Zero electricity for Bitcoin mining and the possibility of the Internet of Things

Twenty-one recently announced that it will produce high-tech bitcoin mining chips together with many powerful chip manufacturers, claiming that it will embed bitcoin chips into the Internet of Things, and use toasters, mobile phone chips, TVs, etc. to mine bitcoin. This caused an uproar in the industry. Pumpkin Zhang ridiculed this move as stealing electricity. The famous mining analyst Ahr999 also wrote an article to analyze the future trend of bitcoin mining. He believed that if it is true as Twenty-one said, the computing power will inevitably be more concentrated, but the concentration of computing power does not mean the end of decentralization. He gave a detailed and incisive explanation of the concept of decentralization and the concept of concentrated computing power.

So, what form will mining take in the future? I am not a talented person, but I would like to share my personal opinion here. Whether it is right or wrong, you are welcome to criticize it.

1. Electricity, electricity, electricity

Ahr999 proposed that in the future, Bitcoin mining will definitely be inclined towards lower and lower electricity costs, and this view is very much in favor of the foreigner. He also mentioned that Bitcoin mining is currently mainly concentrated in the southwest region with rich hydropower resources, and has gradually changed from household electricity of 50 cents to 1 yuan to super cheap 20 cents electricity, and is expected to develop towards zero yuan electricity in the future.

I would like to add to 999's point of view, because zero-yuan electricity is indeed possible. I am currently in the front line of China's wind power industry, dealing with large wind turbine equipment every day, and supervising the construction of several photovoltaic power plants on the way, so I have a slight understanding of the power resources in the northwest. According to the research of the Wind and Solar Energy Resources Assessment Center of the China Meteorological Administration, the potential development of onshore wind power in my country is 2.38 billion kilowatts, and the theoretical potential energy of photovoltaic power can be as high as 1.7 trillion tons of standard coal. These energy reserves are being watched by the state, and now China is in a period of economic downturn as a whole, so it has to find some excuses to stimulate domestic demand, and is trying every means to lure various companies to invest in building factories and sell electricity to the power grid. Under this general trend, the National Development and Reform Commission has successively approved 17.8 million kilowatts of photovoltaic approval (see "Notice of the National Energy Administration on Issuing the Implementation Plan for Photovoltaic Power Generation Point Shooting in 2015") and 34 million kilowatts of "12th Five-Year Plan" wind power project planning (see the National Energy Administration's "12th Five-Year Plan" wind power approval plan).

The above are just new approvals, so how much new energy is there? Let's put it this way, the train line from Lanzhou to Guazhou is hundreds of kilometers long, and there are big windmills all along the way, which is a spectacular scene. With such a large amount of new energy, guess how much the actual utilization rate is? Guazhou is a type of wind power supply area, and the abandoned power is as high as two-thirds! The photovoltaic power plants supervised by Yike also have very small amounts of power connected to the grid. One 50MW photovoltaic plant even only connected 9MW. And in most cases, the power plant also requires grandpa and grandma to contact the provincial dispatching center to smooth relations and generate more electricity.

If these abandoned wind energy sources can be successfully used for Bitcoin mining, there will definitely be as many mining machines as possible.

So the question is, why do we only hear that Bitcoin mining machines are used more in hydropower, but less in new energy such as wind power or photovoltaics?

First of all, we need to clarify the current status of resources. Wind power and photovoltaic power are not high-quality energy sources for Bitcoin mining machines, because this type of energy itself is extremely unstable. It depends on the weather. There is electricity only when there is wind and light. If it is to be used on Bitcoin mining machines, it is necessary to establish voltage regulation equipment such as SVG reactive power compensation. It is also necessary for the mining machine to have relatively good quality and be able to operate for a long time under conditions such as repeated power outages and power-ons. At the same time, there must be a set of corresponding software and hardware equipment that can cut off the connection with all Bitcoin devices in time when the power grid needs to generate full power, ensuring that the normal power supply of the state grid is not affected in any way.

Secondly, Bitcoin has a very bad reputation. Yike racked his brains to communicate with the power plant, trying to get some free electricity (those people were stealing electricity from the State Grid like crazy, and some people in small power plants stole electricity directly from transformers. This is what the saying goes, "rely on the mountain to eat the mountain"). Anyway, it's free money, so why not try it? As a result, no one in the factory understood it, and directly rejected Yike with the reason that "MLM is easily investigated and dealt with by the state." Yike said that this was not a MLM, but was "earnestly taught" by a group of people that even if it was not a MLM, it would be better not to touch such uncertain things. It really made me sad and angry.

Therefore, this kind of thing is a long and arduous task, and it is absolutely impossible to accomplish it by relying on the power of a few individuals or small companies. Large enterprises must be involved to ensure stable investment and no legal risks, so that these electricity resources can be used properly.

Don’t count on Chinese companies. Chinese people are too lazy to even move a finger. They just want to make money lying down, not to mention developing new hardware and software equipment that match new energy. They can only wait for foreign companies to successfully develop these things, make a lot of money, and completely establish the "successful model" and successfully attract the world's attention. Only then will the "knowledgeable people" in China copy and imitate them.

In the short term, with Bitcoin prices so low, the possibility of using new energy is very low, and the time span of intervention will be very long.

However, Bitcoin has been developing silently. As long as mining continues, based on the profit-seeking nature of capital, these new energy sources will one day be used as zero-yuan electricity.

2. Internet of Things?

Twenty-One is planning to embed Bitcoin chips into various household appliances to realize the Bitcoin Internet of Things. Is this idea realistic? In theory, yes!

However, it is not so simple to prove it in practice. First of all, if it is large household appliances, such as washing machines, refrigerators, televisions, air conditioners, etc., the power consumption itself is not low. Look at all the brands on the market now, which one does not advertise "energy saving, energy saving, super energy saving"? If it is not energy-saving, it is embarrassing to greet users! If you add a Bitcoin mining chip, the energy consumption will not be reduced anyway... unless...

Directly sell the mined bitcoins to give money to users or pay their electricity bills.

Under the current circumstances, it is simply unrealistic to expect novice users who know nothing to accept Bitcoin. They only believe in legal currency, and will always try to get every penny of profit. At present, the income from mining is still higher than the electricity bill, so this method, which increases energy consumption but allows users to save money, will be recognized.

The model is: mining coins are sent directly to a company - the company sells part of the coins - and part of the money is sent directly to users (or paid for electricity).

This model has actually been reflected in the routers of some manufacturers, such as Youku Router, which has a golden signboard of "idle traffic can be exchanged for money", and many users are flocking to it. Black eyes, white silver, who doesn't love money? The advertisement should also be straightforward and simple, directly indicating "this thing can give you more money on top of compensating for electricity bills". Only this simple and convenient way of making money can attract novice users.

As for the selection of electrical appliances, Yike also has his own opinions. The "toaster" mentioned by 21st Company is really a bad choice. In Yike's opinion, the best appliances to embed Bitcoin mining chips are refrigerators, routers and air conditioners. These three household appliances will experience long-term operation. At the same time, because they are all large items, it is not particularly difficult to add networking devices, and they can be involved in the mining environment under the condition of continuous and stable power consumption. Imagine that your refrigerator is bound to a bank account and can mine money for you every day. What a wonderful scene it is?

However, there is another twist here. Don’t expect this in China, because China’s “Five-Ministry Regulations” clearly stipulate that companies are not allowed to set up Bitcoin-related accounts. Therefore, no electrical appliance manufacturer can sell coins and return money to users. This is a dead end. Just like using new energy above, we have to rely on foreign manufacturers, let them develop successful products first, import them to China and sell them well, occupy a certain market share, successfully attract the attention of domestic electrical appliance companies, and finally force these domestic electrical appliance companies to find various ways to enter the Bitcoin field.

Let’s talk about mobile phone chips. In theory, mobile phone chips can be used for mining, but it is too difficult to actually mine. Nowadays, mining with computers is almost fruitless, let alone mobile phone chips.

It is not ruled out that new technologies in the future will be able to improve the mining efficiency of chips, but the problem arises again. The power consumption and heat generation problems of smartphones are serious in themselves, and adding a mining program is tantamount to courting death.

Yike believes that it is only reasonable to mine when the phone is charging. Because now the following scenario often occurs: someone plugs the phone into the power supply when going to work to ensure that the power is sufficient for the day; or plugs the phone into the power supply before going to bed to charge it at night. Mining in this charging situation will not cause obvious battery power consumption, nor will it cause serious heating problems (because the hand does not touch the phone at all). The data traffic of the mobile phone itself can complete the transmission of Bitcoin mining data packets. As for the benefits... some domestic Bitcoin companies can indeed use Bitcoin to recharge mobile phones, but according to the current situation, how long will it take to make up the number? Yike also feels a little sad.

The same situation has also occurred. It is very unrealistic to rely on the Chinese uncles in China. It is better to look abroad for this kind of research and development...