mining

Bitcoin proponents respond to New York Times’ BTC mining report

Bitcoin proponents accused The New York Times of overstating mining companies’ emissions and omitting facts about the growing adoption of renewable energy sources for BTC mining.

The New York Times’ latest report on Bitcoin (BTC) mining, titled “The Real-World Costs of the Digital Race for Bitcoin,” has irked many BTC proponents — some of whom took to Twitter to call out certain aspects of the report, including saying it was “cherry-picking” data.

The NYT article says Bitcoin mining has a “voracious” appetite and claims it uses as much energy as all residences in New York City.

In response, Daniel Batten — a Bitcoin environmental, social and governance (ESG) analyst — pointed toward what he said were two major instances of cherry-picking data alongside neglecting the increased use of renewable energy in the mining sector.

Batten said the NYT article drastically exaggerates the actual fossil fuel use of BTC miners, with emission levels overstated by an average of 81.7%. He added the report was “using overwhelmingly incomplete datasets to support a thesis.”

Batten also mentioned that there are 26 Bitcoin miners in the United States and Canada using 90% sustainable energy to fuel their mining activities, but the NYT article chose just two and focused on the sites least backed by renewable energy.

Troy Cross, another Bitcoin proponent, said the NYT article used “marginal emissions accounting” to prove its narrative, selectively applying it only for carbon emissions, not generation.

Dennis Porter, CEO of the Satoshi Act Fund, noted that the NYT article made a mistake in its initial reporting, naming the incorrect town in which a BTC mining facility in Texas is based. The publication later corrected the error.

Pierre Rochard, vice president of research at BTC mining firm Riot, accused the NYT of using “fictitious fractional-reserve carbon accounting” and “cooking the books to fabricate emissions.” Another Twitter user, Hakan, pointed toward passages they believed to be fear-mongering.

While the high energy consumption required for Bitcoin mining is definitely a topic of debate, mining is significantly important for the blockchain. Not only is it used to verify transactions, it also makes it decentralized and adds a layer of security.

Related: Bill protecting Bitcoin mining rights passes in Arkansas Senate and House

According to the Bitcoin Mining Council report for Q4 of 2022, the Bitcoin network is already a leader in sustainable energy use, with 58.9% of its energy coming from renewable sources.

The Bitcoin network‘s sustainable power mix vs. countries. Source: Bitcoin Mining Council

Bitcoin mining has always been a controversial topic, often fueled by critical articles published by mainstream outlets claiming it has a net negative impact on the environment. However, many Bitcoin proponents see these sorts of reports as hit pieces and are quick to offer an opposing perspective. Meanwhile, some are actively campaigning to change Bitcoin’s mining consensus to the more environmentally friendly proof-of-stake.

Cointelegraph Magazine: Bitcoin in Senegal: Why is this African country using BTC?

Bill protecting Bitcoin mining rights passes in Arkansas Senate and House

The Arkansas Data Centers Act is now moving to the governor’s office for approval. It grants crypto miners in the state the same rights as data centers.

A bill seeking to regulate Bitcoin (BTC) mining activity in Arkansas has passed in the state’s House of Representatives and Senate. The bill will now move to the governor’s office for approval.

According to the bill, the Arkansas Data Centers Act of 2023 intends to regulate the Bitcoin mining industry in the American state, creating guidelines for miners and protecting them from discriminatory regulations and taxes.

Arkansas’ state legislators quickly passed the bill after it was proposed on March 30 by Senator Joshua Bryant. The document recognizes “that data centers create jobs, pay taxes, and provide general economic value to local communities.“

Arkansas Data Centers Act of 2023. Source: Arkansas State Legislature

As per the approved bill, a digital asset miner is required “to pay applicable taxes and government fees in acceptable forms of currency and operate in a manner that causes no stress on an electric public utility’s generation capabilities or transmission network.“

Under the legislation, crypto miners will also have the same rights as data centers. The bill outlines that Arkansas’ government should not “impose a different requirement for a digital asset mining business than is applicable to any requirement for a data center.“

Related: Crypto mining in 2023 — Is it still worth it? Watch Market Talks

Arkansas’ move follows a similar initiative in the state of Montana. In late March, the Montana Senate passed a bill to protect crypto miners operating within the state. The bill intends to protect miners against taxes on digital assets used for payments, and to eliminate energy rates discriminating against home crypto miners and digital assets businesses.

The state of Texas went in a different direction. Its Senate Committee on Business and Commerce passed legislation on April 4 that would essentially remove incentives for miners operating under the state’s crypto-friendly regulatory environment, Cointelegraph reported.

An even more decisive move came from New York in November 2022 when Governor Kathy Hochul signed the proof-of-work mining moratorium into law, banning crypto-mining activities in the state for two years. On a federal level, crypto miners in the United States could eventually be subject to a 30% tax on electricity costs under a budget proposal introduced on March 9 by President Joe Biden aimed to “reduce mining activity.”

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

Sphere 3D files lawsuit against Gryphon Digital Mining after BTC transfer

An alleged Bitcoin spoofing attack is behind the lawsuit between the companies that once considered merging.

Crypto miner Sphere 3D has filed a lawsuit against its partner Gryphon Digital Mining after an alleged spoofing attack led to the irregular transfer of Bitcoin (BTC), according to court documents on April 7. 

“Today we filed litigation against Gryphon, the custodial management services provider of our blockchain and cryptocurrency-related services, for materially breaching the Master Services Agreement (“MSA”) we entered into with Gryphon,” said Patricia Trompeter, the CEO of Sphere 3D, in a statement for investors, adding that “Gryphon has put the Company’s assets at significant risk and willfully violated their contractual duties.”

According to the complaint, Gryphon CEO Rob Chang allegedly wired 18 BTC in January to a fraudster posing as Sphere 3D’s chief financial officer through a spoofing attack. Another eight Bitcoin were sent to the same address a few days later.

In a spoofing attack, an attacker attempts to trick a system or a user into believing that they are someone else through falsifying data, such as IP addresses, email headers or user credentials, to gain access to a system, steal sensitive information or launch further attacks.

In comments to Cointelegraph, Gryphon’s Chang said the company is “aware of the complaint and look forward to defending it vigorously.“ He also stated:

“While we cannot comment on pending litigation, we are confident that our impending response to the complaint — and the documents and other evidence that will come to light in the aftermath — will speak for themselves.“

Sphere 3D and Gryphon have been partners since August 2021. Gryphon manages Sphere 3D’s “crypto mining activities” and maintains “fiduciary duties of Sphere’s digital assets,” said the statement. Gryphon receives 22.5% of Sphere’s gross profit as payment for this work.

Sphere’s statement also suggests that the relationship between the companies that were once considering a merger has deteriorated. Trompeter noted that the filing demonstrates that “we will not be bullied or threatened by the likes of Gryphon.“ The executive stated:

“Gryphon has failed to act with integrity, has failed to honor our contract, and we will hold them accountable.”

Cointelegraph reached out to Sphere 3D but did not receive an immediate response. Both companies claim to be committed to growing crypto mining operations with a net carbon-neutral impact. A merger agreement between the two companies was terminated in April 2022. 

Magazine: Green consumers want supply chain transparency via blockchain

US Bitcoin reaches tentative settlement to reopen Niagara Falls mining facility

After a lengthy legal tussle, the company will have to pay various fees and fines and take extensive noise control measures.

Crypto miner US Bitcoin Corp has come to a tentative agreement with the City of Niagara Falls that will allow it to reopen its mining operation in the city, according to a local news report. A state supreme court judge ordered its plant closed in early March. The settlement still requires the approval of the city council.

State Supreme Court Justice Edward Pace ordered the plant’s closing after “weeks of contentious negotiations” between the city and US Bitcoin on the wording of the order. The order enforced a ruling from another state supreme court judge to cease operations while the city sought an injunction to enforce new city ordinances affecting the plant.

Related: MIT Space Force major proposes Bitcoin mining as cybersecurity tool

Pace found US Bitcoin in contempt of court for ignoring the initial order and imposed fines retroactively to Dec. 9, when it was initially ordered to close. Those fines will total over $1 million, according to the report.

Now the company will have to pay $150,000 in fees to the city, $180,000 to reimburse legal costs and new application fees. In addition, US Bitcoin will have to take measures to reduce noise at the plant, including building a noise-dampening wall and submitting to third-party monitoring.

US Bitcoin is in the process of merging with Canadian miner Hut 8 in a deal announced in February. It also has facilities in Texas and Nebraska. According to its website, US Bitcoin uses approximately 90% “zero-emissions electricity” at its New York plant.

The state of New York imposed a two-year moratorium on new proof-of-work mining operations and licensing renewals for existing ones, unless they operate on 100% renewable energy. The state’s attorney general issued an investor alert warning of the risks of cryptocurrency investing in June.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

Texas Senate committee moves forward on bill removing incentives for crypto miners

Under the proposed legislation, certain crypto mining firms participating in a program to reduce the load on Texas’ energy grid would not receive an abatement on state taxes.

The Texas Senate Committee on Business and Commerce has passed legislation that would largely remove incentives for miners operating under the state’s crypto-friendly regulatory environment. 

In an April 4 session of the committee, Texas lawmakers agreed to move forward in a 10-0 vote on Senate Bill 1751 first introduced by state Senator Lois Kolkhorst. The proposed legislation would amend sections of Texas’ utilities and tax code to add restrictions for crypto mining facilities.

Under the bill, crypto firms participating in a program intended to compensate them for load reductions on Texas’ power grid would be capped for anticipated demand of “less than 10 percent of the total load required by all loads in the program.” Certain crypto mining companies would also not receive an abatement on state taxes for participation in the program starting in September.

According to Bitcoin (BTC) mining advocate Dennis Porter, the CEO of the Satoshi Action Fund, the changes to the state’s code would effectively eliminate incentives for crypto miners to create jobs in rural parts of Texas. He claimed that lawmakers on the committee had been “swayed by the influence of the powerful bill sponsor” — likely referring to Senator Kolkhorst.

Related: Bitcoin mining advocate is going state-to-state to educate US lawmakers

Texas has become somewhat of a beacon for crypto miners due to its seemingly loose regulatory regime and in the wake of the practice being largely banned in China. Crypto has been recognized as part of the state’s commercial code since 2021, and Governor Greg Abbott — re-elected to another four-year term in November — has previously referred to himself as a “crypto law proposal supporter” in the state.

Senate Bill 1751 will likely next move to the Texas state Senate for a floor vote.

Magazine: Crypto City: Guide to Austin

TON validators receive single nominator smart contract

Orbs’ single-nominator contract offers independent validation for validators, safeguards against gas attacks and enables stake recovery during emergencies.

Orbs, a public blockchain infrastructure designed for mass usage applications and close integration, has announced the release of the single nominator smart contract for validators in the Telegram Open Network (TON), a decentralized layer-1 blockchain.

In the TON blockchain network, validators can use the single nominator, which provides an isolated cold wallet for securing their validation process. This feature is particularly useful for validators with enough self-stake to conduct independent validation without needing third-party nominators. This feature aims to enhance validators’ independence, security and protection against gas-spending attacks.

In blockchain technology, a nominator is an individual or entity participating in a proof-of-stake consensus algorithm. This is done by staking their cryptocurrency holdings to support the network’s security and transaction processing.

The nominator essentially nominates a validator to represent their stake in the network and earn rewards on their behalf. The validator, in turn, is responsible for validating transactions and adding new blocks to the blockchain. This process is essential to the security and efficiency of the blockchain network, as it ensures that only legitimate transactions are processed and recorded on the blockchain.

Smart contracts typically involve two or more parties agreeing on a set of rules or conditions that must be met before the contract can be executed. These rules are encoded into the smart contract, and when the specified conditions are met, the contract executes automatically, transferring funds or assets between the parties involved.

The single nominator smart contract provides an option for the core team’s nominator pool smart contract. The alternative was developed in-house to provide security for validators who stake their funds. The single nominator tool is now offered to the community as a free, open-source product.

Related: TON blockchain freezes $2.6B worth of inactive tokens

Orbs added that the single nominator contract offers protection against attack methods by keeping the validator node’s hot wallet separate from the principal staking funds. This separation safeguards the funds against gas spending attacks, and the owner can alter the validator address if the wallet is compromised. Moreover, the contract provides the ability to recover stakes during emergencies, such as elector upgrades.

The contract has been audited by CertiK, a Web3, blockchain and smart contract security firm, which recently announced a partnership with TON to audit future projects on the network.

Magazine: Green consumers want supply chain transparency via blockchain

Bitcoin hash rate spikes as analysts say miners coming back online

Analysts are speculating that the Bitcoin hash rate has seen a significant spike recently as miners come back online to reap the rewards of the BTC price hike.

Bitcoin’s (BTC) hash rate spiked to all-time highs of 398 terahashes per second (TH/s) on March 23, with analysts speculating miners are starting to turn their rigs back on as BTC’s price rises.

According to data aggregator YCharts, the Bitcoin network hash rate dropped to 344.63 TH/s as of March 27, an increase from 335.32 TH/s on March 26, but still up from 178.77 TH/s one year ago.

In a March 26 post, Sam Wouters, a research analyst at Bitcoin financial service provider River Financial, speculated that the spike in hash rate is connected to unused mining inventory coming online, new facilities going live and entrepreneurs finding cheap sources of mining.

“While Bitcoin’s price was so low and as much inventory as possible was brought online last year, at some point, maximum capacity of what the network could handle was reached,” he said.

“Now that the price has been rising again and some time has passed, more of this inventory has been able to go online,” Wouters added.

In addition, Wouters says that Hydro models are starting to get into the market with “250+ TH/s per machine, which adds tremendous hash rate.“

A March 20 analysis from investment banking company Stifel shared a similar sentiment, speculating that the recent spike could be connected to miners bringing hardware back online.

“We anticipate overall network hash rate will continue to climb higher as a result of attractively priced hardware being bought up by well-capitalized miners.“

Speaking to Cointelegraph, Nazar Khan from Bitcoin mining company TeraWulf, explained the company is currently maximizing the hash rate of all its rigs and has recently brought more online at its new Nautilus Cryptomine facility. 

“Wulf has the opportunity to add 80 MW of capacity at LMD and 50 MW at Nautilus. The recent price movement is an indication of the long-term value of the ability to expand at low-cost energy sites,” Khan said.

According to Khan, while some have speculated the lower prices forced miners to shut down their rigs and wait for the BTC price to improve, TeraWulf was able to continue mining Bitcoin at lower price levels because of their lost cost from “efficient mining fleets.”

Related: Crypto miner explains how Bitcoin mining stabilizes grids

However, regardless of the reason for the spike, Khan says TeraWulf is not expecting the network hash rate to continue to increase through the first half of the year, irrespective of the BTC price.

“There is a lag between when investment decisions are made, and when that capacity comes online,” Khan explained.

Magazine: Best and worst countries for crypto taxes — plus crypto tax tips

Venezuela shuts down crypto mining facilities, exchanges amid corruption probe

According to Venezuela’s attorney general office, government officials were running parallel oil operations with the assistance of the national crypto department.

Venezuela’s energy supplier has shut down crypto mining facilities throughout the country as part of a reorganization of the national crypto department and ongoing corruption investigations involving the country’s oil company.

According to local media reports, crypto mining companies, and tweets from Venezuela’s National Association of Cryptocurrencies, mining facilities were shut down in the past days in the states of Lara, Carabobo and Bolívar. It is unclear how many crypto firms were affected. Some crypto exchanges were also ordered to cease operations.

The closure of crypto mining facilities is believed to be part of an ongoing investigation of corruption involving Venezuela’s oil company PDVSA and the country’s crypto department. 

Venezuela’s attorney general, Tarek William Saab, disclosed on March 25 that government officials were allegedly running parallel oil operations with the assistance of the national crypto department. Saab commented on Twitter:

“This network used a conglomerate of commercial companies to legitimize the capital obtained from sales through the acquisition of crypto-assets, personal and real estate.“

According to Saab, at least 10 people have been arrested in connection with the investigations, including Joselit Ramirez Camacho, who led the crypto department since its inception in 2018, overseeing crypto tax rules and the country’s cryptocurrency PetroDollar (XPD). According to earlier reports, Camacho was arrested on March 17 as part of the investigation.

Since June 2020, Camacho has been listed in the United States Most Wanted List. At the time, Department of Homeland Security Investigators issued a bounty of up to $5 million for any information that would lead to the capture of the Petro’s supervisor. Authorities alleged that Camacho had “deep political, social and economic ties” to suspected narcotic kingpins, including Tareck El Aissami, the former vice president of Venezuela.

Venezuela’s president Nicolás Maduro announced the reorganization of the National Superintendency of Crypto Assets in a decree issued on March 17. Maduro’s administration claimed the decision was intended to protect the country’s citizens from the negative effects of economic sanctions, among other reasons.

Magazine: Best and worst countries for crypto taxes — plus crypto tax tips

Crypto mining in 2023 — Is it still worth it? Watch Market Talks

Join us as we discuss whether cryptocurrency mining is still worth it in 2023 and all the latest updates regarding the mining industry.

In this week’s episode of Market Talks, Cointelegraph welcomes Justin Kramer, CEO of Badgerland Home Crypto Mining and a long-time cryptocurrency investor. When he is not attending to his own mining rigs, Kramer provides consultation services to home-based operations and larger startups on how to set up mining farms.

We start things off with miner prices and how they have changed in the last few months. Have the prices gone up or down, and what kind of impact does Bitcoin (BTC) have on prices? Which miners are the most in-demand right now, and who is buying them — small-scale miners or larger operations?

Mining operations that paid extremely high prices for mining rigs, which are now not worth even close to the same amount, how are they managing in this market? What is their plan for getting their investments back? Is it a lost cause at this point since the prices of the coins they currently mine are not as high as they used to be? Is it still worth it to pay those high electricity costs and keep mining?

United States President Joe Biden announced a new budget recently that also includes a whooping 30% tax on the electricity used for cryptocurrency mining operations. We ask Kramer for his thoughts on this and what exactly the details are of this new tax. Could this be an attack on crypto?

Are miners gravitating more toward altcoin miners at this point because they might be able to make more of a profit as compared to Bitcoin mining? We ask Kramer if this is true, and if so, what is the reason behind it?

How profitable is it to mine Kadena (KDA)? How much do the miners cost, and also, is it worth anything to mine and hold Kadena? Is the network moving forward and innovating?

We ask Kramer how he advises people who want to set up a mining farm, is it all Bitcoin miners or a certain percentage of Bitcoin miners and the rest are altcoin miners, and which miners does he recommend specifically?

How are things developing in the cloud-based mining and NFT-based mining sectors? Are they a good option for someone who might not have the space or resources needed to run a miner in their house or on their property? We also ask Kramer for the details about profit sharing and other expenses involved in this form of mining.

We cover all this and more, so make sure to stay tuned until the end because Cointelegraph Markets & Research will also be taking your questions and comments throughout the show, so be sure to have them ready to go.

Market Talks streams live every Thursday at 12:00 pm ET (5:00 pm UTC). Each week, it features interviews with some of the most influential and inspiring people from the crypto and blockchain industry. So, head on over to Cointelegraph Markets & Research’s YouTube page and smash those Like and Subscribe buttons for all our future videos and updates.

Jack Dorsey’s Block asks for input on proposed ‘mining development kit’

Block’s mining hardware product lead, Naoise Irwin, has asked for pointers on a proposed hardware and software development kit for Bitcoin mining.

Payments company Block, formerly known as Square, is delving deeper into the crypto mining industry with potential plans to build a “mining development kit.”

A March 7 blog post revealed that the Jack Dorsey-founded multinational technology firm was mulling its latest vision for advancing its Bitcoin (BTC) mining ambitions. Senior product lead for mining hardware Naoise Irwin asked for feedback on the concept via email.

The mining development kit (MDK), if it goes ahead, will provide a “suite of tools” to developers with the aim of increasing the “accessibility and openness” of Bitcoin mining.

Block noted the kit would deliver several components including an “industrial-grade Bitcoin mining hashboard” designed to be compatible with the firm’s custom-built control board and third-party controllers such as Raspberry Pi.

Additionally, there will be a custom-designed controller board designed to work with the “hashboard.”

The firm asked what features users want to see on the proposed hardware such as power requirements, required connections, and how much it should cost.

There will also be open-source firmware, a software API and a web front-end, “allowing developers to modify the key performance parameters of the hashboard,” it stated.

Block asked for additional feedback on the software, reference material and support documentation.

“The intention behind the MDK is to provide developers with a suite of tools to help unlock creativity and innovation in Bitcoin mining hardware.”

The plan replicates the Bitcoin Developer Kit and Lightning Developer Kit projects developed by Block subsidy Spiral.

Related: Block remains on the hunt for wallet partners nearly two years later

In October 2021, Dorsey announced plans for an open-source Bitcoin mining system for businesses and individuals. Those plans were confirmed in January 2022 and development commenced.

Irwin stated that since then, “we have been heads down building a team to explore our mining hardware strategy, and have kicked off the long process of developing our own Bitcoin mining semiconductor chips (ASICs).”

He ended the blog post by stating further updates on the mining hardware program will be coming in the following weeks and months.