The Shanghai Update opens a new avenue for tHe technology

The Energy Use of Bitcoin Mining in the U.S. During the 2021 Texas Winter Storm: The Times Reveals the United States as a Leader in the Bitcoin Industry

Texas desperately needed electricity. The winter storm left tens of thousands of homes without power. By the end of Feb. 14, 2021, nearly 40 people had died, some from the freezing cold.

Meanwhile, in the husk of a onetime aluminum smelting plant an hour outside of Austin, row upon row of computers were using enough electricity to power about 6,500 homes as they raced to earn Bitcoin, the world’s largest cryptocurrency.

The computers were performing trillions of calculations per second, trying to get an elusive combination of numbers. There have been about a few dozen wins of about $170,000 in recent weeks because a computer somewhere guessed correctly. Anyone can try, but to make a business of it can require as much electricity as a small city.

In Texas, the computers kept running until just after midnight. Then the state’s power grid operator ordered them shut off, under an agreement that allowed it to do so if the system was about to fail. In return, it began paying the Bitcoin company, Bitdeer, an average of $175,000 an hour to keep the computers offline. Over the next four days, Bitdeer would make more than $18 million for not operating, from fees ultimately paid by Texans who had endured the storm.

Since then, precisely how much electricity Bitcoin mines are using in America and their effect on energy markets and the environment have been unclear. The most comprehensive estimates to date of the power use of the biggest operations are put together by The Times with both public and confidential records.

In June 2021, most of the mining of the virtual currency was done in China. After some time, it discontinued the operations due to their power use. The United States is the leader in the industry.

The Proof-of-Stake (PoS) Blockchain: Why the Bitcoin Industry is Consuming More Energy than It Used to Spend to Solve Puzzles

A purposely energy-demanding blockchain is the name of the thing. To solve mathematical puzzles, miners use specialized hardware. Bad actors aren’t supposed to mess with the ledger if the amount of energy used to solve those puzzles is low. The puzzles get increasingly complex with time as more people try to solve them, requiring more sophisticated software that eats up more electricity in the process.

Many people disagree that the network is energy-guzzling and carbon intensive. They say PoS is inferior to PoW because of the fact that it is prone to centralization, concentrating influence and wealth in the hands of the wealthy. All of this makes Shanghai a proxy battle over the future of crypto.

The Proof-of-work (PoW) mining right is determined by a race to finish a mathematical puzzle under the old system. The more computing power miners throw at the problem, the harder it is to win the race. Under the new proof-of-Stake (PoS) system, there is no race or miners and the winner is decided by a lottery. The greater the amount of ether somebody locks up on the network—or stakes—the greater the chance they hold a prize-winning ticket.

Proponents of digital currency argue that the absolute amount of energy that the industry consumes misses important context. The miners think they are incentivizingrenewable energy development by plugging the gaps when demand is low.