The evolution of Bitcoin miners has given rise to opportunities for both individual miners and institutional investors and regulatory clarity could help legitimise this sector and attract investment. Nangeng Zhang at Canaan explains ongoing efforts to improve this sector’s sustainability footprint.
The Bitcoin mining has witnessed remarkable growth and transformation, characterised by a relentless pursuit of computing efficiency and sustainable energy practices. Established in 2013, Canaan revolutionised the Bitcoin mining industry by creating the first ASIC Bitcoin miner.
Over the past 11 years, Canaan has launched the innovative Avalon A1 to Avalon A14 series of Bitcoin mining rigs and is gearing up for the upcoming release of the new generation Avalon A15 Bitcoin miner. Canaan has set a new standard in the industry by consistently enhancing miner performance and promoting a greener approach to Bitcoin mining.
The evolution of Bitcoin miners has given rise to a range of opportunities for both individual miners and institutional investors. Regulatory clarity and adoption could also help legitimise the sector and attract institutional investors. The approval of US Securities and Exchange Commission of Spot BTC ETFs as well as Hong Kong SFC’s approval of Spot BTC ETF suggest a positive market outlook for cryptocurrencies in 2024.
Canaan consistently launches new Bitcoin mining products and solutions to meet the evolving needs of the Bitcoin mining market. Through the innovative Avalon miner series, including Bitcoin miners, Avalon Box, One-stop Mining Solutions, and the latest portable Avalon Nano, Canaan delivers Bitcoin mining service for both institutional and individual clients.
Market overview
Bitcoin mining sector is highly competitive. Mining operations are concentrated in regions with cheap electricity to maximise profitability. Large-scale mining operations, are often located in areas with renewable energy sources. Talking about mining rig providers, the market is relatively concentrated.
After the fourth halving in April this year, it is expected that the Bitcoin price will go through ups and downs and we hope it will hit the historical peak eventually. Historically, after each halving, the price of Bitcoin has risen. Miners will have to increase power and energy consumption to mine the same amount of Bitcoin and strive to reduce costs to maintain profitability.
The growth of the leading cryptocurrency compensates for the reduction in mining income and, most likely, will result in increased profitability. The Bitcoin mining market is large enough to support the sustainable development of the mining machine market.
The UAE and the wider Middle East have experienced exponential growth in the cryptocurrency sector, demonstrated by a 400% increase in registered crypto businesses from 2020 to 2022. This surge has positioned the region to capture 10% of global digital asset trading volume, establishing it as a significant player in the global cryptocurrency market.
The Middle East is now the fastest-growing cryptocurrency market globally, with a 9.2% share of global transactions from 2021 to 2022. This rapid growth is underscored by a 300% rise in blockchain-related educational initiatives and an 8% contribution to global mining hash rates, illustrating the region’s dedication to leading in blockchain innovation and education.
With its rich solar energy resources and increasing engagement with blockchain technologies, the Middle East is becoming a hub for blockchain innovation and renewable energy development. This synergy is creating optimal conditions for Bitcoin mining operations and opening avenues for sustainable growth and technological advancement in the region.
Miners
Advancements in ASIC technology continue to increase mining efficiency, reducing energy consumption per hash, and driving down operational costs. The only thing not to forget is that it is always necessary to use modern and reliable equipment to remain competitive in the market.
Before, people are using CPU or GPU chips to do Bitcoin mining, but since 2013 ASIC mining machines are predominantly used. Canaan released the Avalon A1 in 2013, the world’s first ASIC-powered miner, significantly outperforming earlier FPGA units in hash rate and energy efficiency. In addition, Canaan has recently launched its next generation Avalon A15 miner series, boasting cutting-edge chips that promise enhanced energy efficiency.
The ASIC mining machine requires high levels of computing power, energy efficiency, and cooling capabilities to operate effectively and remain competitive in the mining landscape.
In the future, different from traditional miners who pursue high financial returns, the new funds aims to pursue more sustainable, stable, long-term, reliable, and efficient Bitcoin mining investment. They will need new mining rigs with high ROI as well as mature solutions to deploy mining more easily. This puts forward certain requirements and challenges for the transformation of the business model of mining machine manufacturers.
Mining
Whether mining machine manufacturers can provide integrated solutions and have advantages in terms of chip design and supply, mining machine production, environmentally friendly and sustainable program design, overall mine construction, operation and maintenance, stable and cheap power acquisition, and mine construction, will determine whether they can become leaders in the future.
Bitcoin mining is a computation-intensive process that involves the use of specialised hardware and software to solve complex mathematical puzzles by executing the SHA-256 hashing algorithm and validate transactions on the blockchain network. The ASIC chips are designed specifically for mining Bitcoin which is highly efficient at processing hashing algorithm.
When a miner successfully mines a block, they are rewarded with newly created bitcoins and any transaction fees associated with that block. This stimulates miners to contribute their computational power to the network.
The concept of Bitcoin green mining has gained traction in the Bitcoin mining, driven by the need to reduce the environmental impact of mining activities and promote sustainability. Initiatives such as sourcing renewable energy, implementing energy-efficient mining hardware, and exploring alternative cooling solutions have become key strategies in achieving green mining practices.
By prioritising sustainability, miners can not only mitigate their carbon footprint but also enhance their long-term resilience and contribute to the border global efforts towards combating climate change.
Recycling energy
Previously, crypto mining’s energy consumption was a major concern due to its potential for high carbon emissions. But now, green mining solutions have made a significant contribution to global climate action. According to the Bitcoin ESG Forecast, Bitcoin mining is currently the highest user of sustainable energy, 54.5% across multiple subsectors, and it has achieved an increase in sustainable mining of 3.6% for the calendar year of 2023 compared with other global industries.
This indicates a significant shift towards green crypto mining, using solar power, hydroelectric power, and nuclear energy, essential for reducing mining operations’ carbon footprint. By using renewable energy sources such as hydroelectric, solar, and wind power, these solutions help mitigate carbon emissions associated with traditional fossil fuel-based mining operations.
This shift towards sustainability not only lowers the carbon footprint of Bitcoin mining but also promotes the adoption of renewable energy technologies, further advancing the global transition to a low-carbon economy.
Green Bitcoin mining also means making good use of wasted green energies. Bitcoin can contribute to reducing carbon emissions: approximately 139 billion cubic meters of natural gas were burned off globally in 2022. This quantity is equivalent to the total natural gas consumption in Central and South America.
Bitcoin mining has the potential to significantly reduce emissions caused by combustion. This is because mining rigs and necessary generators can be placed in containers, for instance our Avalon Box and operated in remote areas far from the existing power grid.
By adopting waste heat recovery technologies and solutions, mining farms can recycle the heat generated by the mining machines to heat the swimming pool, vegetable greenhouse, buildings. Canaan’s Avalon immersion cooling system support this recycling. Canada’s North Vancouver City is the very first city in the world able to boast of being partially heated thanks to Bitcoin.
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