Network security

Texas Bitcoin Mining Blackout Leads to Lower Network Security

A brutal heat wave that hit Texas caused the majority of Bitcoin mining farms in the state to voluntarily shut down their servers to ease the strain on the network.

Record temperatures have pushed the mercury above 103°F (39°C) this week, dramatically increasing the likelihood of massive blackouts in the Lone Star State as energy demand soars.

“It’s the right thing to do to be a good ‘network citizen,'” said Lee Bratcher, president of the Texas Blockchain Council. The edge.

Although considering the skyrocketing price electricity, miners are probably also motivated by economic concerns.

Texas was already struggling with soaring utility bills after increasing its natural gas exports when Russia’s invasion of Ukraine sent global gas supplies roaring.

Companies affected include Riot Blockchain, the mining giant whose 400 MW Whinstone facility is among the largest in North America.

Although RIOT shares fell 4.75% in Wednesday’s premarket trading, the NASDAQ-listed company struck an altruistic tone, boasting that it provided enough capacity to power 13,000 Texas homes after the shutdown. .

Security goes down, income goes up

The widespread lights out caused a subsequent drop in the hash rate of 2.6% across the Bitcoin network.

Hashrate refers to the amount of computing power applied to network security; a higher hashrate makes Bitcoin less prone to attack.

While a 2.6% drop may seem insignificant, the hashrate was already down in unfavorable market conditions.

On a monthly basis, Bitcoin network security has now dropped by more than 11%.

Source: Blockchain.com

But with a smaller group of miners picking up the same amount of rewards, some active miners stand to gain from the Texas blackout.

Data provided by Blockchain.com shows that block rewards jumped over 16% on Tuesday, July 12 alone.

As for the price of BTC, while no direct correlation can be drawn between the drastic shutdown and its 3.59% drop on Wednesday, a potential ripple effect could still hurt the market.

Texas miners could decide to give up a large chunk of their BTC reserves to cover costs, which would have a far greater price impact than any temporary hashrate drop.

Miners dig in Texas

Despite rising energy costs, Texas remains one of the cheapest US states for electricity.

Data provided by Energybot shows an average price of $0.085 per kWh compared to a national average of $0.104.

Only Vermont, Washington and Wisconsin are cheaper.

This, combined with large swaths of unpopulated desert, has made Texas a primary jurisdiction for mining fugitives fleeing China’s 2021 crackdown.

The United States has become by far the largest contributor to Bitcoin hashrate by country.

Iceland also became a popular mining destination, due to an abundance of cheap geothermal energy and a cold climate requiring less air conditioning, until a supply shortage brought the island down. out of favor with the industry.



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