Decentralization is the core spirit of Bitcoin. In this article, I will explain the importance of decentralizing Bitcoin mining with a wide range of small-scale mining.
Competition is fierce in the future.
Large Bitcoin mines have economies of scale advantages and can be installed in jurisdictions with the lowest electricity costs. Large mines play an important role in scaling hash power, but having large and small mines is important. Currently, incentive structures support the relative concentration of the mining industry in large mines.
If mining is too centralized, some risk vectors will work.
- 51% attack: It is easier to force 100 large mines to cooperate or shut down than to force 1 million small mines to cooperate or shut down.
- State / Government Compliance: Large mines are subject to government policy and political pressure.
- Anti-vulnerability: The more centralized, the less robust the network. In order for Bitcoin to become the base layer of the global monetary system, it must be able to withstand the threats that may arise in the foreseeable future. Events such as widespread power outages, world wars, the collapse of the world economy, coordinated EMPs or nuclear attacks can lead to denial of service or 51% attack opportunities.
Not democratized: Bitcoin is for people. Miners and nodes work together to protect the blockchain and “vote” for changes in core functionality. By controlling miners and nodes individually, more people will be able to control the “voting” of Bitcoin into the future.
In addition to the pressure from large mines, small mines must also compete with the simple economics of reducing Bitcoin rewards over time. Staying competitive in the long run is not an easy task as network hash power increases and block rewards decrease.
Small mines need to find areas where they can compete among much larger industrial mining farms operated by large corporations. And there are two important advantages that small mines can employ to remain competitive over large mines.
The first is the establishment of grid stabilization through dynamic power reduction. Power plants are a large and costly business. They should be sized to meet the peak demand of the jurisdiction in which they serve. Otherwise, a power outage will occur. Peaks occur only in a small part of a particular time frame: hours of the day, or during extreme weather. For the rest of the time, much energy is lost because the plants cannot scale up and down fast enough. Because miners can turn power on and off quickly, Bitcoin mining is in the best position to scale up during low demand times and scale down during peak hours.
Some large mines are currently doing this, but how can small miners do this? This is the way I am doing.
Scaling Home Bitcoin Miners with Energy Peaks
Here in southern Nevada, energy usage peaks in the summer afternoons, with heat above 100 degrees Fahrenheit forcing the mass use of air conditioners in homes and businesses.
To encourage off-peak use, an opt-in power plan is offered by your local power company. These rate plans are often referred to as service hours (TOS) or hours of use (TOU). Instead of always paying $ 0.11 per kilowatt hour (kWh) throughout the year, the rates from 1:00 pm to 7:00 pm on weekdays from June to September are always $ 0.36 per kWh. It will be $ 0.06 per kwh. .. This infographic provides a clearer breakdown of this rate.
Before using a solar panel with battery backup, optimize your energy usage as follows:
- Use home automation to automatically shut down Bitcoin miners during peak hours
- Precool the house a few degrees before peak energy expenditure and then increase the peak air conditioning settings to minimize peak air conditioning usage. Basically, the house acts as an energy battery for cooled air. In the figure below, you can see that the air conditioner rarely works during peak events.
Source: Screenshot of the author
The addition of Tesla Solar with Powerwall battery backup allows for further optimization with net metering billing (net metering is the power used by the grid minus the power supplied to the grid. Take things into account). Utilities credit customers for surplus solar power supplied to the grid beyond the electricity used at home (credit rates also vary by TOU).
In my case, the utility company pays me $ 0.28 per kWh For power, it supplies the grid during peak hours. Therefore, the Tesla app allows you to configure these settings and automatically push / pull from the source to optimize power savings.
Source: Screenshot of the author
Basically, I consume as much power as I need during off-peak hours, and during peak hours the battery supplies the house with all the power demand (up to 10 consecutive kilowatts with two Powerwall batteries) and all the solar energy generated. Returns to the grid.
As you can see from the screenshot of the Tesla app on June 7, 2022 above, power is consumed from the grid during off-peak hours and solar energy charges the battery. Then, during the peak event, the battery powers my home’s energy load while all the PV is redirected to the grid and sold at the highest possible rate.
In effect, my house acts as a small power plant during peak hours and as an energy consumer during off-peak hours.
This has the effect of providing the utility provider with what they need. In other words, the power supply during peak consumption increases, and the power consumption during off-peak consumption increases. It’s also in my interest to be credited at a high rate of $ 0.28 per kWh for all electricity supplied during peak events, while only consuming low cost electricity.
This one-day example can be categorized as follows (assuming only net usage for comparison):
- Non-TOU rate: 98.4 kWh, $ 0.11 per kwh = $ 10.82
- TOU Net Metering: 111.3kWh at $ 0.06 per 1kWh- $ 0.28 / kwh at 12.9kWh = $ 6.68- $ 3.61 = $ 3.07
- Effective rate: $ 3.07 / 98.4 kWh = $ 0.03 per kWh
As you can see, for me as a consumer, there are significant cost benefits. Instead of $ 0.11 per kWh, you are effectively paying $ 0.06 or $ 0.03 per kWh, depending on the season.
Utility TOU options are not available in all jurisdictions, but many utility providers may need to level peak demand. Once utilities can dynamically interface with miners to instantly reduce demand, new tariffs can be implemented to take advantage of this scenario.
Even if you don’t have a solar and battery backup system installed, small miners can use dynamic power scaling to scale down mining during peak events and scale up mining during off-peak events. This can be achieved using a microcontroller and a home automation controller that subscribe to live power grid events. This will increase or decrease the minor hash rate accordingly.
Warm your home with Bitcoin miners
The cost savings of this approach are even more pronounced when combined with heat mining, the second important advantage available to home miners.
Every device that consumes electricity emits 100% of its energy in the form of heat, along with its main purpose (light generation, hashing, etc.). The 3,400 watt Bitcoin miner outputs essentially the same wattage in the form of heat. With some innovation and engineering, this heat can be redirected and integrated into heating homes, pools, water heaters, greenhouses and more.
The double-payment energy already spent on heating not only significantly improves ROI, but also improves the perception of the mining industry to the general public, but requires a deeper and simpler integration into heating equipment. Yes, currently under development (checkout) This list For more information, see Example of Home Bitcoin Minor Building System for Reusing Heat).
Dynamic power scaling to meet the demands of energy grids along with heat mining Must To continue to protect the Bitcoin blockchain with highly decentralized small mining.
Dynamic power scaling based on grid demand is possible on a small scale. And by combining this with heat mining, small-scale mining operations can benefit the foreseeable future.
I am working to modularize and simplify these control systems for more miners.If you’re a home miner using any of the techniques I’ve mentioned here, or if you’re a miner interested in learning more, follow us and join the Twitter conversation. @ TechEngineer21..
This is a guest post by TechEngineer21. The opinions expressed are completely original and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
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