy Challenge August 7, 2024/ The Renewable Energy Challenge: Powering Our World in Transition July 29, 2024/ Optimizing Bitcoin Mining: The Strategic Advantage of Location July 19, 2024/ What is Bitcoin mining and why is it an integral part of the Bitcoin network? Introduction In the previous article, The Renewable Energy Challenge, we explored the challenges that arise with increasing renewable energy shares and briefly discussed how Bitcoin mining could help address these issues. But why focus on Bitcoin mining specifically, and not High-Performance Computing (HPC) data centers, such as AI data centers? What sets them apart? This article compares the infrastructure needs of Bitcoin mining operations with those of HPC data centers. Bitcoin mining, which uses specialized ASIC hardware, is energy-intensive and crucial for securing the Bitcoin network. On the other hand, HPC data centers support advanced computations like AI tasks and require robust hardware, connectivity, and variable energy management. We will examine the distinct energy needs, cooling requirements, location factors and regulatory environments of Bitcoin mining versus HPC data centers. We will explore why Bitcoin mining is more like a dung beetle (in a positive way), while HPC data centers are more akin to the locust of the energy sector, based on the recent research article How Bitcoin Mining Reduces Carbon Emissions by Margot Paez and Troy Cross from the Bitcoin Policy Institute. Note: In the article Optimizing Bitcoin Mining: The Strategic Advantage of Location , we have already explored the location requirements for Bitcoin mining in more detail. Therefore, here we will focus only on the distinctive features of Bitcoin mining versus HPC data centers. 1. Energy Requirements: Both Bitcoin mining and HPC data centers are highly energy intensive. While the energy demand of HPC data centers may fluctuate based on workload, Bitcoin mining can easily be powered up or down as needed. HPC data centers usually require extremely reliable power with multiple redundancies to prevent downtime and ensure continuous operation. The value of the work offered by HPC data centers may vary depending on the workload, which is less of an issue for Bitcoin mining. Bitcoin mining does not need to be operational at specific times; for example, it can easily power up or down depending on the local energy supply and energy prices. HPC data centers cannot be powered down as easily and require specific software to manage and balance the workload. Bitcoin miners are far more sensitive to energy costs than HPC data centers, driving them to seek out the cheapest energy sources available, thus often tapping into wasted energy that isn’t utilized by other consumers. Comparison Between Bitcoin Mining and HPC Data Centers Aspect Bitcoin Mining HPC Data Centers Primary Purpose Securing the Bitcoin network through energy-intensive ASIC operations. Supporting advanced computations, such as AI tasks and simulations. Energy Requirements High energy demand; can be powered up or down based on energy availability. High energy demand with variable workloads; requires continuous, reliable power with redundancies. Energy Sensitivity Highly sensitive to energy costs; seeks the cheapest energy sources. Less sensitive to energy costs, as profit margins are higher. But requires reliable and stable energy sources. Cooling Needs Requires robust cooling due to significant heat from ASICs. Complex cooling needs due to high-density server racks and diverse hardware; uses advanced techniques like liquid cooling. Infrastructure & Connectivity Basic but robust internet connection sufficient; latency is not critical. Requires ultra-high-speed, low-latency connections for large data transfers and complex computations. Hardware Specialized ASIC hardware. Specialized hardware like GPUs and TPUs; massive data storage capabilities. Security Needs Minimal physical and cyber security requirements; no sensitive data processed. High physical and cyber security requirements, especially for sensitive data and government contracts. Regulatory Requirements Fewer regulatory concerns, mainly focused on energy use. Stringent regulatory compliance, particularly for data privacy (e.g., GDPR) and security standards. Location Flexibility Highly location-agnostic; can operate in remote areas and utilize otherwise wasted energy. Location-dependent; requires proximity to reliable power sources and robust infrastructure. Operational Flexibility Can quickly adjust power usage based on energy supply. Less flexible; operations are closely tied to demand for workload. Environmental Role Can function as a flexible demand response entity, aiding in energy grid stability. Primarily focuses on consistent operation; less flexibility in adapting to energy availability. 2. Cooling Considerations: Bitcoin mining relies on ASIC miners, which generate significant heat, necessitating robust cooling systems to maintain optimal operating temperatures. To reduce cooling costs, miners may choose naturally cool climates, and innovations like immersion cooling are becoming increasingly popular in the sector. HPC data centers also face substantial cooling challenges due to the heat generated by high-density server racks. Their cooling needs are more complex, given the variety of hardware used. Advanced cooling techniques, such as liquid cooling, are commonly employed, especially for supercomputers, and these centers often implement sophisticated airflow management and heat recycling systems. 3. Infrastructure & Connectivity: HPC data centers need ultra-high-speed, low-latency network connections to handle immense data transfer and computational tasks. While Bitcoin mining also requires a robust internet connection, a basic but stable internet connectivity is sufficient for maintaining the connection to the blockchain network. Latency is not as critical for Bitcoin mining. Advanced security systems, both physical and cyber, are crucial for protecting sensitive data and infrastructure in the case of HPC data centers. Specialized hardware, such as GPUs and TPUs, is necessary to perform complex computations efficiently. Moreover, massive data storage capabilities are required to manage the vast amounts of data processed and stored in HPC environments. While both require reliable power and internet, HPC centers have much higher demands for connectivity speed, data storage, and specialized hardware, limiting the viable locations. 4. Regulatory requirements HPC data centers face different regulatory challenges compared to Bitcoin miners, often focusing on data privacy (such as GDPR in Europe), security compliance (especially for government contracts),

The Renewable Energy Challenge: Powering Our World in Transition

The Renewable Energy Challenge: Powering Our World in Transition Jan Wuestenfeld August 7, 2024 Recent Posts August 8, 2024/ Bitcoin Mining vs High Performance Data Centers and the Renewable Energy Challenge August 7, 2024/ The Renewable Energy Challenge: Powering Our World in Transition July 29, 2024/ Optimizing Bitcoin Mining: The Strategic Advantage of Location July 19, 2024/ What is Bitcoin mining and why is it an integral part of the Bitcoin network? As the world confronts climate change, renewable energy sources like solar and wind are crucial for reducing carbon emissions and creating a sustainable future. While these clean options hold great promise, integrating them into existing power grids poses significant challenges. Advancements have made renewables more efficient and affordable, but their intermittent nature—sunlight and wind vary—can disrupt grid stability. Adapting our infrastructure, originally built for fossil fuels, requires technological and regulatory changes. Addressing these challenges involves strategies like energy storage, smart grids, and demand response. Bitcoin mining as a flexible energy demand source can be one of the tools to overcome these challenges. Before diving into the specifics in the next article, we’ll address the challenges associated with increasing renewable energy shares and consider potential solutions beyond Bitcoin mining in the present article. The Renewables Intermittency Challenge The unpredictable nature of power output from wind and solar sources is known as renewables intermittency. These technologies only generate electricity when environmental conditions allow. Most people grasp that solar panels fall silent after sunset and wind turbines idle on windless days. However, the story doesn’t end there. Let’s explore five of these less-discussed forms and their implications for energy planning. 1. Rapid Fluctuations: These occur as sunlight intensity shifts, clouds pass overhead, and wind patterns change. Traditional grid operations involve minor, constant adjustments in voltage and frequency, managed continuously to maintain power quality. Renewable energy introduces more dramatic real-time power fluctuations, demanding larger and more frequent adjustments from ‘online’ plants and occasional activation of ‘peaker’ capacity. This challenge intensifies as renewable energy’s share grows. 2. Daily Supply-Demand Misalignment: Often, the average power generation from renewables doesn’t align with the typical daily electricity demand curve. For example, solar farms produce nothing at night, ramp up in the morning but continue to rise after the morning peak, reach their peak during low afternoon demand, and then decline even as demand grows in the evening. This creates a challenge of backing up renewable power supplies when they are either unlikely or unable to supply, necessitating the operation of power plants in a part-time, inefficient mode. 3. Excess Energy Dilemma: Managing surplus solar power during midday or excess wind power at night presents another hurdle. Without adequate storage solutions, excess electricity must be addressed. This often involves curtailing or shutting down fossil fuel or nuclear plants, a costly and not easily reversible process. Alternatively, surplus power can be offloaded to neighboring markets, effectively exporting the issue. While renewable power has zero marginal cost, the expenses of shutting down and restarting conventional plants must be factored in. 4. Surplus Power Management: Managing surplus solar power during solar’s afternoon generation peak or wind’s nighttime peak poses another challenge. Without sufficient storage solutions, excess electricity must be managed. This often involves curtailment or shutdown of fossil fuel or nuclear plants, which is costly and not easily reversible. Alternatively, surplus power can be ‘dumped’ into neighboring markets, effectively exporting the problem. While renewable power exhibits zero marginal cost, the expenses involved in shutting down and restarting conventional plants must be considered. 5. Low-Capacity Factors: Solar farms typically generate only 20-25% of their nameplate capacity over the course of a year, while wind farms might achieve 40-45%. In contrast, Combined Cycle Natural Gas (CCNG) plants produce about 85% of their capacity, and nuclear plants over 90%. The lower capacity factors for renewables are a direct result of their intermittency, with production affected by time of day, weather, and seasonal variations. These low-capacity factors and unpredictable variability make renewables less suited for providing base load generation, necessitating large reserves of dispatchable power to compensate for fluctuations. Generate Income For Supporting Clean Computing Our team of experts are there to assist you Book a Call Strategies for Effective Integration To effectively integrate renewable energy into our power systems, several strategies are emerging: 1. Energy Storage: Large-scale battery systems, like lithium-ion and flow batteries, and technologies such as pumped hydro storage, are essential for balancing supply and demand by storing excess energy for periods when generation is low. These storage solutions act as buffers, smoothing out the peaks and troughs of renewable generation and ensuring a steady supply of power. 2. Smart Grids: Advanced grid management systems use real-time data and predictive algorithms to better balance energy supply and demand. These smart grids adjust distribution in response to changes in renewable energy output, optimizing the flow of electricity and enhancing grid stability. Smart grids also enable more efficient energy usage by providing consumers with information about their energy consumption patterns, encouraging more conscious usage. 3. Demand Response: Incentivizing energy users to shift their consumption patterns in line with renewable availability helps synchronize demand with supply. This strategy often involves rewarding energy use during peak renewable generation periods. Such an approach not only eases grid strain during high-demand times but also maximizes the utilization of abundant renewable energy. Bitcoin mining is uniquely positioned to serve as such a flexible energy consumer compared to most other energy consumers. In the upcoming article, we’ll delve deeper into why this is the case. 4. Hybrid Energy Systems: Combining renewable sources with traditional power generation can offer a more reliable and consistent energy supply while reducing overall emissions. Hybrid systems can use fossil fuels or nuclear power to provide a steady base load, while renewables handle variable demand, resulting in a more balanced and resilient energy system. 5. Geographical Diversification: Distributing renewable energy sources across various locations can mitigate local weather-related fluctuations. For example, pairing solar power from sunny regions with wind power from coastal areas can

Optimizing Bitcoin Mining: The Strategic Advantage of Location

Optimizing Bitcoin Mining: The Strategic Advantage of Location ByJan Wuestenfeld July 29, 2024 Recent Posts August 8, 2024/ Bitcoin Mining vs High Performance Data Centers and the Renewable Energy Challenge August 7, 2024/ The Renewable Energy Challenge: Powering Our World in Transition July 29, 2024/ Optimizing Bitcoin Mining: The Strategic Advantage of Location July 19, 2024/ What is Bitcoin mining and why is it an integral part of the Bitcoin network? Introduction In the previous article we introduced Bitcoin mining and showed why it is crucial for securing the Bitcoin network and how for the first time in history it solved the double spend problem in the digital age without relying on a centralized party involved. The insights provided lay the foundation for our next discussion on the geographical factors influencing Bitcoin mining operations. In this article we are going to look at the importance of choosing the appropriate location for a Bitcoin mining site, the challenges around it and what to consider. The geographic location significantly impacts profitability, efficiency, and regulatory compliance. This article explores key factors influencing location selection, including energy costs, regulatory environments, climatic conditions, and infrastructure capabilities. It examines established favorable jurisdictions and emerging hotspots attracting miners seeking competitive advantages. By strategically navigating these factors, miners can optimize operations and position themselves competitively in the evolving global Bitcoin mining landscape. The Energy Equation: Powering Profitability Energy costs present a significant challenge in Bitcoin mining, as ASIC miners—specialized hardware necessary for this process—consume substantial electricity to find a valid hash. Therefore, the accessibility of affordable and abundant energy sources in specific geographic locations is paramount for maximizing profitability. Renewable energy sources such as hydroelectric and wind power are particularly attractive due to their cost-effectiveness and environmental advantages. Utilizing these renewable sources enables miners to markedly lower operational expenses while also contributing to sustainability objectives by minimizing the carbon footprint associated with conventional energy sources. Thus, the selection of energy sources plays a pivotal role in shaping both the economic feasibility and environmental impact of Bitcoin mining operations. Navigating the Regulatory Landscape The regulatory landscape profoundly influences cryptocurrency mining operations. Jurisdictions with well-defined and supportive frameworks provide essential operational certainty, mitigate risks arising from regulatory fluctuations, and establish clear legal parameters. Emerging markets are increasingly appealing to miners due to proactive regulatory environments that foster innovation and facilitate investment in cryptocurrency ventures. These jurisdictions aim to attract miners by offering stability, legal safeguards, and occasionally, fiscal incentives. A conducive regulatory framework empowers miners to operate confidently, strategize for long-term growth, and adeptly navigate industry challenges, ensuring the sustainable advancement of the mining sector. Cooling Considerations: Keeping Miners Running Smoothly Maintaining optimal operating temperatures for ASIC miners is crucial for efficient performance and hardware longevity. ASIC miners generate significant heat during operation, necessitating effective cooling systems to prevent overheating and potential hardware failures. Locations with naturally cool climates inherently reduce the need for expensive cooling infrastructure, thereby minimizing operational costs associated with temperature control. This advantage not only enhances the economic viability of mining operations but also extends the lifespan of mining equipment, optimizing the return on investment for miners. Strategic selection of such locations underscores the importance of environmental factors in maximizing operational efficiency and profitability in the competitive landscape of Bitcoin mining.  Generate Income For Supporting Clean Computing Our team of experts are there to assist you Book a Call Infrastructure and Connectivity: The Backbone of Operations Robust internet connectivity and reliable power grids are indispensable for seamless Bitcoin mining operations, ensuring stable connectivity to the blockchain network and uninterrupted mining activities. Proximity to manufacturing facilities for ASIC miners can streamline logistics and reduce costs associated with equipment acquisition and maintenance, thereby enhancing operational efficiency and responsiveness to technological advancements, but are a less relevant factor. Access to reliable infrastructure not only minimizes downtime but also facilitates timely upgrades and repairs, crucial for maintaining competitiveness in the rapidly evolving cryptocurrency mining industry. Strategic location decisions that prioritize these infrastructure advantages enable miners to optimize their operational capabilities and adapt swiftly to market dynamics, reinforcing their strategic position in the global Bitcoin mining landscape. FACTOR DESCRIPTION Energy Costs Accessibility to affordable and abundant energy sources is critical. Renewable energy sources like hydroelectric and wind power are particularly attractive for cost and sustainability. Regulatory Environment Jurisdictions with clear and supportive regulatory frameworks provide operational certainty and mitigate risks. Proactive regulatory environments attract miners. Climatic Conditions Locations with naturally cool climates reduce the need for expensive cooling infrastructure, minimizing operational costs and enhancing hardware longevity. Infrastructure Capabilities Robust internet connectivity and reliable power grids are essential for stable operations. Proximity to ASIC miner manufacturing facilities can streamline logistics. Sustainable Energy Initiatives Locations investing in renewable energy infrastructure attract more miners due to lower operational costs and environmental benefits. Technological Advancements Advances in cooling technologies and energy-efficient ASIC miners influence location choices. Favorable conditions for deploying advanced equipment are crucial. Geopolitical Considerations Trade policies, geopolitical stability, and international relations impact mining operations. Geopolitical risks are assessed alongside economic and regulatory factors. Future-Proofing Consider how each location aligns with future trends, potential for long-term operations, and adaptability to changing market conditions. Risk Assessment Comprehensive risk assessment for political stability, natural disaster risks, and potential regulatory changes. Scalability Potential for future expansion, including available land, energy capacity, and regulatory outlook. Environmental Impact The local community’s perception of the operation, particularly in terms of energy usage and environmental factors. Looking ahead, several trends may shape the future of Bitcoin mining locations: Sustainable Energy Initiatives: Increasing emphasis on sustainability is prompting miners to seek locations with access to renewable energy sources. Countries investing in renewable energy infrastructure are likely to attract more miners due to their lower operational costs and environmental benefits. Regulatory Clarity and Stability: Jurisdictions that provide clear and stable regulatory frameworks will continue to be preferred by miners. For instance, governments that support innovation while maintaining regulatory oversight will foster a conducive environment for cryptocurrency mining. Technological Advancements: Advances in cooling

What is Bitcoin mining and why is it an integral part of the Bitcoin network?

What is Bitcoin mining and why is it an integral part of the Bitcoin network? ByJan Wuestenfeld July 19, 2024 Recent Posts July 19, 2024/ What is Bitcoin mining and why is it an integral part of the Bitcoin network? An introduction In this article, we explore the inner workings of Bitcoin mining, delving into its technical aspects and broader implications. Bitcoin, as a digital currency, operates on a decentralized network that allows peer-to-peer transactions without the need for a central authority. This decentralized nature is one of Bitcoin’s most significant innovations, distinguishing it from traditional fiat currencies and financial systems. At the heart of this system is Bitcoin mining. The process of Bitcoin mining is more than just a means to generate new Bitcoin; it is a fundamental component that underpins the security and integrity of the entire Bitcoin ecosystem. Bitcoin mining ensures the security, validity, and continuity of the blockchain. Understanding Bitcoin mining is crucial for grasping how the Bitcoin network maintains its integrity and why it has become a revolutionary force in the financial world. We will go through the concepts of decentralization, proof-of-work, and the challenges that Bitcoin mining addresses in the realm of digital finance. Before diving into the specifics of Bitcoin mining, it is essential to understand its necessity and its central role within the Bitcoin network. Why Bitcoin mining? The internet has revolutionized the transfer of digital information, allowing instant, low-cost sharing of text, videos, and other data. However, this ease of duplication poses problems for transferring value. For example, if Alice wants to send €100 to Bob online, two issues arise: First, proving Alice owns the €100; and second, preventing double-spending, where both Alice and Bob end up with a copy of the €100. Until the release of the Bitcoin Whitepaper by Satoshi Nakamoto in October 2008, we relied exclusively rely on centralized solutions like banks, PayPal, and Visa to verify and process transactions. These institutions confirm the existence of funds and deduct them upon transfer. However, this system requires trust in these institutions, that can fail or that can censor transactions. In some cases, they may even exclude people from the digital financial system (e.g. political activists) or people may even not have the opportunity open a financial account due to e.g. a lack of documentations. Satoshi Nakamoto proposed a combination of proof-of-work and blockchain technology, addressing the double-spending problem and the need for trust in central institutions. With the launch of the Bitcoin network in 2009, it became possible for the first time to transfer value digitally in a decentralized manner without a central party involved. Proof-of-work and the blockchain The Bitcoin network consists of two integral parts: The blockchain and Bitcoin mining (proof-of-work). The blockchain is a chain of blocks in which transactions are included, which in itself is not a revolutionary concept. The combination of the blockchain with Bitcoin mining is where things get interesting. Bitcoin miners play a crucial role in determining when the blockchain can be extended by another block and which chain is the correct one, all without the need for a central institution. How does Bitcoin mining work? Miners aim to discover a valid hash of block that meets specific criteria. Upon finding a valid hash, a miner can broadcast the block, along with the collected transactions, to the network. This new block, including the transactions of network participants, is then added to the blockchain. With each block added to the network roughly every 10 minutes the blockchain or if you want the public ledger growth in length. As a reward, the miner receives newly mined Bitcoin (currently 3.125 Bitcoin) and transaction fees. Every 210.000 blocks the block reward is cut in half, which means roughly every four years we have the so-called halving event. These halving cycles repeat until we asymptotically reach the maximum of 21 million Bitcoin to ever exist. The last fraction of a Bitcoin is expected to be mined around the year 2140. Once this happens Bitcoin miners will solely rely on transaction fees from the users for revenue. Contrary to common belief, Bitcoin miners do not solve complex mathematical problems. It is more akin to playing the lottery or throwing a dice and getting the number that fits the predetermined requirements. For simplicity, imagine a 100-sided dice. To broadcast a block, the condition is to roll a number below 30. The person to first roll a number below 30 has the right to mine the next block. By increasing the number of dice rolls, miners increase their chances of finding a number that fits the requirements. However, this also means more often a number that fits the requirements is being found. The target time for finding a block within the Bitcoin network is set at 10 minutes. Adding more dice throws without any adjustments would bring the block times below 10 minutes. Generate Income For Supporting Clean Computing Our team of experts are there to assist you Book a Call The Difficulty Adjustment Here is where the difficulty adjustment comes in. Every 2016 blocks (~ every 2 weeks) the difficulty of finding a valid block is adjusted. In the dice example, if more dice are used, blocks are coming in faster. To get back to 10 minutes a difficulty adjustment will take place. Now participants, for example, have to throw a number below 20 instead of 30. In reality, Bitcoin miners are not throwing dice. Bitcoin miners employ so called application-specific integrated circuit (ASIC) miners (machines specifically developed for Bitcoin mining) using the SHA256 hashing algorithm to find a valid hash. The miner processes a block prototype through the hash function and gets a hash in return (equivalent to one dice throw). For the output hash there is a target range to be met. If that target range is not met the miner submits a new block prototype with minor adjustments until either the miner or another miner finds a hash that meets the current rules. Increasing computing