Cryptocurrency mining has become a semi-legal business that poses a security threat around the world. But there are so many big fish in troubled waters it is hard for them to stay in the shadows anymore. Here we will talk about the trends that should change this market in the future.
The crypto industry is an alluring and coveted world of easy profits, an El Dorado and Klondike of our day. It seems to the miners that all they need is the proper hardware. This ease, the novelty of the industry, being unregulated and unclear for a wide audience, often gives rise to the illusion of simplicity and irresponsibility. As a result, there is a variety of “gray” or even “shadow” cryptocurrency mining schemes that have flooded the industry in recent years and have begun to threaten infrastructure security.
In Troubled Water
Shadow mining is divided into two main types. One is mining using software that can exploit the resources of websites, or act like a Trojan virus, overloading the victim’s PC processing power. And the second type is the theft of electricity for crypto farms, or the consumption of electricity on an industrial scale while paying for it at household rates.
Almost every day there is news about crypto farms accidentally discovered in garages, garden houses somewhere in the middle of nowhere, or even in a police station. Usually, their owners illegally use other people’s hardware or illegally connect to the power grid. These farms often produce abnormally high indoor temperatures and extremely high power consumption on the site. Among such semi-amateur initiatives, the more powerful projects stand out.
So, employees of the nuclear power plant in the Yuzhnoukrainsk city, Mykolaiv region of Ukraine, secretly set up a farm at the station and mined cryptocurrency until they were detained by the SSU in 2019.
In 2021, the largest crypto farm in the country with over 7 thousand devices was discovered in an abandoned factory in Tehran. It had a direct impact on the electricity shortage in the capital of Iran, consumption was about 4% of the entire state. In total, over 45 thousand mining rigs were confiscated in Iran in 2021. According to experts, at the peak of their production capacity, Iranian crypto pirates mined 4.5% of all Bitcoin mining in the world.
When the Entire Country is Mining
But in the case of Iran, there is a nuance — miners could connect to the power grid legally. They became a threat to the power industry of the country precisely because of the total scale of electricity consumption. Also, most of them used government subsidies for energy, while crypto mining is beyond household consumption. The same situation is now observed in one of the regions of Russia.
Cheap electricity in the Irkutsk region has helped turn the region into a center of Russian mining. As a result, the entire power grid of the Irkutsk region is experiencing overloads and operates under conditions of increased emergency risk. Both individual small miners and large investors are taking advantage of the price benefits.
While the first ones, as elsewhere, tend to operate illegally, the latter are entering the Irkutsk region officially for mining and work on an industrial scale. As an example, at the end of 2020, a one-off shipment of mining equipment with a capacity of 79 MW and an estimated value of $40-60 million was brought to this Russian region. It took 14 trucks to transport this batch of 20,000 devices.
New Application of Power Plants
Being in the shadows, it is possible to mine on the scale of a few dozen machines. But big business, after seeing the potential of investing in cryptocurrency, needs more transparent schemes. Now the industrial production of Bitcoins and altcoins has become a trend that will influence events in the crypto market in the near future. This will certainly lead to a devaluation of the efforts of small miners. We are already seeing this trend.
Mechanicville Hydroelectric Plant, New York, USA, is one of the oldest power plants still in operation in the country. Its original equipment has been in operation since 1897. It’s 7 turbines, with a total capacity of about 5 megawatts. Starting in 2021, some of that electricity goes to bitcoin mining.
Albany Engineering, the company that owns the plant, uses only a fraction of the generated electricity for mining so far. Every week the mined funds are sold on the exchange. As the owners of the farm note, they earn about 9 cents per kilowatt-hour, while the sale of 1 kilowatt-hour to ordinary consumers brings income three times less, just three cents.
In the second quarter of 2022, a crypto mining facility is expected to launch at a nuclear power plant in Salem, Pennsylvania. Talen Energy plans to build a hyper-scale data center on undeveloped land next to the plant, which will be powered by cheap, reliable, and carbon-free energy from the NPP. Customers of this facility can expect 300 MW of power after the full launch of the project.
Mining steps out of the shadows, becoming an alternative to traditional businesses, where things are going to be serious. It should be expected that the big players in this field will be followed by regulatory methods designed to normalize this game with and without rules.