What crypto currency does Genesis Mining pay out

Bitcoin mining: is the crypto boom coming to an end in Scandinavia?

Bitcoins are real power guzzlers. Depending on the estimate, the global energy requirement for mining what is by far the most successful cryptocurrencies is 67 to 121 terawatt hours (TWh). That is around half of what all data centers - for the Internet, cloud services, the entire financial sector and all cryptocurrencies - consume together. The annual consumption in Germany is a little over 500 TWh.

  • How does Bitcoin work?

    Pretty cryptic

    Bitcoin is a cryptocurrency. The means of payment therefore works digitally, without physical coins and notes, and is based on cryptographic processes. Bitcoin is organized on a decentralized basis and does not require banks or central banks. The currency can therefore be used worldwide and across borders under the same conditions and cannot be compared with any previous monetary system.

  • How does Bitcoin work?

    The "father" as a mystery

    In January 2009, open source software for Bitcoin was published under the developer pseudonym Satoshi Nakamoto. A few months earlier, this person or group had first publicly described how the digital currency works in a text.

  • How does Bitcoin work?

    How do you get bitcoins?

    There are different ways to get Bitcoins: You buy them on an internet platform (and pay for them with euros, for example). Or you accept Bitcoin as a means of payment for goods or services that you offer. Or you can become a "miner" and mine for bitcoins yourself.

  • How does Bitcoin work?

    Also digital: without a wallet, everything is nothing

    Cryptocurrencies are stored in a virtual wallet. It contains keys. Only with them can you find out who owns a Bitcoin. You also need them for transactions. A wallet can be saved on a smartphone, a computer, a USB stick, specially secured storage media and in a web cloud. Without a wallet, you have no access to your bitcoins.

  • How does Bitcoin work?

    Hats off to the Kypto currency

    Let's say Mr. X wants to buy a hat from Ms. Y and pay with Bitcoin. Both must have a public key (comparable to an account number) and a private key (comparable to a TAN) for a Bitcoin transaction.

  • How does Bitcoin work?

    Block building blocks

    Ms. Y transmits her public key to Mr. X. He confirms with his private key and uses it to request a transaction. This is collected in a block with a few hundred other transactions (hence the term blockchain, but more on that later).

  • How does Bitcoin work?

    Arithmetic servants

    The block is distributed to all computers in the decentralized Bitcoin network. These computers are also called miners. They check the transactions going from one wallet to another and confirm them. In theory, everyone can let their computer work on the network. But now most of the work is done by professional server farms.

  • How does Bitcoin work?

    In the sweat of their graphics cards

    Before the transaction is actually carried out, the miners have to solve cryptographic computing tasks for each block. This requires computing power and strong graphics cards. Mining works like a competition: several miners try to decrypt a block from the blockchain at the same time. Whoever manages this first receives new - that is, "freshly mined" - Bitcoins as payment.

  • How does Bitcoin work?

    A kind of pearl necklace

    The block of Mr. X and Mrs. Y is part of a long chain, the so-called blockchain. All Bitcoin activities are stored in this decentralized database. The blockchain thus serves as the payment book (ledger) for the cryptocurrency: it contains all transactions and wallet information of the parties involved. Although all of this is recorded and visible, users remain anonymous.

  • How does Bitcoin work?

    This is where mining is going on

    China has by far the largest share of the computing power of the Bitcoin network (hashrate) and thus of its electricity consumption. Other important countries are the USA, Russia, Kazakhstan, Iran and Malaysia, according to the Bitcoin Electricity Consumption Index from the University of Cambridge. Mining is only worthwhile where electricity prices are cheap.

  • How does Bitcoin work?

    Huge hunger for energy

    The energy-intensive process for calculating the Bitcoin transactions (mining) requires around 120 terawatt hours (TWh) per year, according to the Bitcoin Electricity Consumption Index of the University of Cambridge. That is more electricity than any of the blue-colored countries consumes in a year. Graphics: Per Sander Texts: Gudrun Haupt

Therefore, Bitcoin and the entire blockchain technology on which it is based are suspected of damaging the climate. Especially since (as of April 2020) around 80 percent of the hashrate, i.e. the computing power for mining new Bitcoins, is provided in Asian countries. And none of them generate more than a quarter of their electricity from renewable sources. In addition, there is around 15 percent hashrate from Russia and the USA, which are not exactly pioneers for a decisive energy turnaround.

More sustainable mining in the far north?

That is why Bitcoin mining is seen as the green way out of the dilemma in Scandinavian countries. Iceland was one of the pioneering countries. In the meantime, according to the Icelandic Blockchain Foundation eight percent of all bitcoins mined. With geothermal and hydropower, the state Landsvirkjun and other energy companies nearly 100 percent of the island's electricity. And it is so cheap that there have been considerations for years to run a submarine cable to the UK to deliver green electricity to Europe, where it is much more expensive.

Instead, it was decided to lure energy-intensive industries and their added value to the island, including aluminum smelters and the blockchain sector. One of the first companies to build a Bitcoin mine in Iceland was in 2013 Genesis mining. One of the founders is the German Philip Salter, who is now Chief Technical Officer at the sister company Genesis Digital Assets is. Salter sums up the advantages of the island state: "There are no political or geopolitical risks, the infrastructure is very reliable and the electricity is sustainable and incredibly cheap."

In Iceland, performance is running out

In the meantime, however, the country's generation capacities are reaching their limits: "The electricity surplus could be very low in 2021 and 2022," said Landsvirkjun boss Hordur Arnarson of the Bloomberg media group. The electricity cost advantage is therefore on the brink.

In recent years, the mining industry has grown much faster elsewhere. And so Iceland’s share of world production has fallen below two or even below one percent, depending on the survey. Mining pioneer Salter says he can well understand that the Icelanders don't want to sacrifice their unique nature at the moment. There are also alternatives.

The existing geothermal (picture) and hydropower plants in Iceland are reaching their limits

The Scandinavian mainland is also a popular location for mining companies. Norway has already overtaken the Icelanders on hashrate. Salter assumes that Sweden also has what it takes to become a hotspot for Bitcoin miners: "Especially in the north of the country, where we also operate a mining farm, the conditions are comparable to those in Iceland."

Does Scandinavia have a similar fate?

Renewable energies are available in Scandinavia in such large quantities that some countries hardly know what to do with the electricity: "Under average weather conditions, the Nordic countries have an expected oversupply of almost 30 terawatt hours this year," says Olav Johan Botnen, energy analyst at the Norwegian Market research company Volue Insight.

However, the demand for electricity from heavy industry is also growing there - especially for the production of "green steel": instead of coal, the pig iron is processed into steel with renewable electricity and green hydrogen. The sustainable hydrogen, in turn, is also obtained from water with the help of renewable electricity. The electricity demand is correspondingly high.

Two consortia have big plans in northern Sweden: In the small town of Boden, which is also home to the Genesis Bitcoin mine, and in the nearby port city of Luleå, two huge plants are to be built by the end of the decade. The 15 TWh of electricity that the hydropower plants already generate annually and the ten TWh that the soon-to-be-largest onshore wind farm in Europe is supposed to generate there will probably not be enough to completely cover the demand. In the medium term, the mining group LKAB wants to expand its sustainable sponge iron production in Sweden to an output of 55 TWh per year. Again in comparison: Worldwide Bitcoin mining currently consumes around 100 TWh, all of Sweden 135 TWh.

Hydrogen steel and submarine cables are likely to drive electricity prices up

The Nordic countries want to further expand their renewable electricity production. But at best, it is as problem-free as before in northern Sweden and Finland, says energy analyst Botnen, in the more densely populated south of the countries, as well as in Norway and Denmark, space is now scarce and therefore more expensive.

Added to this is the increasing integration of the northern and central European electricity markets: several submarine cables have long been connecting Scandinavia with the Netherlands, Poland and Great Britain. The submarine cable NordLink has been connecting Norway with Germany since December 2020, and further such connections are planned: "This will bring the electricity prices in Northern and Central Europe closer," says Botnen. For the Scandinavians, that means: it will be more expensive.

The energy analyst expects electricity prices to rise by around 50 percent to 40 to 50 euros per megawatt hour on the spot markets over the course of the decade. "With long-term contracts, industrial customers in northern Sweden should still be able to secure the old prices until the mid-2030s," believes Botnen.

"Bitcoins promote sustainable power generation"

Philip Salter remains confident that Sweden will remain an attractive location for Bitcoin miners. Nevertheless, it is questionable to what extent the Scandinavian countries are actually making Bitcoin and other crypto currencies greener. According to figures from the University of Cambridge, the blockchain industry in all five countries accounts for around one percent of the global hashrate.

Mining expert Salter sees the problem from the other side: "I believe that our industry is even promoting the expansion of renewable energies - and not only in Scandinavia, but also in developing countries."

This is supported by the fact that wind and solar power plants are the cheapest power sources that can be installed today. And some of the best locations are in developing countries. But it is also true that Bitcoin mining increases the demand for electricity. And before no more renewable electricity is generated, Bitcoin and Co are mined with fossil energy.