Cryptocurrency "eats" renewable energy, triggering a mining boom in Japan

Bianews reported on April 21 that according to Nikkei News, virtual currencies are "eating" renewable resources. Japanese and foreign companies are using renewable energy to decrypt codes on computers and conduct virtual currency trading licenses (mining) to cope with the rise of virtual currencies.

According to statistics compiled by the International Renewable Energy Agency (IRENA) this month, renewable energy power generation at the end of 2017 increased by 8% compared to 2016. Considering the burden on the environment, mining companies are likely to use renewable energy in the future and promote the development of renewable energy.

GMO Mining in Northern Europe

In the slender building standing on the snowy plains of Northern Europe, the semiconductor cooling fans are running day and night, making bursts of noise. Japanese Internet giant GMO uses thousands of special machines to mine Bitcoin and Bitcoin Cash. GMO has set up such equipment in two Nordic countries, and can earn 500 million yen in 1 to 3 months.

Mining machines need to process complex calculations to decipher the encrypted virtual currency system. Miners who quickly solve the puzzle can approve and record the transaction data of the virtual currency in the "blockchain (distributed ledger)" shared by the network, and can receive newly issued virtual currency as a reward for the recording work. For example, in principle, Bitcoin has an encryption problem every 10 minutes, and the reward is about 1.5 billion yen per day.

"The investment in the machine can be recovered in a few months" (an industry insider) said, and GMO plans to invest 38 billion yen and join SBI Holdings and DMM.com (Tokyo Port) in December 2018. It also intends to join banks and securities companies whose profits have deteriorated due to low interest rates.

Initially, mining was very popular in China, but the popularity has declined due to the government's tightening of regulation on virtual currencies. As a result, the base has been moved to countries such as Northern Europe, Russia, and Canada, where machines are cooled by external air. GMO is based on the policy of using renewable resources with little environmental burden, and has placed its base in Northern Europe, where hydropower, wind power, and geothermal power generation are prevalent.

The appreciation of virtual currencies has made it possible to mine in countries with high electricity costs. Kumamoto Electric Power (Kumamoto Prefecture), a regional new power company, plans to provide mining facilities using solar power from July. In February, DMM opened Japan's largest virtual currency mining facility in Kanazawa City. The area of ​​Hokuriku Electric Power Company, which has a high proportion of hydroelectric power generation in Hokuriku, is a region with relatively cheap electricity costs in Japan.

According to Morgan Stanley estimates, 0.6% of the world's total electricity consumption will be used for mining in 2018, equivalent to Argentina's annual electricity consumption. And by 2025, it will be comparable to the amount of electricity required for electric vehicles (EVs).

In Iceland, mining electricity is higher than household consumption

In February, the Icelandic Power Company proposed the view that "the continuous increase in mining facilities may lead to power shortages", which has aroused widespread discussion. Almost 100% of Iceland's electricity is provided by hydropower and geothermal energy. Miners value Iceland's cold climate, which is conducive to the operation of high-speed network equipment, so a large number of equipment have poured into this island country with a population of only about 340,000. It is expected that the electricity consumed by mining equipment in 2018 will exceed the total electricity consumption of ordinary households.

The virtual currency exchanged on the Internet has gradually begun to affect the power supply in the real world. Not only in the financial world, but also in the power-related issues and the investment in semiconductor equipment used in mining, it has gradually become a problem that cannot be ignored.