Category: Blog

Could Bitcoin Mining Help with Gas Flaring?

A company based out of Denver has found an interesting and creative way to solve a problem that has been plaguing shale drilling sites. Crusoe Energy Systems Inc. has started to install data centers at these drilling sites as a way to capitalize on the excess natural gas supplies, and it is helping with the issue of gas flaring.

Gas flaring refers to the burning off of the excess gas that is being products at the sites. This is something that many drilling companies do because the pipelines do not have the needed capacity to hold the gas. Essentially, the gas is wasted, and burning it is not healthy for the environment. Fortunately, something is being done about it. However, it’s not happening in a way that many people at all expected.

Crusoe Energy Systems has found a way to take advantage of this and to help reduce the amount of gas flaring. They have already set up eight data centers at these shale drilling sites around the country. They use some of the excess gas in order to create electricity, which they then use as a means to mine Bitcoin, which helps to generate revenue. In the first half of 2020, the company plans to have another 30 of these centers created, and by the end of the year, they want to have 70 installed.

Each of the facilities would have a capacity of a megawatt. The CEO of the company said that this could help to keep around 10 million cubic feet a day of gas from being flared. This is a smart and novel way to help solve a problem that would have only gotten worse. It also helps to ensure that the company can make a profit through the generation of the Bitcoin. It is not clear exactly how much the company is earning through their mining operation, but with eight data center facilities currently dedicated to mining, it is likely a fair amount.

How Will the Expansions Be Funded?

The initial capital of $5 million was raised through investors in 2019. Upper90 Capital Management LLC has already agreed to provide the company with project financing in the amount of $40 million. The company also raised another $30 million when they sold equity to investors. Because of the unique idea of the plan, and the fact that it can actually work, there has been quite a bit of interest from a number of oil and gas producers. There is the potential that it could include revenue sharing.

These facilities are going to have a substantial amount of computing power. Crusoe Energy Systems has already said that they want to use that power as a means to help develop an artificial intelligence cloud-computing service.

Hopefully, the creation and implementation of the data centers proceed smoothly. The data centers are helping to protect the environment from the gas flaring already. With additional data centers installed, it can help even more.

Resources: https://www.bloomberg.com/news/articles/2019-12-06/why-bitcoin-mining-is-being-touted-as-a-solution-to-gas-flaring

https://www.datacenterknowledge.com/energy/why-bitcoin-mining-being-touted-solution-gas-flaring

In light of recent events, it is high time we discussed the issue of forking including both its benefits and potentially catastrophic outcomes including multiple versions of a coin coexisting in parallel and the various network attacks associated with that. In the simplest terms, hard and soft forking describe two separate ways of updating the blockchain software. When the latest version looks to break compatibility with the previous versions. This, however, is not to be confused with a software fall, where someone takes the original project code and modifies it in order to create a new project of their own such as Litecoin being a project spinoff of Bitcoin. In order to better understand forking, we first need to know what a node is to find if anyone who possesses a copy of the blockchain as they will be playing a very important and integral role in the processes.

A soft fork is a backward compatible method of upgrading the core wallet software and defined as a temporary split in the blockchain that occurs when these new rules are implemented. The original chain contains blocks from non upgraded nodes. However, it will all flex up to blocks generated by the upgraded nodes. Meanwhile the forks chain contains blocks only from upgraded nodes, which are chosen to actively support new rules and be soft fork. As soon as the soft fork is implemented, it is then up’d to the upgraded nodes to try and reach a clear majority and remind us to reach a certain percentage of a network cash rate usually by a certain block number. Otherwise the soft fork will fail and the original chain will simply carry on unchanged.

However, if a consensus is reached, the new rules are implemented across the network and any non upgraded nodes still mining, will simply be wasting their time rehashing old invalid information both generating and gaining nothing. This in turn leaves the upgraded node blocks being recognized as the strongest and truest chain of events.

In comparison, a hard fork enables a quick and high priority change to the rule, which is not backwards compatible and defined as a permanent divergence in the block chain that occurs when new rules are implemented. Both the new and old chains run in parallel to each other, but each follows a different set of rules. Because of this, it means users who have chosen to utilize different chains, will not be able to send funds to each other as they will each be using a different version of the same coin that are incompatible with one another. This then also brings up the issue of dual funds. Where as soon as the fork happens every coin in existence gets duplicated. So, if you happen to have 100 coins before the fork, you’ll now have 100 on the original chain and 100 on the forked chain giving you a total of 200 spend. Of course then won’t be work the same as each of them and they re not transferrable across chains.

So, I hope that in the long run, one chin gins a clear majority of users and support. If not, the economy and politics around it can become a real mess, so I hope is that the hard fork will ever be instigated if absolutely necessary and it has a clear overwhelming support from its users.

Most of these new figures will be implemented via a soft fork due to its safe and less urgent nature. These include things such as check sequence, verify or CSV, which allows the coins to be locked and unspendable until a certain given time period or segregated witness, which seeks to fix [inaudible 00:03:33] of transactions on the network. However, new rules actually bring compatibility must be implemented with a hard fork. These would include things such as methods to prevent serious network abuse an increase of the block size on the block chain or seeking to read distribute funds due to broken code or theft through a centralized method.

Further more, this then starts to lead on to the question of when a hard fork should actually be taken. The moral and ethical delima is behind that decision. Who should take it and under what circumstances. Unfortunately however, we are not philosophers and that is another topic for another time. So, be sure to subscribe so you don’t miss it or any of our other content and I will see you next time.

With LiteCoin’s first-ever halving completed in 2015, we are already beginning to see the effects of the next one even in 2018. So what better time to discuss exactly that. So sit back, this is gonna get interesting.

By no means is LiteCoin the first coin to be halved. In fact, back on November the 28th of 2012, BitCoin underwent its first ever halving. So we already have a good idea what to expect just by looking at history.

Okay, so what do we actually mean when we refer to a coin as halving? Well, it’s pretty simple. It means the mining award halves. So in the case of LiteCoin, miners are currently awarded 50 new coins for solving blocks. After the halving, miners will only be rewarded 25 LiteCoins per block. This process only takes place once half of all the coins are in existence. And then another half, and another half, and so on and so forth.

The the halving process doesn’t just happen once. For both BitCoin and LiteCoin, this is set to happen every four years as is stated in their code. but for other coins, this may vary. And while nobody really knows for sure when the last few coins will be mined, we expect it to be around 2142 for LiteCoin and 2140 for BitCoin based on the reward over this time.

Of course, by then only 0.00000672 LiteCoin will be mined each day, until eventually all 84 million LiteCoins are in existence.

Clearly this is a positive thing then. As inflation slows each time, less coins flood the market, and therefore everyone’s coins rise in price as a result. So why vendors of LiteCoin actually look like this before the halving? Well, the most likely answer is people are actually expecting the price to rise. So in anticipation of our buying up these “cheap” undervalued coins in their mind while they are at this current price. We should also point out that cryptocurrency has come a long way in 2012 when BitCoin underwent its first halving.

Thus in turn, this sudden rush and demand of people wanting to buy in has in turn pushed the price of LiteCoin higher.

There is, however, one more part of the equation: the miners. So as we know, miners invest in specialized equipment in order to actually mine the coins. And just like the actual business, they need to make a profit otherwise it’s just not worth them doing so. And now that their income is about to be cut in half, a lot of their ineffective equipment is about to be shut off. That is unless the market price of the coins rise to a point where they can continue to make a profit.

Either way, the miners face one of two options, those being: The price rises and everything stays pretty much the same as it is now; however, if it doesn’t a lot of miners will no longer be able to operate. In turn, the network hash rate will drop as they begin to shut off, leaving only the mining farms in places such as China working, in turn resulting in a less distributed network. If a network hash rate drops low enough, the mining difficulty will automatically adjust itself, meaning those who stopped may be able to start mining again at a profit. And while we do not know how high the price will go during this period, we do expect that after all is said and done the price will settle higher than it was in the view leading up to the halving.