The Proof-of-Work (PoW) mining on the bitcoin network allows you to maintain its performance. This ingenious cryptographic system protects the network. It set the stage for other PoW cryptocurrencies. Unfortunately, it has one serious drawback: the electricity to support work costs money. Big money.
This was not a problem when bitcoin was growing in price and miners earned good money. But now, when cryptocurrencies are at their lowest, some believe that bitcoin is on the verge of a mining crisis. The co-founder of the F2Pool Discus Fish mining pool said that according to his estimates, from 600,000 to 800,000 miners have already been stopped. Due to falling prices and increasing complexity, many miners are now working at a loss, since most of their costs are electricity related.
What if we eliminated this expenditure altogether? Even though this will not happen soon, but in the future miners may find solutions to their woes — in space.
Rising energy costs are a serious economic problem for miners. Mining difficulty is constantly increasing, while the cost of electricity, at best, remains the same. In fact, over quite long periods, it has also been increasing, and the International Energy Agency (IEA) expects this trend to continue. This is bad news for miners, many of whom are already losing money on bitcoin mining considering current prices on crypto and electricity.
In a search for cheap electricity, miners set up their farms on remote hydroelectric power plants. They also use excess natural gas from natural gas fields in Canada. In China, miner migration is seasonal — they move around the country depending on where electricity is the cheapest since climatic factors cause predictable fluctuations in electricity prices. In other words, miners try to set up their farms in places with the best conditions for mining.
So, why space? Because the Sun is a giant source of absolutely free energy. According to the IEA, our civilization consumes about 100,000 terawatt hours (TWh) of electricity. The sun emits a total of 384.6 septillion watts. This amount is enough to supply energy to 3.8 billion planets like the Earth at the current level of energy consumption. And all this energy would be available right on the surface of our planet if it were not for the weather. However, in space, nothing prevents us from using the solar power 24/7. We could place solar batteries in orbit, but so far there is no reliable way to transport the collected power to Earth.
On the other hand, we can easily transfer data, so placing mining farms in space seems more logical.
Of course, this approach also has its flaws: how can we transfer the necessary data on time? The farther the farm from the Earth, the longer it will take to transfer the data. If one sets up the equipment too far, blocks may become obsolete by the time they are included in the blockchain. However, this is not too big of a problem. If we analyze across a large number of blocks, we get an exponential distribution with a very long tail. On average, a block is created every 10 minutes, but every third block takes approximately 10 minutes longer to be created, and 5% of the blocks reach the network only in 30 minutes. Modern-day technology allows us to transfer data from space to Earth much faster!
However, it is still reasonable to place farms as close to Earth as possible, to make sure that the information reaches the network on time and other miners will not overtake it. Polar-orbiting satellites are perfect for this job: they allow the farm to stay out of the shadow of Earth while being relatively low above the surface. From the height of approximately 2,000 km, the blocks will arrive as fast as they do via the optical network from Hong Kong to Seoul. In other words, there won’t be delays in data transfer. Unfortunately, it is impossible to have millions of satellites set up at this height. The most effective solution is to create a ring of solar-powered miners on a polar orbit. They will be able to produce millions of TWh of electricity — enough to supply the entire planet.
Sure, it’ll take a while before such mining platforms appear. Many economic and technological problems need to be solved: solar panels need to become cheaper, mining chips need to slow down their evolution, and space launches should become much more accessible.
There is also another idea put forward by Peter Todd in 2017: mining bitcoins can make the generation of electricity in space more cost-effective. Instead of transferring solar power to the planet, people can mine bitcoins in space and then transport them to Earth, benefiting from solar power without having to worry about transferring it to the planet.
But even when we resolve these problems, others will remain: who will build such a satellite and how can it remain decentralized? With no particular system of ownership in space what will prevent competitors from literally stealing someone else's solar power? At first, this doesn’t seem to be a viable idea, but the first steps towards its implementation are already being taken.
A company called Miner One launched a miner Space Miner One in a balloon.
The startup plans to mine bitcoins at the height of 30 km. Strictly speaking, this is not yet “space”: it is in the mesosphere, which is part of the Earth’s atmosphere. The real outer space is much higher — at an altitude of 100 km, where the Karman line passes. Nevertheless, this project proves that bitcoin mining at a high altitude using solar power is quite possible, even if its large-scale implementation does not yet appear economically or technologically justified. This solution will not save miners from the current crisis, but in the long term, space mining will completely avoid electricity costs, remaining profitable even at low prices and high mining difficulty.