Part I : Mining at home
The energy consumption of mining is one of the most discussed and strongly debated subjects when talking about Bitcoin. We decided to wade into this debate, and also bring profitable mining right to people's homes !
We have serious reasons to think that mining at home can be economically sustainable, and if it's not the standard in the future, it should certainly help soothe most environmental critiques about mining.
It’s not a secret that computing hardware produces heat. Actually it’s very good at it and one can’t tell the difference in terms of heating power and efficiency between an electrical heating rod and an ASIC.
But, most of the time, this heat is just disposed of by miners, despite the fact that it has an economic value.
Knowing how competitive this industry is, that waste seems paradoxical. In mining, having an edge over competitors is a key to survival, but as long as no one is exploiting heat at scale, other miners are not forced to do it. But it is not as easy as it seems. For miners to sell heat, they need buyers, and these buyers have to be local to the miner as heat is not easily transportable.
Therefore the main reason exploiting heat is not the standard in the mining industry is because of a lack of imagination coming from miners who are stuck with the “data center” model.
If someone mines Bitcoin and find a way to exploit all the heat produced by the process at scale, this economic edge will force other participants to adapt or die.
It’s not a matter of "if" but "how," and that is the question we tried to answer.
Across the world, residential heating consumption represents 13,600 TWh per year. Bitcoin mining uses 120 TWh per year according to CBECI, nearly 100 times less.
So we have an “unlimited” demand for heat. In many countries, people are already using electricity to heat water and their home and are willing to pay a higher price per kWh than industrial miners will pay.
But this demand is very decentralized. How will a miner be able to sell heat to so many people from its mining facilities?
Thhis is where we have freed ourselves from the industrial paradigm of mining. With some modifications, an ASIC can be adapted for home heating; it’s not that hard to engineer a system to cool the ASIC without using noisy fans. The solution is to put a mining heater into homes. In 2018 WiseMining did exactly that by developing the Sato combi boiler.
You’ve probably seen videos of people tinkering with their homemade mining machines to exploit the heat generated. So, why didn't these make it to market?
What did they miss ?
They missed the many peculiarities of mining. The first is that ASICs have a lifespan shorter than a regular home heater. You are not supposed to change a heater frequently, whereas ASIC have to be changed every 4 to 5 years. Therefore a good mining heater have to propose a way to change out the ASIC (hashboards, mainly) without having to change other components. Wisemining uses a “hot-swap” technology as you find in servers with hard drives. This way it’s possible to change hashboards easily without paying for and installing a new heater.
Second, you have to take into account the uptime of the ASIC and maximize it. In every home space heating and hot water consumption varies greatly, depending on need and outside temperatures. Therefore, you need to install heating capacity for peak consumption and not just average usage. But, using only an ASIC-based heater might not meet the peak, that's why it's better to have mining heater working in tandem with a regular heater to ensure the right temperature and amount of hot water any time.
Finally, buying ASICs needs expertise, as their prices are highly dependent on market conditions and it’s not always a good idea to buy. ASICs have a “fair” value representing how much they can still earn in the future. You need to verify if the price of the ASIC is close to its fair value, otherwise you may never see the return. We protect our customers from this risk by purchasing the ASICs ourselves, in bluk, from our professional network.
Right now, our customers are homeowners who want to heat their homes and mine bitcoin at the same time, without spending more on utility costs.
But we can imagine a different scenario where investors buy mining heaters and lease them for free, maintenance included, to people who need a new heater. As a compensation for this service, the investors will receive the bitcoins while borrowers use their free mining heater.
Imagine how this new generation of miners could mine at scale without paying for electricity, and how the struggles to operate an industrial mining farm disappear. The environmental impact is reduced, since the heat produced goes into heating homes. No construction permit for your facility, no contract with electricity suppliers, no political pressure. This is the kind of mining future we can all get behind!
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