Canadian city threatens to cut off power from local Bitcoin mining farm

25 Sep, 2018
by Matthew Kim
News
Canadian city threatens to cut off power from local Bitcoin mining farm

A city in Canada, Medicine Hat, is on the verge of cutting off power from a local Bitcoin mining farm, Hut 8.

Located in a city hosting just around 60,000 people, Hut 8 is a $100 million Bitcoin mining farm over 4.5 hectare of land. It is comprised of 56 shipping containers and 180 mining servers. Working around the clock, the mining farm burns through as much power as the rest of the city, and 10 times more than the next highest energy consuming facility.

According to CBC, Residents and environmentalists have always been concerned about the enormous amount of energy Hut 8 consumes, but the recent heat wave has forced a hand. With the city demanding more power to combat the heat and humidity, the city has acquired the appropriate provisions to “pull the plug on the electricity it provides to Hut 8”.

Medicine Hat is originally known for its own natural gas and electricity generation and distribution. For a long time, it used its cheap energy to attract businesses requiring large amounts of energy. Hut 8 is one of those businesses, and, despite its unusual power consumption, it has benefitted the city financially.

The company claims to have mined more than 3,300 bitcoins in 2018, an amount equaling around $21 million at the time of writing. On a normal day, the facility is able to mine about 20 Bitcoins.

Although concerns over Bitcoin mining’s power usage in times of need are understandable, some of the concerns come from misunderstanding. CBC incorrectly states that “as more miners compete for a decreasing number of available bitcoins, facilities will have to use more electricity compared to the amount of the cryptocurrency they collect”. Furthermore, environmentalist Keith Stewart said, “the way the bitcoin algorithm works is that it's designed to waste as much electricity as possible”.

Although these are common perceptions, they are inspired by misconceptions that must be dispelled. Bitcoin’s power consumption will not be linear to the network’s growth. It is likely that Bitcoin’s energy cost will reach a ceiling as the amount of energy the network currently consumes is enough for a network far bigger, and the reward for Bitcoin mining will decrease with time.

Stewart questions if Bitcoin is a “necessity of life” that is worth the energy that it consumes. But CEO of Hut 8 Andrew Kiguel retorts that Bitcoin “served a purpose in terms of providing the opportunity for people who don’t necessarily trust their government or their central banks”.

Bitcoin might not be as necessary as heat and light, but it might be firmly entrenched into our society in the near future.

Read more about:Bitcoin (BTC)

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