Just a few years into the cryptocurrency revolution, bitcoin mining is already eating up an estimated 20,000 gigawatt hours of electricity per year. That’s roughly 0.1% of global generation, on par with the power demand of Ireland. The primary culprits are bitcoin mining appliances like the Antminer S9, which is a computer processor that does nothing but endlessly crunch algorithms to lengthen the blockchain. An Antminer draws a load of 1.5 kilowatts — enough to power <a href="https://www.georgiapower.com/in-your-community/electric-safety/chart.cshtml" target="_blank" rel="noopener">two refrigerators and a flatscreen TV</a>. If you run an Antminer 24/7 for a year it will produce about 0.85 bitcoins, at a cost of about 15,000 kilowatt hours. Depending on your power prices it will cost anywhere from $600 (at 3 cents per Kwh) to $1,800 (at 9 cents per Kwh) to mine 1 coin. Even with bitcoin having plunged to $11,600 this morning, there’s still money to be made, assuming you can get your machines cheap enough. Walmart <a href="https://www.walmart.com/ip/Bitmain-Antminer-S9-14-TH-s-asic-Bitcoin-miner-Power-supply-included/724184035?wmlspartner=wlpa&amp;selectedSellerId=7506&amp;adid=22222222227136573873&amp;wl0=&amp;wl1=g&amp;wl2=c&amp;wl3=245332564990&amp;wl4=pla-402226074919&amp;wl5=9027582&amp;wl6=&amp;wl7=&amp;wl8=&amp;wl9=pla&amp;wl10=115780710&amp;wl11=online&amp;wl12=724184035&amp;wl13=&amp;veh=sem" target="_blank" rel="noopener">sells</a> the Antminer s9 for $8,200.
But what happens if the bitcoin bubble just keeps expanding? Some <a href="https://www.weforum.org/agenda/2017/12/bitcoin-consume-more-power-than-world-2020/" target="_blank" rel="noopener">naysayers</a> worry that bitcoin mining could eat up all the <a href="https://www.vox.com/energy-and-environment/2017/12/2/16724786/bitcoin-mining-energy-electricity" target="_blank" rel="noopener">world’s</a> power generation <a href="http://www.newsweek.com/bitcoin-mining-track-consume-worlds-energy-2020-744036" target="_blank" rel="noopener">by 2020</a>. Is it a realistic concern? No.
Analysts Michael Weinstein, Khanh Nguyen and their team at Credit Suisse took a look at the issue, and in a research note out today they conclude that fears of cryptocurrencies overwhelming the power grid are overblown. Start by comparing bitcoin’s 20,000 gigawatt hours per year with the 4.3 million Gwh used in the U.S. last year and 6 million by China. The analysts figured that if the price of bitcoin rose to $50,000, miners would find it economic to boost their efforts such that they would consume more than 350,000 gigawatt hours, still less than 2% of world power capacity. The team also calculated the bitcoin price that would be needed to incentivize miners to gobble up all the world’s generation capacity: $1.1 million per coin.
But that’s all assuming existing technology. As cryptocurrencies evolve, they will become more energy efficient. The proof-of-work algorithms run by bitcoin miners are needlessly complex. New coins have simpler algorithms. Ethereum is even shifting from a proof-of-work system to a more easily processed proof-of-stake system.
<a href="http://www.forbesafrica.com/cover-story/2017/09/04/bitcoin-blockchain-billions/" target="_blank" rel="noopener">READ MORE: Bitcoin, Blockchain And Billions</a>
Crypto-mining will enjoy the same economies of scale of web servers. From 2000 to 2010 the power consumed by data centers surged from 20,000 gigawatt hours to about 70,000 Gwh. At that rate it wasn’t going to take long for the growth of the internet to outstrip human ability to keep the lights on. Data centers evolved to meet the need, both growing in size and scale, as well as energy efficiency. Since 2010 server farm power demand has barely grown, despite the number of installed servers growing 6-fold. <a href="https://eta.lbl.gov/publications/united-states-data-center-energy" target="_blank" rel="noopener">According to</a> scientists at Lawrence Berkeley Lab, the industry is on track to improve energy efficiency 45% by 2020 with the likes of Google, Amazon and Facebook leading the charge.
Fears of rampant energy usage caused by rampant new marijuana cultivation were similarly half-baked. Utility companies in Colorado, California, Oregon and Washington have seen less than a 2% uptick in power demand linked to pot grows, according to the Credit Suisse team. Pacific Gas &amp; Electric even offers discount power pricing for growers — who have LED bulb technology to thank for keeping their lighting bills low.
There’s also the substitution effect. Crypto-blockchain-based payment systems will eventually replace our hack-prone credit card institutions, which themselves are <a href="http://www.datacenterknowledge.com/asia-pacific/visa-plans-its-first-non-us-data-centers-london-and-singapore" target="_blank" rel="noopener">massive</a> data centers (Visa even has one with a <a href="https://usatoday30.usatoday.com/tech/news/story/2012-03-25/visa-data-center/53774904/1" target="_blank" rel="noopener">moat</a>). And somewhere out on the margin, cryptocurrencies are likely to reduce demand for other expensive-to-mine assets, like gold, which according to S&amp;P Global has an all-in cash cost of about <a href="https://marketintelligence.spglobal.com/our-thinking/ideas/gold-mining-companies-hold-operating-costs" target="_blank" rel="noopener">$900 per ounce</a>.
<a href="http://www.forbesafrica.com/investment-guide/2017/12/11/actually-okay-completely-ignore-bitcoins-1400-rally/" target="_blank" rel="noopener">READ MORE: It&#8217;s Actually Okay To Ignore Bitcoin&#8217;s 1,400% Rally</a>
In the long run, says Credit Suisse, the breakthrough far more likely to rile world energy markets is the electric vehicle. If, by 2040, EVs grab a third of new-car market share, the world could require more than 280 gigawatts of additional power generation capacity — or somewhere in the vicinity of 2.4 million gigawatt hours. But again, that’s figuring on current technology. After <a href="http://jes.ecsdl.org/content/164/1/A5019.full" target="_blank" rel="noopener">25 years of improvements</a>, lithium ion batteries are going to keep getting better.
Technology has a way of outwitting the unbelievers. Just a few months ago Jamie Dimon, CEO of JPMorgan, called bitcoin “<a href="https://www.cnbc.com/2017/10/13/jamie-dimon-says-people-who-buy-bitcoin-are-stupid.html" target="_blank" rel="noopener">stupid</a>” and a “fraud.” Last week he said he regretted those comments, saying, “<a href="http://www.foxbusiness.com/markets/2018/01/09/exclusive-jpmorgan-chase-chairman-ceo-jamie-dimon-regrets-saying-bitcoin-is-fraud-but-still-isnt-interested-in-it.html" target="_blank" rel="noopener">The blockchain is real</a>.” &#8211; Written by <a href="https://www.forbes.com/sites/christopherhelman/" target="_blank" rel="noopener" data-ga-track="contrib block byline">Christopher Helman</a>, FORBES STAFF

Bitcoin Mining Uses As Much Power As Ireland. Here’s Why That’s Not A Problem

Will This Battle For The Soul Of Bitcoin Destroy It?

Just 10 years ago, Bitcoin was another office joke in Africa. The rare few who took it seriously have made millions.
&#8220;One year and seven months ago. November 2015. That was the month I started with R3,500 ($260) and now it&#8217;s worth R37,000 ($2,800). A Bitcoin was $260. Exactly one year later that Bitcoin was $900. It grew over 300%. Today it&#8217;s $2,800.&#8221;
This was the moneymaking turning point for communications and marketing employee Shireen Ramjoo who, at the age of 32, was so taken by Bitcoin she left her job in the bank to start her own consultancy, Liquid Crypto-Money.
From humble worldwide beginnings Bitcoin, a digital currency, otherwise known as cryptocurrency, was born from blockchain technology – a mass linking of computers. The midwives are an estimated 5.8 million users generating a market value of $27 billion, which represents a level of value creation on the order of Silicon Valley success stories like Airbnb, according to the 2017 Global Cryptocurrency Benchmarking Study by the Cambridge Centre for Alternative Finance.
The impact of Bitcoin has been compared to the day paper money replaced gold and silver. It is so new that like there were no computer technicians before computers, there are few Bitcoin experts, more educated guessers.
Bitcoin is the tip of the iceberg when it comes to blockchain technology. Many financiers argue it will transform the world money system and maybe be the next dotcom-style boom in Africa. Up for grabs are billions more as peer-to-peer networks spark new business platforms and threaten to wash away established business practices that have been around for centuries.
&#8220;The first time I heard about Bitcoin, I had to write a press release for Standard Bank. It must have been early 2012. At the time I didn&#8217;t understand it, it just went over my head. I thought it was too technical. After I left the industry I wanted to be my own boss. I was looking for an opportunity and came across Bitcoin,&#8221; says Ramjoo.
She has made a business out of educating clients on Bitcoin, blockchain and cryptocurrency – topics that leave many baffled.
&#8220;We are in an evolution of money here. What people don&#8217;t realize is when the internet first started some governments were against it. As more countries started adopting it, more countries got involved. That&#8217;s the same phenomenon happening here,&#8221; says Ramjoo.
&#8220;We keep hearing of [blockchain] from a more technological point of view. Remember the topic of money is social&#8230; when you understand that this is actual money that you can use – I can go and buy bread and put petrol in my car – then you start wanting to find out more.&#8221;
Ramjoo&#8217;s venture is just one small example the business generated by the rise of this cryptocurrency. Since Bitcoin, more than 800 cryptocurrencies have blossomed in this unregulated market.
<a href="http://www.forbesafrica.com/homepage/2017/06/27/cash-falling-fashion-will-disappear-forever/" target="_blank" rel="noopener">Cash is falling out of fashion &#8211; will it disappear forever?</a>
So what is blockchain and bitcoin? 
When you transfer cash your money goes through the bank to another person. The bank, who acts as a central mediator, charges you a service fee and makes a record of the transaction.
Until recently, the bank was the only keeper of these records, which in turn is proof of your transaction. This is called the ledger system.  The process of verifying the information takes days and also means banks are able to dictate the cost of these transactions.
Blockchain short-circuits the ledger system in the blink of an eye, by decentralizing it. In 2008, a paper published under the alias Satoshi Nakamoto suggested instead of your transaction being in one single computer server at the bank, you could store a transaction on thousands of computers around the world at the same time – rent-a-crowd worldwide.
&#8220;There are a whole lot of people logged onto this network and confirm all these transactions all day long. What do they get as a reward for it? The answer is Bitcoin. The reason why Bitcoin exists is to reward these people that make their computers available to store data and to become a world super computer that looks over transactions,&#8221; says Ran Neu-Ner, Johannesburg entrepreneur and Co-Founder of the Creative Counsel.
<a href="http://www.forbesafrica.com/cover-story/2017/09/04/emperors-new-coins/" target="_blank" rel="noopener">The Emperor&#8217;s New Coins</a>
Not only does this mean there are literally millions of back-ups, so that you cannot delete the transaction should the bank be hacked, but also the bank is no longer needed to make the transaction. In effect blockchain cuts out the middleman making all the rules, all the money and protecting your privacy.
&#8220;The Bitcoin isn&#8217;t important. The piece of tech that&#8217;s important is the blockchain that gets tech around the world to become a super computer to transfer money to store contracts or whatever else,&#8221; says Neu-Ner.
Imagine a world where people go from place to place in driverless cars, where there are no stop streets, or traffic lights, and machines decide how fast you get to your destination. If you can dream it, Neu-Ner can see it.
&#8220;Think 10 years from now, when there are only driverless cars on the road. You don&#8217;t have to have anything on the roads created for human nature.&#8221;
&#8220;Imagine the scenario: we&#8217;re driving in driverless cars, we both need to get to work. Your car is in front of my car. You want to pass, so you would normally flash your car’s lights. But in a driverless car you&#8217;re not able to flash lights at each other and say move over.&#8221;
The solution will be for driverless cars to set up smart contracts and you&#8217;ll pay in [cryptocurrency].
&#8220;The guys who are working on driverless cars are working on that blockchain right-of-way system right now.&#8221;
&#8220;The keyword when you are thinking about the blockchain is decentralization… Just keep asking yourself, if something is centralized, how is it going to be disrupted? Because it&#8217;s going to be disrupted. It&#8217;s a new economy, where everyone who contributes earns their fair share in tokens,&#8221; says Neu-Ner.
Trading and spending   
Because it is an international currency, the Bitcoin, as well as the world, is your oyster. You can travel the world by spending Bitcoin. In Japan, for instance, over 200,000 stores now accept Bitcoin.
This is how it works.
While on the way, a Bitcoin can be purchased on exchange sites when you are starting out. All you need to do is download an app, load up some cash and then start buying. Some financial brokers will even purchase Bitcoin fractions on your behalf.
The exchanges vary but we&#8217;ve found bitcoinzar.co.za offers a number of companies that will accept PayPal, your credit or debit card, and person-to-person. There is even a BTM (bitcoin ATM) at a business called Metroman in Kyalami, Johannesburg, that accepts rand in exchange for Bitcoin.
It is even possible to get your salary in Bitcoin; it&#8217;s as simple as a shopping cart on an online store.
There are, however, pitfalls. You must research the apps and look for realistic returns when investing in cryptocurrency, especially ones you are not familiar with. Schemes, such as Pipcoin, offered high returns of 35% a month and many fell for it.
&#8220;Millions were invested in it and many lost money, because they couldn&#8217;t tell it was a scam. It was plugged as the coin of Africa. So if you don&#8217;t understand how coins are generated, you won&#8217;t know how these schemes operate,&#8221; says Ramjoo.
Bitcoinzar.co.za also recommends you don&#8217;t leave your Bitcoin on an exchange. Hackers know that exchanges are mostly honey-pots, with private user information, and, more importantly, Bitcoin that can be instantly stolen and transferred away to an anonymous Bitcoin wallet.
&#8220;People are losing their money very quickly. They are believing that if they buy into this hype today, tomorrow I&#8217;ll come away with a lot of money,&#8221; says Neu-Ner.
If you are looking to invest, ensure you have a Bitcoin/cryptocurrency wallet where you can keep your data offline and private. You should always question the authenticity of these wallets and the company should be transparent.
It is even possible to mine you own Bitcoins, although this method of earning is considered to be going out of date. At the current rate of exchange, you would be spending more money on equipment and electricity, unless the price escalates substantially.
&#8220;You can compare it to when the internet first came and emails. The whole process of us writing a letter, going to the post office, then waiting for the letter to get to the person. When the email came, the postal service became a third party, and not being used as much as we used it before,&#8221; says Ramjoo.
Banks are transforming
Africa is looking at adopting blockchain-based currency. In February, the South African Reserve Bank said it is open to issuing a national digital currency, which would likely be based on blockchain or distributed ledger technology. Senegal is set to roll out its eCFA, a digital version of the West African franc, later this year, and there are even plans to extend distribution across the West African Economic and Monetary Union (UEMOA).
&#8220;There is going to be a new generation for banks. We are starting to see it play out in the market – governments starting to issue out their own cryptocurrency. Tunisia was the first country in the world to have its own government-issued digital currency… Some people are old school and will keep their money in the banks. But the bank of the future will not be the same as it is now,&#8221; says Ramjoo.
This is just the beginning of a new system that will transform the world and make billions in the process. Many people don&#8217;t understand what&#8217;s happening; those that do will likely become even richer.
<h2>Coin Collection?</h2>
Cryptocurrency, such as Bitcoin, is generated in the form of data strings. Only computers can solve the complex mathematical equations. For every completed equation, a coin is created and the coin that follows requires more data and processing power to add to the string, which in turn keeps a record of every transaction ever made.
&#8220;Bitcoin is not a company, nor does a single person or organization issue or control Bitcoins; therefore, it has no central point of failure. For this reason, nobody can inflate the currency supply and create hyperinflation crises, such as those that occurred in post-World War I Germany and more recently in Zimbabwe. In 2008, the government of Zimbabwe printed so much of its currency that in a single year, a loaf of bread increased from $1 to $100 billion. In both cases, any savings that people had in the form of national currency were completely destroyed.&#8221; &#8211;  extracts from Bitcoin for the Befuddled by Conrad Barski and Chris Wilmer
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A previous version of this story stated that there are two licensed exchanges in South Africa. This was incorrect and the article has been updated.

Tag: blockchain

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Bitcoin Mining Uses As Much Power As Ireland. Here’s Why That’s Not A Problem

Will This Battle For The Soul Of Bitcoin Destroy It?

Bitcoin, Blockchain And Billions