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Black Mountain Energy investigating Bitcoin mining at Kimberley site targeted for fracking

A United States-owned resources company hopes to use “flared-off” gas from fracking wells to mine cryptocurrency in a process it says will curb emissions.

Black Mountain Energy revealed the plan in a statement to the ASX last week, which will see methane, a usually burned off fracking by-product, power “cryptocurrency servers”.

The company is investigating options to roll out the project at its Valhalla Project fracking site in the Kimberley’s Canning Basin in conjunction with Wyoming-based start-up, Highwire Energy.

Cryptocurrency mining uses computer servers to solve cryptographic algorithms, which validates transactions and maintains a shared record of transactions. The so-called miners are automatically rewarded with a portion of the digital currency. 

Flaring is a process where excess natural gases are burnt off during or after the resource extraction process.

Company touts benefits

In an interview with finance website, The Market Herald, Black Mountain Energy’s chief executive officer Rhett Bennett said the project would use gas left over from fracking to power the servers.

Posted , updated 


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New York Bill Aims To Limit Fossil Fuel Energy Use For Crypto Mining

New York Bill Aims To Limit Fossil Fuel Energy Use For Crypto Mining

New York State Legislature has passed a bill limiting fossil fuel energy usage for crypto mining

The New York State Legislature has passed a bill that would impose a two-year moratorium on the use of fossil-fuel power plants to provide energy to miners of cryptocurrencies like Bitcoin, but Governor Kathy Hochul’s office on Monday said she had not yet decided whether to sign it.

Cryptocurrency mining requires a lot of electricity to power computer systems that compete to solve mathematical puzzles to validate blockchain transactions. The miner who solves the puzzle first is rewarded with cryptocurrency.

The State Assembly passed the bill in April and the Senate passed it late last week. The governor’s office said on Monday she was still weighing whether to sign the bill.

“There is a balancing act involved here, very much a balancing act,” the governor said in a statement on Monday. “We have to balance protection of the environment, but also protect the opportunity for jobs that go to areas that don’t see a lot of activity, and making sure that the energy that’s consumed by these entities, is managed properly.”

The bill is part of the state’s effort to reduce statewide greenhouse gas emissions by 85% by 2050.

Cryptocurrency mining operations “are an expanding industry in the State of New York” that “will greatly increase the amount of energy usage” in the state, according to the bill.

To prevent cryptocurrency mining from increasing greenhouse gas emissions, the bill would impose a moratorium on air permit issuance and renewal for an electric generating facility that utilizes a carbon-based fuel and provides energy used by crytocurrency mining operations.


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A Home-Grown Crypto Startup In Haryana’s Rohtak Holds Hope For Future

A Home-Grown Crypto Startup In Haryana's Rohtak Holds Hope For Future

New Edge Soft Sol Pvt Ltd, is a cryptocurrency startup founded by Pardeep Narwal (fourth from left)

Rohtak in Haryana, known as the dairy hub of the country, is nowadays milking (or rather minting) cryptocurrency, using a mining farm with 300+ Graphics Processing Units (GPUs), costing them an electricity bill of Rs 3 lakh a month.  

New Edge Soft Sol Pvt Ltd, founded by Pardeep Narwal, is situated close to the age-old Palika Bazaar of the city, where three engineers man the machines extracting Ethereum 24×7 in different shifts. A three-storeyed building houses their office on the first floor, rigs on the second and accommodation facility for engineers on the ground floor. 

Mining is essentially validating crypto transactions on the blockchain, a public ledger system. It not only validates but also secures the system. Computers all around the globe can do it by Proof-of-Work, which means by solving a complex algorithmic problem. But, this calls for speed and strength of the system. 

34-year-old Pardeep, a gold medalist in M. Tech, started the venture during the pandemic with his wife Jyoti Lamba and college friend Monu Nagar. They not only mine for themselves but also host clients on their machines who want to invest but don’t have the infrastructure.  

This 14-Gigahash data centre consumes 35,000 electricity units which translate into a heavy electricity bill every month. A big turbine installed on their terrace sucks the hot air from the ducts installed above the rigs and another cooler brings in fresh air from outside to maintain the temperature.  

Rig is an arrangement of hardware elements: specially designed motherboard, server, GPUs and Internet connection, required to perform cryptocurrency mining.

One small room attached to the mining farm room is a control unit where engineers monitor different factors of a rig, i.e the client it is working for, temperature, output etc.

“I have studied and been brought up in this city, hence I started the farm here”, said Mr Narwal while replying to a query on why he didn’t set this up in any other metro city like Delhi or Mumbai or for that matter even Bengaluru, known for tech setups.  

But there is a business strategy also behind choosing Rohtak as a location. Rental properties are much cheaper in the city as compared to other Tier-A cities, but the output remains the same as it would be in any other big town. Pardeep has worked on various government and non-government engineering projects and now lends his knowledge for Blockchain integration in government projects. 

In the Union Budget, Centre had announced that crypto mining infrastructure won’t be considered as cost of acquisition, hence would not be allowed as a deduction under I-T Act.  

New Edge Soft Sol doesn’t feel too demotivated by this because they believe in holding their crypto earning from mining and hence realising its benefits over a long period of time.  

Mr Nagar hopes that the Government will make better rules to regulate this space and also align itself with international forces. 

If your question is: can I start mining at home? The answer from their team is a big “Yes”. But, one should have a strategy, crypto and goal in mind. Because you don’t want to spend more resources than what you earn. As the blockchain gets older, the complexity to solve the problems also increases.

That means you spend more energy resources. So, is mining profitable? Mr Narwal answers this by saying, “setup and infrastructure cost is reduced now as the devices are not as expensive as they were five years ago. So the lump sum amount remains unaffected.” 


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What Is Crypto Pre-Mining, And How Does It Work?

When a new crypto project is about to be launched, a portion of its native token is mined as the founder’s and developers’ share. This is done before the tokens are made available to the public through an Initial Coin Offering (ICO), and hence the term ‘pre-mining.’

Pre-mining is a way of rewarding the developers, early investors, and founders for their contribution to the launch of a cryptocurrency. The pre-mining process can be thought of as selling a company stake to its employees before it holds an IPO and goes public. This process leads to value generation of the pre-mined tokens after they become tradable on exchanges.

Many view this as advantageous to the pre-miners as they end up controlling a large share of tokens. They could significantly influence token prices when they trade or hold them.

On the other hand, some consider pre-mining a healthy practice as it helps create a large reserve to support the project through its early stages. Let’s look at it from both angles to get a better perspective.

There are multiple ways in which pre-mining benefits the project:

1. Fair Rewards: Those who invest early in the project are entitled to a certain percentage of the tokens, much like an investor’s stake in a company.

2. Warding off whales: When a sizable share of the tokens is entrusted to investors and developers, whales cannot accumulate large amounts and use them for market manipulation.

3. Reserves: Pre-mining helps create a crypto reserve for the project, which acts as a development fund for future expenses. The reserve also helps when the project experiences financial headwinds and keeps it stable.

4. Community Building: Rewarding users for their early support helps create a loyal and long-standing community, encouraging further participation.

By rewarding the project’s early supporters, developers encourage crypto enthusiasts to get involved in its development from its nascent stages. The practice also coaxes potential investors to do the same for other crypto projects that may need similar support.

Disadvantages of pre-mining:

In the early days of 2017-18, cryptocurrency developers would use pre-mining to allocate themselves a massive portion of the circulation supply before releasing the tokens to the public. They would then use their filled coffers to inflate the cryptocurrency’s price before the ICO. Developers would make large sums of money in the process and then dump all the coins in the open market, thus causing financial distress to all investors.

This led to a growing feeling of mistrust among blockchain users and investors. Since then, pre-mining always comes with a negative sentiment attached to it. Although pre-mining is controversial, it remains a widely practised activity.

Famous cryptocurrencies that came under fire for pre-mining:

1. Ripple: Before the XRP token was made public, 100 percent of the tokens had already been pre-mined. Their total value amounted to $100 billion at the time. It was later brought to light that Ripple Labs founders Bradley Garlinghouse, Christian A. Larsen and Jed McCaleb were in control of 50-70 percent of the total coins in circulation.

When McCaleb parted ways with Ripple in 2014, he dumped over 1 billion XRP tokens in the open market between 2014 and 2019. He ended up making $135 million. But it didn’t stop there. McCaleb sold another 1.2 billion XRP and made an additional $411 million. This eventually turned into a lawsuit between the SEC and Ripple, accusing the latter of selling XRP to realise personal gains — a case whose verdict is still awaited today.

2. Ethereum: This second-generation cryptocurrency launched in 2015 is also known for having pre-mined Ether (ETH). According to Ether Scan, the developers mined 72 million ETH, of which 80 percent (60 million ETH) were released to the public, the co-founders held 10 percent, and the Ethereum Foundation retained 10 percent. This decision also came to be criticised by Matt Odell, a Bitcoin entrepreneur and turned into a Twitter feud at the time.


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How Ethereum’s next big switch could change the crypto mining industry forever

Ethereum plans to do this by shifting from a Proof-of-work model to Proof-of-stake. In today’s column, we take a look at how Ethereum’s new upgrade could change the crypto mining industry forever.

Verifying transactions

Cryptocurrencies use enormous amounts of electricity to secure their networks. This is done via something called crypto mining. Mining cryptocurrency is not just a way of adding or creating new coins. Crypto mining also involves validating cryptocurrency transactions on a blockchain network and adding them to a distributed ledger.

For instance, when you send money to your friend or your family, your bank updates the digital ledger by debiting one account and crediting the other. Blockchain, essentially, is a distributed digital ledger which records every transaction. Every crypto coin you buy or every NFT you mint has to be recorded on the digital ledger. Crypto miners verify and update each record on the blockchain.

However, Crypto distributed ledger only allows verified miners to verify and update these transactions on the digital ledger. And for verifying these transactions, miners are rewarded with crypto coins for contributing their computing resources to the network.

But how does blockchain ensure that only verified crypto miners can mine and validate these transactions? This is possible through Proof-of-work (PoW) consensus protocol. PoW also secures the network from any external attacks.

Problem area

Mining consumes a lot of computing power and resources because of the proof of work algorithm. The idea was first introduced in 1993, as an effective way to combat email spams. However, until 2009 the idea remained largely ineffective.

Satoshi Nakamoto, a pseudonymous Bitcoin creator, realised that this mechanism could be used as a way to secure the Bitcoin Blockchain.

The proof of work algorithm works by having all nodes (devices) to solve a cryptographic puzzle. This puzzle is solved by miners and the first one to find a solution gets the reward. This has led to a lot of competition and situations where people are building larger mining farms.

According to Digiconomist, Ethereum consumes about 112 terawatt-hours of electricity per year, which is comparable to that of Netherlands and more than what Philippines or Pakistan use. A single transaction on Ethereum is equivalent to the power consumption of an average US household for over nine days.

A single Ethereum transaction also equals the energy consumption of more than 1,50,000 Visa card transactions.

In the case of Bitcoin, it’s even higher — 137 terawatt-hours of electricity per year.

The more computational power you have, the easier it becomes to mine a coin. This computational power is also referred to as hash rate.To increase their chances to win further, miners can come together in what’s called mining pools, they combine their hashing power and distribute the rewards evenly across everyone in the pool, ultimately causing miners to use massive amounts of electricity.

This has also made crypto mining centralised. Imagine several big players coming together, combining their hash rate and eventually teaming up to increase their chances of mining a new block and thus collecting a reward.

Small crypto miners are left at the mercy of such big players. To address these issues, a new consensus algorithm was needed that is better than Proof-of-work.

Staking coins

In 2011, a user of a Bitcoin talk forum Quantum Mechanic proposed a new idea of ending competition between crypto miners. This was called Proof-of-stake (PoS).

Rather than competing against each other for a block, PoS uses a process in which one node is chosen randomly to validate the next block.

The terminology is slightly different here. PoS calls it miners ‘validators’. Unlike PoW, where users have to mine a new block, PoS users have to ‘mint’ or ‘forge’ new blocks.

To become a validator at PoS, users are required to deposit a certain amount of cryptocurrency as a stake— like a security deposit. The bigger the amount of stake, the more chances users have to mint a new block. For instance, if a user deposits $100 into the network as a stake, and another user deposits $500, the second user now has a five times higher chance of being chosen to forge the next block.

PoS vs PoW: Which is better?

Crypto miners have the potential to update and verify transactions, and there is a possibility that a transaction that never happened or a fraudulent transaction can be verified as well. This is where the stake comes in. Validators will lose a part of their stake if they approve any fraudulent transactions.

But what happens if the majority of the stake is bought in a network by a single entity, and worst, what if the entity starts approving fake transactions. This is called a 51 per cent scenario. If a single miner or group of miners can obtain 51 per cent of the hashing power, they can effectively control the blockchain. It was first discussed as a weak point of the proof of work algorithm.

On the other hand, Proof-of-stake makes this attack impractical, because users are asked to stake higher than what they receive from the block rewards. So, even if miners acquire 51 per cent of the hashing power, they would lose way more than they would earn for verifying every fake transaction.

It should be noted if a user stops being a validator, the stake plus all the transaction fees is released after a certain period of time, not straight away because the network still needs to be able to punish, should they discover that some of the blocks were actually fraudulent. So the 51 per cent attack is actually less likely to happen with Proof-of-stake.

At the energy front, PoS only allows a few crypto miners or ‘validators’ to mine cryptocurrency. This means less computational power is required. So, high-tech mining equipment is not needed, reducing the mining energy significantly.

Flaws

PoS favors rich people who will get chosen more frequently, will collect more transaction fees, become even richer, and thus increase their chances of being chosen as a validator even further.

Another potential problem is when the network chooses the next validator, but the validator doesn’t turn up to do the job. In short, Proof-of-stake brings additional risks when compared to Proof-of-work.

A lot of research is yet to be done understand risks associated with PoS and then to mitigate them. For now, it seems more cryptocurrencies are likely to follow PoS in the future.




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Bitcoin price: Crypto market plummets over $200 billion as world governments step in

The cryptocurrency market has suffered another “chaotic” 24 hour period, with $200 billion wiped off the market overnight.

The cryptocurrency market has suffered another brutal day, losing over $200 billion in value over the past 24 hours with major coins copping the worst of the crash.

Bitcoin and Ethereum, the world’s two most-traded digital assets, went into another freefall on Wednesday, with smaller coins BNB, Solana, Cardano and XRP also suffering significant losses.

Bitcoin’s price crashed almost 10 per cent over the last 24 hours, dropping to under $54,000 (AUD) for the first time in well over six months.

The price of ethereum, BNB, solana, cardano and XRP also experienced significant drops of between 7 to 11 per cent in the last 24 hours.

Still in its relative infancy, the cryptocurrency market has faced similar tumultuous periods where large chunks of value disappear overnight.

Experts in the field believe values have dropped as a result of the US Federal Reserve raising rates in 2022, alongside heightened pressure from China and Russia to stifle digital currency trading within their borders.

The Chinese government’s widespread crypto ban in 2021 saw the country expel those who use high-powered computers to mine new coin. The result sent bitcoin and crypto prices spiralling, with the downward trend continuing steadily in the first few weeks of 2022.

“I think the main reason for this is the market being spooked by the Federal Reserve raising rates this year, but when the stock market sees some relief, I expect a strong squeeze to the upside for bitcoin and the whole market,” analyst at UK-based broker GlobalBlock Marcus Sotiriou wrote this year.

The wild west nature of the crypto sphere has attracted millions of new investors buying in over the past 12 months. A brief period in early 2022 saw Bitcoin break new ground, soaring to over $80,000 AUD per coin after Elon Musk’s persistent endorsement of the revolutionary technology.

CEO and Co-founder of Mudrex Edul Patel says the current dive-bomb, which he believes has come from a lack of demand amid soaring inflation in the West, has left casual investors in a state of panic.

“The downward trend is likely to put investors in a chaotic situation. The fall of significant cryptos can be attributed to lower demand, inflation, and seasonality. The coming week would be vital for the crypto spectrum,” he told the Economic Times.

In Russia, life is about to get a lot harder for those deep in the crypto sphere, with the government making serious moves against what has become a $7 billion yearly market in the country of 143 million.

According to a report released by the country’s central bank on Thursday local time, cryptocurrency mining and trading goes against Russia’s green agenda and can be used in money laundering or to finance terrorism.

Cryptocurrency has a lot in common with a pyramid scheme, according to the bank, which also called for crypto rule breakers to face the full penalty of the law.

Although the bank’s suggestion to clamp down on cryptocurrency is just that — a suggestion — Russia appears to be fast-tracking parliamentary sessions so that a potential ban could come into effect as soon as possible.

Speaker of the lower house of parliament Vyacheslav Volodin revealed this week that politicians were creating a regulatory framework on cryptocurrency that will be ready in time for the Russian parliament’s spring session.

Under the proposal, cryptocurrency wouldn’t be able to be created, mined or traded on Russian soil — including blocking customers from using crypto exchange platforms.

Russians with offshore accounts would still be able to trade cryptocurrency.

If Russia’s proposal to go ahead, it would be a major blow to the cryptocurrency market around the world.

Russian citizens make up the third-largest number of crypto miners, behind the US and Kazakhstan.

Blockchain miners have made the most of Russia’s unique resources to maximise their mining, with people flocking to the country’s north and Siberia to mine blockchain, because power is cheap over there.

“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia,” the central bank said.

But according to the research team at CoinCDX, India’s largest crypto trading platform, digital assets have endured years of similar suppression from world governments, tipping the decentralised currencies to rise again in the future.

“As Russia-one of the largest crypto adopters in the world-announced its plans for a blanket ban on crypto, the digital asset market plunged back into the reds. BTC and ETH took sharp dips, dropping 2.54% and 3.62% respectively over the past 24 hours,” CoinCDX said in a statement.

“Other altcoins from BNB, ADA, and SOL also nosedived with yet another economic powerhouse taking a hard stance against crypto.

“While this may be a cause for concern, the crypto industry has weathered through multiple bans, restrictions and regulatory scrutiny over the years but have stood the test of time.

“Looking back at how the sector bounced back shortly after China’s crypto ban, we can expect the sell-off to have little long-term impact on crypto’s performance besides this brief initial dip.”


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