Volcanoes that mine bitcoin
11:24 21 de January de 2022 By Daniel Oiticica
The decision of Nayib Bukele’s government to adopt bitcoin as legal currency in El Salvador already provided from its conception the solution to a major problem that generates the growth of cryptocurrencies: the high energy consumption to power the computer systems for the creation of cryptocurrencies, known as bitcoin mining.
A day after the new law was approved, Bukele shared with society his plan to carry out bitcoin mining in El Salvador with very cheap energy, 100% clean, 100% renewable, and 0 emissions thanks to its volcanoes.
The state-owned geothermal company La Geo is responsible for developing the bitcoin mining plan using geothermal energy, which is already operating at the Berlin plant, 112 km from the capital San Salvador. For this purpose, a van was installed where 300 computer processors or miners that generate cryptocurrency have been placed.
What is the importance and how does bitcoin mining work? Mining is a process by which new bitcoins are created, performed with supercomputers that solve complex mathematical problems, impossible to do by hand, which requires large amounts of computational power and energy.
New bitcoins are introduced when blocks of transactions are processed by miners, which occurs every time a person sends or receives bitcoins. In 24 hours, for example, approximately 200,000 transactions are made, and this estimate will continue to increase as more people start using bitcoins.
Miners place transactions in blocks and add them to a kind of public record known as the blockchain. When miners add new blocks to the blockchain, new bitcoins are created, but to add a new block they must mathematically validate the transactions to make sure they are correct and avoid duplication. This creates a more secure bitcoin network.
When they add a new block of transactions, miners are rewarded with bitcoins. In 2012, the reward was 25 bitcoins, in 2016 it was 12.5 bitcoins and by February 2021 the reward was 6.25 bitcoins for each new block mined. To get the reward, they have to not only solve a mathematical problem, but were the first ones to do so. This process is known as Proof of Work (PoW). There is a finite number of bitcoins which is 21 million and to date 18.5 million have been mined, hence the need to continue mining the cryptocurrency.
The more miners there are, the more difficult it is to obtain a reward. When bitcoin were created, the level of difficulty to mine a new block for the blockchain was 1 and by June 2021, it is 21 billion.
The big problem of this whole process is related to the environmental damage that its high energy consumption can generate to the planet. Cryptocurrency mining has always been questioned by environmentalists as it consumes a ton of computing power and electricity. In El Salvador, this problem is solved thanks to the clean energy source generated by its volcanoes.
“In the Berlin plant, the bitcoin mining process is already taking place. In the last two years we managed to generate 7 additional megawatts in the plant, and we took 1.5 megawatts to make the first test in mining. Proudly, we have already mined our first bitcoin, and today we have 360 machines mining bitcoin 24 hours a day, 7 days a week. This is the first step and there is much more to come,” says Daniel Alvarez, president of the Lempa River Hydroelectric Executive Commission (CEL). “We have 95 megawatts that have already been identified and we are looking at how we raise these plants. The projected term is three years. We are going to open two new plants, one in Chinameca and the other in San Vicente, to make the ones we already have in Berlin and Ahuachapán grow even more”, he adds.