A Canadian hydropower energy plant had put up a welcome banner, asking bitcoin miners to come over and use their power for mining bitcoins. Soon after that, the place was overrun with miners.
Initially, there seems to be nothing really special about the gradually degrading industrial park in Saint-Hyacinthe, Quebec. Located about 60 miles to the east of Montreal, this industrial park has the air filled with the scent of cacao being roasted from a massive chocolate factory nearby.
The scene is filled with vacated offices and tractor trailers on the roads. There are other stores, warehouses, and laboratories, but nothing looks cutting edge. A lot of them have received a plastic sheeting showing that they are closed.
The only sign of life you get is when you stand close to a building. There is a persistent hum from all the buildings. Each of those buildings is filled with thousands of computers. Each of them is dedicated to doing one single task over and over again, day after day.
These computers belong to Bitfarms. It is one of North America’s largest cryptocurrency mining operation. Each of these crypto-mining rigs eats up a huge amount of power and generate massive amounts of heat in order to mine for bitcoins.
Cryptocurrencies are fundamentally energy intensive. They have a huge decentralized and globally distributed ledger that needs massive amounts of computation to maintain.
Let alone the last of mining for bitcoins. About every 10 minutes, the Bitcoin network generates a new coin as a proof of work for verifying a block of the transaction.
The resource-intensive nature of bitcoins is based on the fundamental lack of trust between the participants in the bitcoin network.
Besides requiring electricity for the generation of coins and the maintenance of the network, there is a massive cost attached to cooling these mining rigs too.
Without a doubt, electricity is the cheapest form of energy available right now, and also the most easily accessible. From where we get this electricity matters.
One of the reasons China had a mining boom is because coal is cheap in China and hence the electricity is available at a lower cost.
But coal is the dirtiest form of energy. China’s contribution to climate change is simply not ignorable.
The hydroelectric power being used in Canada is undeniably cleaner but does not come without consequences.
The cost of hydroelectricity
Hydroelectricity energy is generated by rotating turbines with the flow of water. This means that you have to hold water of a certain amount and at a certain altitude to generate that much force.
This means having to clear out acres of land and using the area as a water reserve. This means that you are basically destroying forest land, homes of animals, and destroying entire ecosystems.
This is just as bad as releasing carbon dioxide into the air. Maybe the scale is smaller.
Researchers have been calculating how much carbon the facility would release if the blockchain operations would continue.
Yearly, it would generate over 9,000 kilotons of carbon, along with 150 kilotons of methane. The latter is an even more deadly greenhouse gas.
Moreover, in winter, the temperature in Quebec remains -20 °C for some days. Researchers will analyze the effect of blockchain on winter temperatures and may suspend the mining activities for energy.