Australia’s dirtiest coal plant, which was closed in 2014 amidst criticisms by environmentalists for producing more CO2 than other types of coal-fired power station, might now re-open to mine bitcoin and potentially other cryptos.
“IOT Group has signed an agreement with Hunter Energy to build a blockchain centre inside the Redbank coal-fired power station to provide cheap electricity for blockchain applications,” local media reported earlier this month.
Energy costs for mining a bitcoin in Australia are estimated at nearly $10,000, but the highly polluting coal-mine might bring it substantially down to potentially even lower than electricity costs for mining a bitcoin in China at $3,000.
“The average consumer pays around 28 cents per kilowatt-hour, with what IOT are doing its pre-grid [price] is 8 cents and will be 5 cents at night time,” IOT said at the time.
They argued their plan could create a mini Silicon Valley of sorts in Australia, with IOT Group executive director, Sean Neylon, stating:
“With these current prices, by having a blockchain application centre behind the grid offers cheaper power. It offers the potential to create a new Silicon Valley in Australia.”
But it would come at a very high environmental cost. “It will probably generate 22,000 pounds of CO2 every hour, but everybody needs their bitcoins!” Treehugger commented in their reporting.
While Carbon Monitoring for Action (CARMA) found in 2007 that Redbank emitted more climate change and global warming causing greenhouse gases per unit of electricity generated than any other power station in Australia.
They further estimated the power station emits 1.06 million tonnes of greenhouse gases each year as a result of burning coal.
Bitcoin mining consumes significant amounts of electricity primarily because of the huge numbers of specialized asics computers that are needed to undertake the pointless calculations which serve to prove that work was done.
That, in effect, has the quality of turning bitcoin into a commodity backed by energy, but such energy is not stored. Instead, it is constantly required to keep the network running.
Ethereum, the second biggest public blockchain, is now at the final stages of replacing in part the hardware mining process by moving to Proof of Stake.
That will be done in stages, starting with Hybrid Casper, which is to launch hopefully by the end of summer. At which point, the reward for ethereum miners will be reduced by 80%.
That should make it far less profitable to mine eth. Therefore the network may consume significantly less electricity. With ethereum then eventually removing hardware mining all-together.
Bitcoin has no such plan and changing bitcoin’s hardware mining Proof of Work would probably be a very difficult task.
But, arguably, coal plants are not required. Solar energy, wind power and water based hydraulic power, could instead be used.
Bitcoin’s mining process is however very competitive with a gain for each miner meaning a loss for all other miners. Any advantage, therefore, might be utilize. But if that includes the dirtiest plants, then there might be a backlash from environmentalists.