A new green energy company claims to have the answer to a problem plaguing the digital currency industry. As cryptocurrencies like bitcoin continue to grow in price and popularity, they have put larger and larger demands on the world's energy supply. Although the currencies are digital, they nonetheless require massive amounts of electricity and computing power to mine.
The surge in electricity consumption has caused some concern among developers and investors alike, particularly at a stage when digital currencies seem to be close to breaking through into the mainstream worlds of investment and business. Now, an Austrian company claims to be able to use hydropower in order to fuel the energy needs of the industry.
HydroMiner GmbH Raised $2.8 Million
The company, called HydroMiner GmbH, raised about $2.8 million in funds through an initial coin offering in November, according to a report by Bloomberg. The startup plans to use the cash to install high-powered computers at hydropower plants. The result will be that the company will be able to utilize the energy produced at those plants to mine for new digital currencies, reducing both costs and pollution as a result.
According to co-founder and CEO of HydroMiner Nadine Damblon, "a lot of people are worried about the high energy consumption of cryptocurrencies. It's a huge factor."
This isn't surprising, given that the electricity used by the computing systems supporting the blockchain technology which undergirds bitcoin has risen by 43% just since the beginning of October 2017.
For perspective, that total usage, which amounts to about 28 terawatt-hours per year, is more than the national power usage of the country of Nigeria, with its 186 million inhabitants. What's more, much of the energy being used is produced with fossil fuels.
Miners Face Increasing Barriers to Profitability
One other reason that hydropower may be beneficial is the steep slope of profitability that miners are experiencing. According to analysis by Citigroup, miners may need the price of bitcoin to reach as little as $300,000 per coin by 2022 in order for the mining operations to remain profitable. This estimate is based on current growth rates for mining and for the electricity consumption associated with it.
In the face of these steep barriers, HydroMiner and other companies like it are likely to find many strong supporters in the mining community. Damblon explains that the company "mine[s] only with renewable energy. There will be more blockchain adoption if the energy problem can be handled this way." As bitcoin continues to climb in price, alternative energy sources for mining may become increasingly desirable.