Bitcoin mining: everything investors need to know

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The digital mining industry has evolved dramatically. With the growth of the network and the increase in usage, the computing power required to solve cryptographic problems has increased significantly.

“The current state of the mining industry has evolved to the point where we have this great computing power, but the increases are diminishing – so miners will have to focus on other areas of their business to generate this profit from Bitcoin. . They will need to pay more attention to energy costs, financial planning and diversifying their businesses, ”said Ed Lopez, Managing Director and Head of ETF Products at VanEck during a recent roundtable webinar sponsored by VanEck on the evolution of blockchain.

CPU to ASIC

Many switched from CPU power to GPU, graphics processing units, in 2010 because it is more powerful and can do multiple math calculations at once instead of consensual. This moved to an even more powerful type of processing unit, and then in 2013 we saw the ASIC unit, which are application-specific integrated circuits that are dedicated machines and processors that incorporate both the hardware and software components needed to perform the complex calculations related to Bitcoin mining.

“To give you an idea of ​​how powerful they are, ASIC units are 100 billion times faster than the average processor in 2009, which is just amazing. And you have companies that have evolved in this space filled with data warehouses. these units. It has become a legitimate business, especially as the price of cryptocurrencies and Bitcoin, in particular, has increased. This has given them the opportunity to be profitable, “said Lopez.

Bitcoin mining and energy efficiency

“There seems to be a lack of understanding that we can actually ban Bitcoin mining because it consumes too much electricity, and I just want to point out that this is a very small percentage of the energy. world, which is actually electrified … so even if you tell these Bitcoin miners that they can’t use electricity anymore, they can just go and tap into the remaining 80% of the world’s energy that isn’t connected to the power grid, ”said Matthew Sigel, head of digital asset research at VanEck.

Just weeks after China cracked down on Bitcoin mining over environmental concerns, we see commercial mining companies making deals in Argentina, Canada and Texas to redeploy this capacity.

“There will always be a local government or local power company that has too much energy and is looking to sell it to a flexible source of demand. You can’t uproot an iron mine and you can’t move a copper refinery, but a Bitcoin mine can go anywhere in the world where there is stuck energy and instantly monetize it to spend it. for public welfare, ”Sigel said.

Bitcoin mining is changing, but its very flexibility supports the strength of the network and will boost the adoption of renewable energy as Bitcoin miners seek out the cheapest sources of that renewable energy.

Watch the full webinar presented by VanEck to learn more about the evolution of blockchain and how the base of crypto is changing fintech:

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