Is Bitcoin Mining Practical For UK Business?
What is Bitcoin?
Bitcoin is a digital currency, or cryptocurrency, meaning there is no physical tender to hold. It offers a means of transferring money via the internet and is controlled by a decentralised authority, unlike government-issued currencies like the British pound or U.S. dollar.
It has presented an alternative to bank-controlled fiat money but requires more widespread adoption to be viable as a true currency, due to the volatility of its appreciation and depreciation. If widespread Bitcoin adoption was achieved, and captured 15% of the global currency market, each Bitcoin could reach a value of around £365,000. Within the last few weeks, Central American country El Salvador became the first to officially classify cryptocurrency as legal tender.
Bitcoin is incredibly popular and has led to the creation of swathes of ‘altcoins’ like the aforementioned Dogecoin and Ethereum. It matches key attributes of successful currencies, as it is scarce, offers utility, is easily divisible and transportable, as well as being durable and hard to counterfeit – which is what gives it its value.
Bitcoin mining potential for UK business
In order to mine Bitcoin, a variety of hardware can be used – built into mining processors known as rigs. Computer chips like Application-Specific Integrated Circuits (ASICS) and advanced Graphic Processing Units (GPUs) are popular choices – and this has seen a shortage of these components for the amateur personal computer builder over recent months.
The rigs require a lot of energy to power them. Mining for one Bitcoin transaction uses up an estimated 3.0 kWh of electricity per hour, and 26,280 kwH annually. But how does this stack up to some of the leading industries in UK business and their average usage from one company to another? And what does their Bitcoin mining potential look like? Simply click on the icons below to find out more.
How Bitcoin mining works
Mining Bitcoin is the process that allows a new Bitcoin to be released into circulation. A “blockchain”, in the simplest form, is a type of database that structures data in groups with certain storage capacities. Once these are filled, they are chained onto the previously filled block which forms a string of data known as the blockchain.
In Bitcoin mining, you are rewarded for verifying transactions that use Bitcoin. This verification process requires a computer to cycle and guess through a range of random 64-digit hexadecimal numbers. The transaction will have been assigned a metaphorical, undisclosed number called the ‘target hash’. This random hexadecimal number must generate a hash that is less than, or equal to, the target hash. It’s a case of finding that and then being the first to supply it as a potential solution. Once this has been confirmed, and the block has been added into the blockchain – which is, at a basic level, a souped-up database – you’ll be rewarded for doing so with 6.25 Bitcoin, worth around £170,000 at the time of writing.
The difficulty level, which gets harder the more competition there is to solve the hash problem, currently stands at chances of one in 17.59 trillion.
Is the energy required impractical for business?
As the icons above will tell you, the energy required to power rigs to mine one single Bitcoin is not worth the time or effort for business – simply because the odds are so low. If any business ventures in the industries listed above decided to shelve their current activities to pursue Bitcoin mining, the odds still don’t stack up anywhere near in favour of such a decision.
And, across a full year, only those industries that do not already have a high energy outlay would make a profit worthwhile the effort. It’s also key to consider that high numbers of electronic power working all day, every day, for a full year, would need a means of cooling – further increasing the energy usage.
The more mining rigs that you could power, the greater the possibility of successfully receiving Bitcoin from your efforts. But yet again, that showcases a higher energy usage that would be required to power more rigs.
While the prospect of striking it lucky on a £170,000 windfall would entice some, the reality of it is that the security, regularity of income and much higher success probability in regard to making a profit, outweigh the benefits of what Bitcoin mining could provide – unless of course you were successful in your mining. Sticking with current business ventures not only makes more sense from a business standpoint, but also an environmental one too – with the carbon footprint of cryptocurrency currently higher than countries like Argentina.
If you’re interested in attempting it yourself, or simply would like to lower your annual electricity costs, get a competitive electricity quote today.
To estimate annual energy usage for each industry, we took average monthly usage from our own data.
The pricing for energy usage/how much it would cost to run those rigs for a year is based on a rate of 12p per kWh.
For the probability of success, we applied the OR rule – these are independent events and are mutually exclusive, so the probability of getting one successful event out of all of them is calculated by the addition of the individual probabilities: P(A or B or … or N) + P(B) + … + P(N)
At the time of writing, 6.2 Bitcoin was worth £169,512.89.
|Industry||Annualised average energy usage (kWh)||Annualised average energy cost (£)||How many rigs you could power per year||Success probability||Profit if successful (£)|
|Manufacturing||1,372,608||164,713||52.2||52 in 17.59T||4,799.89|
|Environmental||1,194,552||143,346||45.4||45 in 17.59T||26,116.89|
|Education||1,039,980||124,798||39.5||40 in 17.59T||44,714.89|
|Social Care||897,120||107,654||34.1||34 in 17.59T||61,858.89|
|Hospitality||808,704||97,044||30.7||31 in 17.59T||72,468.89|
|Restaurants and cafés||799,092||95,891||30.4||30 in 17.59T||73,621.89|
|Pubs and bars||728,436||87,412||27.7||28 in 17.59T||82,100.89|
|Takeaways||691,272||82,953||26.3||26 in 17.59T||86,559.89|
|Healthcare||673,116||80,774||25.6||26 in 17.59T||88,738.89|
|Recreation||664,776||79,773||25.3||25 in 17.59T||89,739.89|
|Construction||620,208||74,425||23.6||24 in 17.59T||95,087.89|
|Entertainment||604,992||72,599||23.0||23 in 17.59T||96,913.89|