Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
12/15/2021 - Planning Commission - Agenda -Regular
Planning Commission Meeting AGENDA Wednesday, December 15, 2021, 7:00 PM Work Session 6:00PM Council Chambers Conference Room, City Hall, 114 North Broad Street: Regular Session 7:00PM Council Chambers, City Hall, 114 North Broad Street WORK SESSION 1.Call to Order 2.New Business A.Discussion item on the December 15th agenda 1. Use Not Provided For - 1401 Southside Drive - crypto mining B.Discussion of items on the January 12th agenda 1. Codes changes - Subdivision and site plan 2. Rezoning 630 Union Street - HM to HBD 3. Rezoning 407 East Burwell Street - RB to TBD 4. Special Exception Permit 2936 West Main Street - Massage Parlor C.Discussion of proposed bylaws 1. Continue the discussion of bylaws 3.Adjournment REGULAR SESSION 1.Call to Order 2.Pledge of Allegiance 3.Consent Agenda A.Minutes Consider acceptance of the minutes from the November 10, 2021, work session and regular meeting. 4.New Business 1 A.Use Not Provided For Permit Hold public hearing and consider request of Sia Asset Management LLC, applicant, and Helm Building Enterprises, LTD, property owner, for a Use Not Provided For Permit to allow crypto mining at 1401 Southside Drive, Tax Map # 165-4-2.1. 5.Adjournment City Council meeting, January 10, 2021, 6:30 p.m. Community Room, Salem Civic Center, 1001 Roanoke Boulevard 2 {00442691.DOC } DRAFT BYLAWS OF THE CITY OF SALEM PLANNING COMMISSION Mission Statement/Objective: To promote the orderly development of the City of Salem by providing technical assistance and direction to the Council of the City of Salem and its citizens to accomplish the objectives To provide the City of Salem City Council and it’s citizens direction(advice) and knowledge (assist the City Council in accomplishing the objectives) of the Code of Virginia and the Ordinances of the City of Salem in reference to subdivision and zoning matters as established by §15.2-2200 of the Code of Virginia and The City of Salem Subdivision and Zoning Ordinances, in force on the date hereof, and as may from time to time be lawfully amended. ARTICLE 1: MEMBERSHIP A.The Planning Commission of the City of Salem, hereafter known as the Commission, will consist of five members, appointed by the City of Salem City Council, hereafter known as City Council, all of whom shall be residents of the City of Salem, and qualified by knowledge and experience to make responsible decisions on questions of growth and development. B.Terms of the Commission shall be four years as set out in Section 15.1-437 of the Code of Virginia, 1950, as amended. C.Any vacancy in membership shall be filled by appointment of the City Council and shall be for the unexpired portion of the term. D.Any member of the Commission shall be eligible for re-appointment. E.Any member of the Commission may be removed from office by the City Council for neglect of duty and malfeasance in office. F.The City Council may provide for compensation to Commission members for their services, reimbursement for actual expenses incurred, or both. ARTICLE 2: OFFICERS A.A Chairman and Vice-Chairman shall be elected by the Commission annually from the voting members and shall be members of the Commission. Their terms shall be for (1) one year. B.The Commission shall, at its first meeting in January of each year, elect one of its members as chairman, who shall preside at such meeting and all other meetings during which elected, if present. At the same meeting in January, a vice-chairman who shall, if so elected, preside at meetings in the absence of the chairman and may discharge any other duty of the chairman during his absence or disability. Nominations shall be made from the floor, with the election immediately thereafter. A nominee receiving three or more votes shall be declared elected. C.An Executive Secretary shall serve at the request of the Commission and shall be the Director of Planning City Manager of the City of Salem (Assistant City Manager) and serve as the agent in the review of development plans. A Deputy Executive Secretary shall also serve and shall be the Assistant City Manager. Alternate secretary or secretaries may be appointed by the Commission as deemed necessary. Their terms shall be for (1) one year. D.Agents shall serve at the request of the Commission and shall be the City Manager and the Director of Community Development. E.All officers may succeed themselves. 3 {00442691.DOC } F. Should the Chairman and Vice-chairman be absent at any meeting, the Commission shall elect a temporary Chairman to serve at the meeting. ARTICLE 3: DUTIES OF OFFICERS AND COMMISSION MEMBERS A. The chairman shall: 1. Preside at all meetings. 2. Appoint all committees deemed advisable with the aid of the Commission. 3. Rule on all procedural questions (subject to a reversal by vote of two-thirds of the members present.) 4. Certify the Commission’s review of documents, minutes, plans, maps, etc. brought before the Commission for official action or recommendation. 5. Have authority to call special meetings as he/she deems necessary. 6. Carry out other duties as assigned by the Commission. B. The Vice-Chairman shall act in the absence, resignation or inability of the Chairman with full powers of the Chairman. If the position of Chairman shall become vacant, the Vice-Chairman will assume his/her duties. A Vice-chairman shall then be elected by a majority vote at the next regular meeting following the Vice- chairman’s last regular meeting. C. The secretary shall: 1. Record attendance at all Commission meetings. 2. Record the minutes at all Commission meetings. 3. Certify all minutes as true and correct copies after approval by the Commission. 4. Notify all members of all meetings. 5. Maintain a file of all official Commission records and reports 6. Certify all maps, records, recommendations and reports of the Commission. 7. Give notice and be responsible for publishing public hearings and public meetings. 8. Serve as Subdivision Agent for the Commission. 9. If the office of Secretary should become vacant, the alternate Deputy shall become secretary. D. The duties of the Commission shall be established by law, or as lawfully delegated by the City Council. ARTICLE 4: MEETINGS A. Regular Meetings of the Commission shall take place on the second Wednesday following the second Monday of the first regularly scheduled City Council meeting of the month at 7:00 PM in Council Chambers in the City Hall building located at 114 North Broad Street, provided that upon a decision of the Commission, an adjourned meeting/or the regularly scheduled location is unavailable, may be held at any other place in the city and shall be the duty of the secretary to give timely notice thereof to all members and notify the news media. If there are no items on the agenda, the meeting may be canceled at the request of the secretary/chairman. B. Work Session Meetings will take place at twelve noon on the day of the regularly scheduled Planning Commission Meeting in an official meeting room as designated by the Commission. C. Special Meetings of the Commission may be called at any time by the Chairman or by two members upon written request to the secretary. The secretary shall mail to all members, at least five days in advance of a special meeting, a written notice fixing the time and place of the meeting and the purpose thereof. Written notice of a special meeting is not required if the time of the special meeting has been fixed at a regular meeting, or by given notice to each member personally or left at his or her place of residence not less than twenty-four hours prior to the time fixed for the meeting. Iif all members are present at the special meeting, or file a written waiver of notice then the requirements as to prior notice shall be deemed waived. 1. The business to be discussed shall be stated in the call for such meeting. 2. No other business shall be discussed or acted upon over the objection of any member present. 4 {00442691.DOC } 3. Given notice is not required if the time of the special meeting has been fixed at a regular meeting. 4. If special meeting is at regular meeting, then any business may be transacted that would have been at the regular meeting. D. Quorum of the Commission shall constitute two-thirds of the membership and no action of the Commission shall be valid unless authorized by a majority of those present. 1. Any member of the Commission may introduce a motion. 2. A motion need not be seconded for purposes of discussion and/or voting. E. The secretary shall prepare and make available to each member of the Commission a detailed agenda by Friday on the week preceding the regular meeting of the Commission. The Commission may depart from the agenda with the consent of the Chairman or by a majority vote of the members present. 1. Proposals as to zoning or subdivision requests shall be submitted in writing with an illustrative map, and the petitioner shall state if it, he or she is the owner of the property in question or its, his or her authorized agent. Any person may appear before the Commission in person or through an agent. F. All meetings shall be open to the public provided, however, that closed executive sessions or closed regular or special meetings may be held in accordance with State law. The usual order of business at regular meetings shall be as follows: 1. roll call; 2. correction and/or approval of the meetings of the previous meeting; 3. unfinished business; 4. new business; and 5. reports of the committees. 6. The chairman may modify the usual order of business to promote the efficient management of the meeting and for the convenience of the citizens or interested parties that may attend. 7. Any advertised public hearing shall be considered a special order of business at the time set for such hearing and shall supplant any matter on the agenda except the approval of the minutes. 8. Any matter not disposed of at a meeting shall be included on the agenda of the next regular meeting unless another future meeting date has been selected by the Commission. G. The Commission may, from time to time, adopt rules and regulations for filing, scheduling, and preparing petitions and requests for hearing before the Commission. ARTICLE 5: PARLIMENTARY PROCEDURE A. The deliberations of the Commission, unless otherwise provided by statute or these bylaws, shall be governed by Robert’s Rule of Order. 1. Any member of the Commission may introduce a motion. 2. Appeal may be taken by any member from a ruling of the chair. 3. A majority vote of those members present shall determine any appeal. 4. Any motion to close debate shall require approval by two-thirds majority vote of the members present. ARTICLE 6: ACTION ON COMPREHESIVE PLAN A. The adoption of the comprehensive plan or of any part, amendment, extension or addition shall be by the resolution of the Commission, carried by the affirmative votes of not less than a majority of the entire membership of the Commission. B. The resolution shall refer expressly to maps and other descriptive matter intended by the Commission to form the whole or part of the plan and the action as taken shall be recorded on the map and plan and descriptive matters by the identifying signature of the Chairman and Agent of the Commission. An attested copy of the plan or plan thereof as adopted and approved shall be certified to the City Council and all administrative agencies affected by the plan. 5 {00442691.DOC } C. Before the adoption of the plan or any such part, amendment, extension, or addition, the Commission shall hold at least one public hearing thereon, after notice has been given with State law. ARTICLE 7: CONFORMITY WITH EXCITING CODE The Commission will act within the provisions of the Ordinances of the City of Salem; Title 15.1, Chapter 11, of the Code of Virginia, 1950 as amended, and other State and Federal laws and regulations as applicable. ARTICLE 8: AMENDMENTS These rules may be amended, within the limits allowed by law, at any time by an affirmative vote of not less than two-thirds of the members of the Commission, provided that such amendment is presented in writing at a special or regular meeting preceding the meeting at which the vote is taken. 6 Planning Commission Meeting MINUTES Wednesday, November 10, 2021, 7:00 PM Council Chambers, City Hall, 114 North Broad Street, Salem, Virginia WORK SESSION 1.Call to Order A work session of the Planning Commission of the City of Salem, Virginia, was held in Council Chambers Conference Room, City Hall, 114 North Broad Street, Salem, Virginia, at 6:0 p.m. on November 10, 2021; there being present said Commission members to wit: Denise P. King, Vice Chair; Reid A. Garst, II: Jackson Beamer; and Neil L. Conner; together with H. Robert Light, Assistant City Manager and deputy Executive Secretary, ex officio member of said Commission; Charles E. Van Allman, Jr., Director of Community Development; Mary Ellen Wines, Zoning Administrator; and Christopher Dadak on behalf of Jim H. Guynn, Jr., City Attorney; and the following business was transacted: Vice Chair King called the meeting to order at 6:04 p.m. and reported that this date, place, and time had been set for the Commission to hold a work session. 2.New Business A.Discussion items from the November Meeting Discussion of items from the November 10, 2021, regular session agenda. A discussion was held regarding the request of Simms Property, LLC., property owner/developer for approval of the amended subdivision plan for a 4.549-acre tract known as Simms Farm Section 2. B.Discussion of Bylaws Continue the discussion of proposed bylaws. A discussion was held of proposed bylaws. A draft was given to members. Current projects going on in the City were discussed. The Administrative Calendar for 2022 was also given to members. 7 3.Adjournment Vice Chair King inquired if there were any other items for discussion and hearing none, adjourned the work session at 6: p.m. REGULAR SESSION 1.Call to Order A regular meeting of the Planning Commission of the City of Salem, Virginia, was held after due and proper nice in the Council Chambers, City Hall, 114 North Broad Street, Salem, Virginia, at 7:00 p.m. on November 10, 2021. The Commission, constituting a legal quorum, presided together with Christopher Dadak on behalf of Jim H. Guynn, Jr., City Attorney; H. Robert Light, Assistant City Manager and Deputy Executive Secretary, ex officio member of said Commission, to wit; Charles E. Van Allman, Jr., Director of Community Development; and Mary Ellen Wines, Zoning Administrator; and the following business was transacted: Vice Chair King called the meeting to order at 7:00 p.m. 2.Pledge of Allegiance 3.Consent Agenda A.Minutes Consider acceptance of the minutes from the October 13, 2021, work session and regular meeting. Neil Conner motioned Consider acceptance of the minutes from the October 13, 2021, work session and regular meeting.. Jackson Beamer seconded the motion. Ayes: Beamer, Conner, Daulton, Garst Absent: King 4.New Business A.Simms Farm Section 2 Consider the request of Simms Property, LLC., property owner/developer for 8 approval of the amended subdivision plan for a 4.549 acre tract known as Simms Farm Section 2. Staff noted the following: Although the previous plan submitted did meet all requirements, staff recommended to the developer during the staff review process that the storm drainpipe between Lots 94 and 95 be extended to ensure the water discharge would not impact the house that will be constructed on Lot 94. After the October Planning Commission meeting, the developer agreed and submitted amended plans. This plan has been reviewed by City Staff and approval is recommended with any field revisions to be approved administratively by staff. Neil Conner motioned Consider the request of Simms Property, LLC, property owner/developer, for approval of the amended subdivision plan for a 4.549-acre tract known as Simms Farm Section 2. Reid Garst seconded the motion. Ayes: Beamer, Conner, Daulton, Garst Absent: King 5.Adjournment On motion by , meeting was adjourned at 7:03 p.m.Absent: King City Council meeting, November 29, 2021, 6:30 p.m. Community Room, Salem Civic Center, 1001 Roanoke Boulevard 9 Item # 4A Date: 12-15-2021 AT A REGULAR MEETING OF THE PLANNING COMMISSION OF THE CITY OF SALEM, VIRGINIA held in Council Chambers of City Hall, 114 North Broad Street, Salem, VA 24153 AGENDA ITEM: Use Not Provided For Permit Consider the request of Sia Asset Management LLC, applicant, and Helm Building Enterprises, LTD, property owner, for a Use Not Provided For Permit to allow crypto mining at 1401 Southside Drive, Tax Map # 165-4-2.1. SUBMITTED BY: Mary Ellen Wines, CZA CFM Zoning Administrator SUMMARY OF INFORMATION: “Cryptocurrencies are not issued or backed by the U.S. government or any other government or central bank. Cryptocurrencies are a form of digital currency used in electronic payment transactions—no coins, paper money or banks are involved; there are zero to minimal transaction fees; transactions are fast and not bound by geography; and, similar to using cash, transactions are anonymous.” “All digital currency transactions are recorded in a virtual public ledger called the “blockchain,” which is maintained by digital currency “miners.” These miners can be anyone, anywhere in the world, who is willing to invest in the specialized computer hardware needed to rapidly process complex computations. Miners are awarded digital currency for verifying each transaction and adding it to the blockchain.” There is a cap on the number of “coins” produced and the time it takes to create each coin increases over time. This process utilizes multiple computers, processors, and servers which produce a lot of heat, which require a lot of cooling, in which all use an enormous amount of electricity which can increase the carbon emissions. In researching this type of business, as there are none locally, it has become apparent that in addition to the carbon emissions concerns, the noise level of the HVAC systems required to keep these systems cool, can be detrimental to neighboring properties. The applicant has discussed the electric service with the Building Inspections Division. An 800-to-1000-amp service has been requested. C/Net reported that one bitcoin (a type of cryptocurrency) takes 1,544 kWh to complete. This is equivalent of approximately 53 days of power for the average US household. The goal for the applicant is to have 150 Asic Pro A19 computers at completion. There are few if any jobs created in association with this type of business. A business license will be required, and the city would receive tax on any equipment in addition to the sale of electricity. 10 11 12 CRYPTOCURRENCY BITCOIN What Is Bitcoin Mining? Bitcoin mining is the process by which new bitcoins are entered into circulation; it is also the way that new transactions are confirmed by the network and a critical component of the maintenance and development of the blockchain ledger. "Mining" is performed using sophisticated hardware that solves an extremely complex computational math problem. The first computer to find the solution to the problem is awarded the next block of bitcoins and the process begins again. Cryptocurrency mining is painstaking, costly, and only sporadically rewarding. Nonetheless, mining has a magnetic appeal for many investors interested in cryptocurrency because of the fact that miners are rewarded for their work with crypto tokens. This may be because entrepreneurial types see mining as pennies from heaven, like California gold prospectors in 1849. And if you are technologically inclined, why not do it? However, before you invest the time and equipment, read this explainer to see whether mining is really for you. We will focus primarily on Bitcoin (throughout, we'll use "Bitcoin" when referring to the network or the cryptocurrency as a concept, and "bitcoin" when we're referring to a quantity of individual tokens). How Does Bitcoin Mining Work? By Updated November 30, 2021EUNY HONG Reviewed by JULIUS MANSA TABLE OF CONTENTS What Is Bitcoin Mining? A New Gold Rush Mining to Prevent Double Spend Mining and Bitcoin Circulation How Much a Miner Earns EXPAND + SUBMITTED BY APPLICANT 13 Click Play to Learn How Bitcoin Mining Works A New Gold Rush The primary draw for many mining is the prospect of being rewarded with Bitcoin. That said, you certainly don't have to be a miner to own cryptocurrency tokens. You can also buy cryptocurrencies using fiat currency; you can trade it on an exchange like Bitstamp using another crypto (as an example, using Ethereum or NEO to buy Bitcoin); you even can earn it by shopping, publishing blog posts on platforms that pay users in cryptocurrency, or even set up i t t i t t KEY TAKEAWAYS By mining, you can earn cryptocurrency without having to put down money for it. Bitcoin miners receive Bitcoin as a reward for completing "blocks" of verified transactions, which are added to the blockchain. Mining rewards are paid to the miner who discovers a solution to a complex hashing puzzle first, and the probability that a participant will be the one to discover the solution is related to the portion of the total mining power on the network. You need either a GPU (graphics processing unit) or an application-specific integrated circuit (ASIC) in order to set up a mining rig. SUBMITTED BY APPLICANT 14 interest-earning crypto accounts. An example of a crypto blog platform is Steemit, which is kind of like Medium except that users can reward bloggers by paying them in a proprietary cryptocurrency called STEEM. STEEM can then be traded elsewhere for Bitcoin. The Bitcoin reward that miners receive is an incentive that motivates people to assist in the primary purpose of mining: to legitimize and monitor Bitcoin transactions, ensuring their validity. Because these responsibilities are spread among many users all over the world, Bitcoin is a "decentralized" cryptocurrency, or one that does not rely on any central authority like a central bank or government to oversee its regulation. Mining to Prevent Double Spend Miners are getting paid for their work as auditors. They are doing the work of verifying the legitimacy of Bitcoin transactions. This convention is meant to keep Bitcoin users honest and was conceived by Bitcoin's founder, Satoshi Nakamoto.[1 ] By verifying transactions, miners are helping to prevent the "double-spending problem." Double spending is a scenario in which a Bitcoin owner illicitly spends the same bitcoin twice. With physical currency, this isn't an issue: once you hand someone a $20 bill to buy a bottle of vodka, you no longer have it, so there's no danger you could use that same $20 bill to buy lotto tickets next door. While there is the possibility of counterfeit cash being made, it is not exactly the same as literally spending the same dollar twice. With digital currency, however, as the Investopedia dictionary explains, "there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original." Let's say you had one legitimate $20 bill and one counterfeit of that same $20. If you were to try to spend both the real bill and the fake one, someone that took the trouble of looking at both of the bills' serial numbers would see that they were the same number, and thus one of them had to be false. What a Bitcoin miner does is analogous to that—they check transactions to make sure that users have not illegitimately tried to spend the same bitcoin twice. This isn't a perfect analogy—we'll explain in more detail below. Important:Only 1 megabyte of transaction data can fit into a single bitcoin block. The 1 MB limit was set by Satoshi Nakamoto, and this has become a matter of controversy as some miners believe the block size should be increased toSUBMITTED BY APPLICANT 15 accommodate more data, which would effectively mean that the bitcoin network could process and verify transactions more quickly. "So after all that work spent mining, I might still not get any bitcoin for it?" That is correct. To earn bitcoins, you need to be the first miner to arrive at the right answer, or closest answer, to a numeric problem. This process is also known as proof of work (PoW). "What do you mean, 'the right answer to a numeric problem'?" The good news: No advanced math or computation is really involved. You may have heard that miners are solving difficult mathematical problems—that's true but not because the math itself is hard. What they're actually doing is trying to be the first miner to come up with a 64- digit hexadecimal number (a "hash") that is less than or equal to the target hash. It's basically guesswork.[1 ] The bad news: It's a matter of guesswork or randomness, but with the total number of possible guesses for each of these problems being on the order of trillions, it's incredibly arduous work. And the number of possible solutions only increases the more miners that join the mining network (known as the mining difficulty). In order to solve a problem first, miners need a lot of computing power. To mine successfully, you need to have a high "hash rate," which is measured in terms gigahashes per second (GH/s) and terahashes per second (TH/s). Tip:If you want to estimate how much bitcoin you could mine with your mining rig's hash rate, the site Cryptocompare offers a helpful calculator. Other web resources offer similar tools. Mining and Bitcoin Circulation In addition to lining the pockets of miners and supporting the Bitcoin ecosystem, mining serves another vital purpose: It is the only way to release new cryptocurrency into circulation. In other words, miners are basically "minting" currency. For example, as of September 2021, there were around 18.82 million bitcoins in circulation, out of an ultimate total of 21 million. [2 ] Aside from the coins minted via the genesis block (the very first block, which was created by f d S t hi N k t ) i l f th bit i i t b i b fSUBMITTED BY APPLICANT 16 founder Satoshi Nakamoto), every single one of those bitcoins came into being because of miners. In the absence of miners, Bitcoin as a network would still exist and be usable, but there would never be any additional bitcoin. However, because the rate of bitcoin "mined" is reduced over time, the final bitcoin won't be circulated until around the year 2140. This does not mean that transactions will cease to be verified. Miners will continue to verify transactions and will be paid in fees for doing so in order to keep the integrity of Bitcoin's network.[3 ] Aside from the short-term Bitcoin payoff, being a coin miner can give you "voting" power when changes are proposed in the Bitcoin network protocol. This is known as a BIP (Bitcoin Improvement Protocol). In other words, miners have some degree of influence on the decision-making process on such matters as forking. How Much a Miner Earns The rewards for Bitcoin mining are reduced by half roughly every four years.[1 ] When bitcoin was first mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25 BTC. By 2016, this was halved again to 12.5 BTC. On May 11, 2020, the reward halved again to 6.25 BTC. In September of 2021, the price of Bitcoin was about $45,000 per bitcoin, which means you'd have earned $281,250 (6.25 x 45,000) for completing a block.[4 ] Not a bad incentive to solve that complex hash problem detailed above, it might seem. Image SUBMITTED BY APPLICANT 17 Image by Sabrina Jiang © Investopedia 2021 If you want to keep track of precisely when these halvings will occur, you can consult the Bitcoin Clock, which updates this information in real-time. Interestingly, the market price of Bitcoin has, throughout its history, tended to correspond closely to the reduction of new coins entered into circulation. This lowering inflation rate increased scarcity and historically the price has risen with it. Tip:If you are interested in seeing how many blocks have been mined thus far, there are several sites, including Blockchain.info, that will give you that information in real-time. What You Need to Mine Bitcoins Although early on in Bitcoin's history individuals may have been able to compete for blocks with a regular at-home personal computer, this is no longer the case. The reason for this is that the difficulty of mining Bitcoin changes over time. In order to ensure the smooth functioning of the blockchain and its ability to process and verify transactions, the Bitcoin network aims to have one block produced every 10 minutes or so. However, if there are one million mining rigs competing to solve the hash problem, they'll likely reach a solution faster than a scenario in which 10 mining rigs are working on the same problem. For that reason, Bitcoin is designed to evaluate and adjust the difficulty of mining every 2,016 blocks, or roughly every two weeks.[1 ] When there is more computing power collectively working to mine for bitcoins, the difficulty level of mining increases in order to keep block production at a stable rate. Less computing power means the difficulty level decreases. At today's network size, a personal computer mining for bitcoin will almost certainly find nothing. All of this is to say that, in order to mine competitively, miners must now invest in powerful computer equipment like a GPU (graphics processing unit) or, more realistically, anSUBMITTED BY APPLICANT 18 application-specific integrated circuit (ASIC). These can run from $500 to the tens of thousands. Some miners—particularly Ethereum miners—buy individual graphics cards (GPUs) as a low-cost way to cobble together mining operations. An Analogy Say I tell three friends that I'm thinking of a number between one and 100, and I write that number on a piece of paper and seal it in an envelope. My friends don't have to guess the exact number; they just have to be the first person to guess any number that is less than or equal to the number I am thinking of. And there is no limit to how many guesses they get. Let's say I'm thinking of the number 19. If Friend A guesses 21, they lose because 21>19. If Friend B guesses 16 and Friend C guesses 12, then they've both theoretically arrived at viable answers, because of 16 < 19 and 12 < 19. There is no "extra credit" for Friend B, even though B's answer was closer to the target answer of 19. Now imagine that I pose the "guess what number I'm thinking of" question, but I'm not asking just three friends, and I'm not thinking of a number between 1 and 100. Rather, I'm asking millions of would-be miners and I'm thinking of a 64-digit hexadecimal number. Now you see that it's going to be extremely hard to guess the right answer. If B and C both answer simultaneously, then the analogy breaks down. In Bitcoin terms, simultaneous answers occur frequently, but at the end of the day, there can only be one winning answer. When multiple simultaneous answers are presented that are equal to or less than the target number, the Bitcoin network will decide by a simple majority— 51%—which miner to honor. Typically, it is the miner who has done the most work or, in other words, the one that verifies the most transactions. The losing block then becomes an "orphan block." Orphan blocks are those that are not added to the blockchain. Miners who successfully solve the hash problem but who haven't verified the most transactions are not rewarded with bitcoin. What Is a "64-Digit Hexadecimal Number"? Here is an example of such a number: 0000000000000000057fcc708cf0130d95e27c5819203e9f967ac56e4df598eeSUBMITTED BY APPLICANT 19 000000000000000005 cc 08c 0 30d95e c58 9 03e9 96 ac56e d 598ee The number above has 64 digits. Easy enough to understand so far. As you probably noticed, that number consists not just of numbers, but also letters of the alphabet. Why is that? To understand what these letters are doing in the middle of numbers, let's unpack the word "hexadecimal." The decimal system uses as its base factors of 100 (e.g., 1% = 0.01). This, in turn, means that every digit of a multi-digit number has 100 possibilities, zero through ninety-nine. In computing, the decimal system is simplified to base 10, or zero through nine. "Hexadecimal," on the other hand, means base 16, as "hex" is derived from the Greek word for six and "deca" is derived from the Greek word for 10. In a hexadecimal system, each digit has 16 possibilities. But our numeric system only offers 10 ways of representing numbers (zero through nine). That's why you have to stick letters in, specifically letters a, b, c, d, e, and f. If you are mining Bitcoin, you do not need to calculate the total value of that 64-digit number (the hash). I repeat: You do not need to calculate the total value of a hash. Image SUBMITTED BY APPLICANT 20 Image by Sabrina Jiang © Investopedia 2021 So, what do "64-digit hexadecimal numbers" have to do with Bitcoin mining? Remember that analogy, where the number 19 was written on a piece of paper and put it in a sealed envelope? In Bitcoin mining terms, that metaphorical undisclosed number in the envelope is called the target hash. What miners are doing with those huge computers and dozens of cooling fans is guessing at the target hash. Miners make these guesses by randomly generating as many "nonces" as possible, as fast as possible. A nonce is short for "number only used once," and the nonce is the key to generating these 64-bit hexadecimal numbers I keep talking about. In Bitcoin mining, a nonce is 32 bits in size—much smaller than the hash, which is 256 bits. The first miner whose nonce generates a hash that is less than or equal to the target hash is awarded credit for completing that block and is awarded the spoils of 6.25 BTC. In theory, you could achieve the same goal by rolling a 16-sided die 64 times to arrive at random numbers, but why on earth would you want to do that? The screenshot below, taken from the site Blockchain.info, might help you put all this information together at a glance. You are looking at a summary of everything that happened when block #490163 was mined. The nonce that generated the "winning" hash was 731511405. The target hash is shown on top. The term "Relayed by Antpool" refers to the fact that this particular block was completed by AntPool, one of the more successful mining pools (more about mining pools below). As you see here, their contribution to the Bitcoin community is that they confirmed 1768 transactions for this block. If you really want to see all 1768 of those transactions for this block, go to this page and scroll down to the heading "Transactions." SUBMITTED BY APPLICANT 21 (source: Blockchain.info) How do I guess at the target hash All target hashes begin with a string of leading zeroes. There is no minimum target, but there is a maximum target set by the Bitcoin Protocol. No target can be greater than this number:SUBMITTED BY APPLICANT 22 00000000ffff0000000000000000000000000000000000000000000000000000 The winning hash for a bitcoin miner is one that has at least the minimum number of leading zeroes defined the mining difficulty. Here are some examples of randomized hashes and the criteria for whether they will lead to success for the miner: Note: These are made-up hashes. Image by Sabrina Jiang © Investopedia 2021 To find such a hash value, you have to get a fast mining rig, or, more realistically, join a mining pool—a group of coin miners who combine their computing power and split the mined Bitcoin. Mining pools are comparable to those Powerball clubs whose members buy lottery tickets en masse and agree to share any winnings. A disproportionately large number of blocks are mined by pools rather than by individual miners. In other words, it's literally just a numbers game. You cannot guess the pattern or make a di ti b d i t t h h At t d ' diffi lt l l th dd f fi di th Image SUBMITTED BY APPLICANT 23 prediction based on previous target hashes. At today's difficulty levels, the odds of finding the winning value for a single hash is one in the tens of trillions.[5 ] Not great odds if you're working on your own, even with a tremendously powerful mining rig. Not only do miners have to factor in the costs associated with expensive equipment necessary to stand a chance of solving a hash problem. They must also consider the significant amount of electrical power mining rigs utilize in generating vast quantities of nonces in search of the solution. All told, Bitcoin mining is largely unprofitable for most individual miners as of this writing. The site Cryptocompare offers a helpful calculator that allows you to plug in numbers such as your hash speed and electricity costs to estimate the costs and benefits. (Source: Cryptocompare) Cryptocompare hash calculator SUBMITTED BY APPLICANT 24 What Are Coin Mining Pools? Mining rewards are paid to the miner who discovers a solution to the puzzle first, and the probability that a participant will be the one to discover the solution is equal to the portion of the total mining power on the network. Participants with a small percentage of the mining power stand a very small chance of discovering the next block on their own. For instance, a mining card that one could purchase for a couple of thousand dollars would represent less than 0.001% of the network's mining power. With such a small chance at finding the next block, it could be a long time before that miner finds a block, and the difficulty going up makes things even worse. The miner may never recoup their investment. The answer to this problem is mining pools. Mining pools are operated by third parties and coordinate groups of miners. By working together in a pool and sharing the payouts among all participants, miners can get a steady flow of bitcoin starting the day they activate their miners. Statistics on some of the mining pools can be seen on Blockchain.info. "I've done the math. Forget mining. Is there a less onerous way to profit from cryptocurrencies?" As mentioned above, the easiest way to acquire Bitcoin is to simply buy it on one of the many exchanges. Alternately, you can always leverage the "pickaxe strategy." This is based on the old saw that during the 1849 California gold rush, the smart investment was not to pan for gold, but rather to make the pickaxes used for mining. To put it in modern terms, invest in the companies that manufacture those pickaxes. In a cryptocurrency context, the pickaxe equivalent would be a company that manufactures equipment used for Bitcoin mining. You may consider looking into companies that make ASICs equipment or GPUs instead, for example. Downsides of Mining The risks of mining are often that of financial risk and a regulatory one. As mentioned, Bitcoin mining, and mining in general, is a financial risk since one could go through all the effort of purchasing hundreds or thousands of dollars worth of mining equipment only to have no return on their investment. That said, this risk can be mitigated by joining mining pools. If you are considering mining and live in an area where it is prohibited you should reconsider. It maySUBMITTED BY APPLICANT 25 g g p y y also be a good idea to research your country's regulation and overall sentiment towards cryptocurrency before investing in mining equipment. One additional potential risk from the growth of Bitcoin mining (and other proof-of-work systems as well) is the increasing energy usage required by the computer systems running the mining algorithms. While microchip efficiency has increased dramatically for ASIC chips, the growth of the network itself is outpacing technological progress.[6 ] As a result, there are concerns about the environmental impact and carbon footprint of Bitcoin mining.[7 ] There are, however, efforts to mitigate this negative externality by seeking cleaner and green energy sources for mining operations (such as geothermal or solar), as well as utilizing carbon offset credits. Switching to less energy-intensive consensus mechanisms like proof-of-stake (PoS), which Ethereum has transitioned to, is another strategy; however, PoS comes with its own set of drawbacks and inefficiencies such as incentivizing hoarding instead of using coins and a risk of centralization of consensus control. Why is it called bitcoin "mining"? Mining is used as a metaphor for introducing new bitcoins into the system, since it requires (computational) work just as mining for gold or silver requires (physical) effort. Of course, the tokens that miners find are virtual and exist only within the digital ledger of the Bitcoin blockchain. Why do bitcoins need to be mined? Since they are entirely digital records, there is a risk of copying, counterfeiting, or double- spending the same coin more than once. Mining solves these problems by making it extremely expensive and resource-intensive to try to do one of these things or otherwise "hack" the network. Indeed, it is far more cost-effective to join the network as a miner than to try to undermine it. What do you mean mining confirms transactions? In addition to introducing new BTC into circulation, mining serves the crucial role of confirming and validating new transactions on the Bitcoin blockchain. This is important because there is no central authority such as a bank, court, government, or anything else d t i i hi h t ti lid d hi h t I t d th i iSUBMITTED BY APPLICANT 26 determining which transactions are valid and which are not. Instead, the mining process achieves a decentralized consensus through proof-of-work (PoW). Why does mining use so much electricity? In the early days of Bitcoin, anybody could simply run a mining program from their PC or laptop. But, as the network got larger and more people became interested in mining, the difficulty of the mining algorithm became more difficult. This is because the code for Bitcoin targets finding a new block once every ten minutes, on average.[1 ] If more miners are involved, the chances that somebody will solve the right hash quicker increases, and so the difficulty is raised to restore that 10-minute goal. Now imagine if thousands, or even millions more times of mining power joins the network. That's a lot of new machines consuming energy. Is Bitcoin Mining Legal? The legality of Bitcoin mining depends entirely on your geographic location. The concept of Bitcoin can threaten the dominance of fiat currencies and government control over the financial markets. For this reason, Bitcoin is completely illegal in certain places. Bitcoin ownership and mining are legal in more countries than not. Some examples of places where it was illegal according to a 2018 report were Algeria, Egypt, Morocco, Bolivia, Ecuador, Nepal, and Pakistan.[8 ] Overall, Bitcoin use and mining remain legal across much of the globe. ARTICLE SOURCES SUBMITTED BY APPLICANT 27 28 29 MBLU Location Owner Name Co-Owner Name Address 1 Address 2 City, State, Zip 165-4-2.1 1401 SOUTHSIDE DR HELM BUILDING ENTERPRISES LTD 1491 SOUTHSIDE DR SALEM VA 24153 165-4-2 1491 SOUTHSIDE DR WILLIAM P THURMAN JILL ANNETTE WRIGHT HELM 1491 SOUTHSIDE DR SALEM VA 24153 165-4-1 1700 MILL LN NILAM CORPORATION 2223 WILLIAMSON RD ROANOKE VA 24012 179-2-2 1510 & 1506 SOUTHSIDE DR WM S TRIMBLE CO INC 2200 ATCHLEY ST KNOXVILLE TN 37920 179-2-3 1490 SOUTHSIDE DR CALVIN CECIL PARKS 1490 SOUTHSIDE DR SALEM VA 24153 179-2-4.1 1400 SOUTHSIDE DR STOVER W CARTER TRUSTEE REVOCABLE LIVING TRUST 5298 GLENVAR HEIGHTS BLVD SALEM VA 24153 165-4-3 1399 SOUTHSIDE DR HELM BUILDING ENTERPRISES LTD 1491 SOUTHSIDE DR SALEM VA 24153 165-4-3.1 1260 W RIVERSIDE DR HELM BUILDING ENTERPRISES LTD 1491 SOUTHSIDE DR SALEM VA 24153 165-4-4 1389 SOUTHSIDE DR J & A SPIKES LLC 2131 RIVER OAKS DR SALEM VA 24153 165-3-1 1263 W RIVERSIDE DR DAVID L PRICE ANN S PRICE 1263 W RIVERSIDE DR SALEM VA 24153 30 31 32 At its peak, cryptocurrency mining was an arms race that led to increased demand for graphics processing units (GPUs). In fact, Advanced Micro Devices, a GPU manufacturer, posted impressive financial results (https://www.cnbc.com/2017/07/26/wall-street- stunned-over-amds-cryptocurrency-mining-demand.html) as demand for the company’s stock skyrocketed and shares traded at their highest level in a decade. Despite the increased demand for GPUs, thecrypto mining gold rush quickly came to an end, as the difficulty of mining top cryptocurrencies like Bitcoin increased just as quickly. Mining cryptocurrencies, however, can still be profitable. So, what is crypto mining, is it legal, and how can you get started? This article takes a closer look at these questions. What Is Crypto Mining? (https://freemanlaw.com/) 33 Most people think of crypto mining simply as a way of creating new coins. Crypto mining, however, also involves validating cryptocurrency transactions on a blockchain network and adding them to a distributed ledger. Most importantly, crypto mining prevents the double-spending of digital currency on a distributed network. Like physical currencies, when one member spends cryptocurrency, the digital ledger must be updatedby debiting one account and crediting the other. However, the challenge of a digital currency is that digital platforms are easily manipulated. Bitcoin’s distributed ledger, therefore, only allows verified miners to update transactions on the digital ledger. This gives miners the extra responsibility of securing the network from double-spending. Meanwhile, new coins are generated to reward miners for their work in securing the network. Since distributed ledgers lack a centralized authority, the mining process is crucial for validating transactions. Miners are, therefore, incentivized to secure the network by participating in the transaction validation process that increases their chances of winning newly minted coins. In order to ensure that only verified crypto miners can mine and validate transactions, a proof-of-work (PoW) consensus protocol has been put into place. PoW also secures the network from any external attacks. Proof-of-Work Crypto mining is somewhat similar to mining precious metals . While miners of precious metals will unearth gold, silver, or diamonds, crypto miners will trigger the release of new coins into circulation. For miners to be rewarded with new coins, they need to deploy machines that solve complex mathematical equations in the form of cryptographic hashes. A hash is a truncated digital signature of a chunk of data. Hashes are generated to secure data transferred on a public network. Miners compete with their peers to zero in on a hash value generated by a crypto coin transaction, and the first miner to crack the code gets to add the block to the ledger and receive the reward. Each block uses a hash function to refer to the previous block, forming an unbroken chain of blocks that leads back to the first block. For this reason, peers on the network can easily verify whether certain blocks are valid and whether the miners who validated each block properly solved the hash to receive the reward. Over time, as miners deploy more advanced machines to solve PoW, the difficulty of equations on the network increases. At the same time, competition among miners rises, increasing the scarcity of the cryptocurrency as a result.34 How to Start Mining Cryptocurrencies Mining cryptocurrencies requires computers with special software specifically designed to solve complicated, cryptographic mathematic equations. In the technology’s early days, cryptocurrencies like Bitcoin could be mined with a simple CPU chip on a home computer. Over the years, however, CPU chips have become impractical for mining most cryptocurrencies due to the increasing difficulty levels. Today, mining cryptocurrencies requires a specialized GPU or an application-specific integrated circuit (ASIC) miner. In addition, the GPUs in the mining rig must be connected to a reliable internet connection at all times. Each crypto miner is also required to be a member of an online crypto mining pool as well. Different Methods of Mining Cryptocurrencies Different methods of mining cryptocurrencies require different amounts of time. In the technology’s early days, for example, CPU mining was the go-to option for most miners. However, many find CPU mining to be too slow and impractical today because it takes months to accrue even a small amount of profit, given the high electrical and cooling costs and increased difficulty across the board. GPU mining is another method of mining cryptocurrencies. It maximizes computational power by bringing together a set of GPUs under one mining rig. For GPU mining, a motherboard and cooling system is required for the rig. Similarly, ASIC mining is yet another method of mining cryptocurrencies. Unlike GPU miners, ASIC miners are specifically designed to mine cryptocurrencies, so they produce more cryptocurrency units than GPUs. However, they are expensive, meaning that, as mining difficulty increases, they quickly become obsolete. Given the ever-increasing costs of GPU and ASIC mining, cloud mining is becoming increasingly popular. Cloud mining allows individual miners to leverage the power of major corporations and dedicated crypto mining facilities. 35 Individual crypto miners can identify both free and paid cloud mining hosts online and rent a mining rig for a specific amount of time. This method is the most hands-free way to mine cryptocurrencies. Mining Pools Mining pools allow miners to combine their computational resources in order to increase their chances of finding and mining blocks on a blockchain. If a mining pool succeeds, the reward is distributed across the mining pool, in proportion to the amount of resources that each miner contributed to the pool. Most crypto mining applications come with a mining pool; however, crypto enthusiasts now also join together online to create their own mining pools. Because some pools earn more rewards than others, miners are free to change pools whenever they need to. Miners consider official crypto mining pools more reliable, since they receive frequent upgrades by their host companies, as well as regular technical support. The best place to find mining pools is CryptoCompare (https://www.cryptocompare.com/mining/#/pools), where miners can compare different mining pools based on their reliability, profitability, and the coin that they want to mine. Is Crypto Mining Worth It? Determining whether crypto mining is worthwhile depends on several factors. Whether a propsective miner chooses a CPU, GPU, ASIC miner, or cloud mining, the most important factors to consider are the mining rig’s hash rate, electric power consumption, and overall costs. Generally, crypto mining machines consume a considerable amount of electricity and emit significant heat. For instance, the average ASIC miner will use about 72 terawatts (https://www.thebalance.com/how-much-power-does-the-bitcoin-network-use- 391280#:~:text=Regardless%20of%20the%20number%20of,usage%20provided%20by%20ASIC of power to create a bitcoin in about ten minutes. These figures continue to change as technology advances and mining difficulty increases. Even though the price of the machine matters, it is just as important to consider electricity consumption, electricity costs in the area, and cooling costs, especially with GPU and ASIC mining rigs.36 It is also important to consider the level of difficulty for the cryptocurrency that an individual wants to mine, in order determine whether the operation would even be profitable. Is Crypto Mining Legal? Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear. Under the Financial Crimes Enforcement Network (FinCEN (https://www.fincen.gov/resources/statutes-regulations/guidance)), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States appear friendly to crypto mining. However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining. Conclusion: The Sustainability of Crypto Mining For aspiring crypto miners, curiosity and a strong desire to learn are simply a must. The crypto mining space is constantly changing as new technologies emerge. The professional miners who receive the best rewards are constantly studying the space and optimizing their mining strategies to improve their performance. On the other hand, climate change advocates have become increasingly concerned, as more and more fossil fuels are burned to fuel the mining process. Such concerns have pushed cryptocurrency communities like Ethereum to consider switching from PoW frameworks to more sustainable frameworks, such as proof-of-stake frameworks. 37 CRYPTOCURRENCY CRYPTOCURRENCY STRATEGY & EDUCATION Cryptocurrencies have come a long way from their relatively obscure origins. While the mainstream financial world once disdained digital currencies as tools for criminals and speculators, the industry has made significant progress in establishing itself as a legitimate and (potentially) world-changing space. Bitcoin (BTC) and ether (ETH) have seen massive growth in price and users, but there are still doubts about the consequences of wide cryptocurrency adoption. In particular, many skeptics and environmentalists have raised concerns about the energy consumption of cryptocurrency mining, which may cause increased carbon emissions and climate change. What's the Environmental Impact of Cryptocurrency? By Updated August 26, 2021NATHAN REIFF Reviewed by ERIKA RASURE KEY TAKEAWAYS Bitcoin and other proof-of-work cryptocurrencies require large amounts of energy, due to the computations needed for mining. By the latest estimates, the bitcoin network uses as much energy in one year as the country of Argentina. 65% of bitcoin miners are located in China, a country that generates most of its energy from coal. Some proponents say that as much as 74% of bitcoin's energy needs come from renewable sources, although these figures are disputed. The bitcoin network also generates 11.5 kilotons of e-waste every year. Not all cryptocurrencies have significant environmental impacts. Many of them do not use mining at all. 38 Bitcoin Mining Explained Why Mining Requires Energy These astronomical energy costs are due to the competitive nature of proof-of-work (PoW) blockchains. Instead of storing account balances in a central database, cryptocurrency transactions are recorded by a distributed network of miners, incentivized by block rewards. These specialized computers are engaged in a computational race to record new blocks, which can only be created by solving cryptographic puzzles. Cryptocurrency advocates believe that this system has numerous advantages over centralized currencies because it does not rely on any trusted intermediary or single point of failure. However, the puzzles for mining require many energy-intensive computations. Bitcoin, the most widely-known cryptocurrency network, uses 121 Terawatt-hours of electricity every year, the BBC reported in 2021—more than the entire country of Argentina. According to Digiconomist, a cryptocurrency analytics site, the Ethereum network uses as much power as the entire nation of Qatar.[1 ] One major concern among environmentalists is that mining tends to become less efficient as the price of cryptocurrency increases. In the case of bitcoin, the mathematical puzzles to create blocks get more difficult as the price goes up, but transaction throughput remains CLICK TO PLAYCLICK TO PLAY 1:30 39 constant. This means that over time, the network will consume more computing power and energy to process the same number of transactions. Fossil Fuels and Digital Currencies All of this has combined to link cryptocurrencies with fossil fuels in a way that many investors have yet to acknowledge. According to researchers at the University of Cambridge, around 65% of bitcoin mining takes place in China, a country that gets most of its electricity by burning coal.[2 ] Coal and other fossil fuels are currently a major source of electricity worldwide, both for cryptocurrency mining operations and other industries. However, burning coal is a significant contributor to climate change as a result of the carbon dioxide that the process produces. According to a report by CNBC, bitcoin mining accounts for about 35.95 million tons of carbon dioxide emissions each year—about the same amount as New Zealand. Cryptocurrency Advocates Defend Mining Supporters have downplayed the energy consumption of cryptocurrencies, claiming that mining operations tend to concentrate around areas with surplus renewable energy. A 2019 report by CoinShares, a pro-cryptocurrency research firm, estimated that 74.1% of the electricity powering the bitcoin network came from renewable sources, making bitcoin mining "more renewables-driven than almost every other large-scale industry in the world."[3 ] These claims rest on the fact that cryptocurrency miners are not geographically fixed, allowing them to move in search of surplus energy. According to CoinDesk, some petroleum companies are exploring ways to power mining rigs from gas flares, which would otherwise be wasted energy. Some Chinese mining firms migrate from one province to another in search of the cheapest energy, thereby supporting cheap renewable providers in those locations. Calculations of bitcoin's renewable energy usage are controversial and often disputed. For example, a report by the Cambridge Center for Alternative Finance found that only 39% of bitcoin mining comes from renewable energy. Even with the most optimistic estimates of renewable energy use, the network represents a net contributor to carbon emissions.[4 ] Other Environmental Impacts of Cryptocurrency Mining 40 In addition to energy consumption, cryptocurrency mining also generates a significant amount of electronic waste as hardware becomes obsolete. This is especially true for Application-Specific Integrated Circuits , specialized hardware for mining the most popular cryptocurrencies. Unlike other computer hardware, these circuits cannot be reused for any other purpose, and they quickly become obsolete. According to Digiconomist, the bitcoin network generates between eight and 12 thousand tons of electronic waste every year. Cryptocurrencies Without Mining It's also worth noting that a large number of cryptocurrencies have far lower energy demands. In particular, proof-of-stake (PoS) blockchains do not utilize mining, for instance EOS, Cardano, and more recently a switch to PoS by Ethereum. Although this model has clear energy consumption advantages over mining, other concerns arise with PoS such as concentration of staking, The Bottom Line Whether you're in favor of cryptocurrencies or against them, there's little doubt that bitcoin and other proof-of-work blockchains use enormous amounts of energy. Much of this energy usage comes from burning coal and other fossil fuels, although cryptocurrency advocates have argued that renewable sources are also a major component. While the exact figures are disputed, even the best case scenarios indicate that mining is a major factor in carbon dioxide emissions. ARTICLE SOURCES 41 KEY POINTS MacKenzie Sigalos @KENZIESIGALOS CRYPTO DECODED Bitcoin mining isn’t nearly as bad for the environment as it used to be, new data shows PUBLISHED TUE, JUL 20 2021 •5:33 PM EDT UPDATED TUE, JUL 20 2021 •5:33 PM EDT WATCH LIVE After Beijing decided to expel its miners in May, more than 50% of the hashrate – the collective computing power of miners worldwide – dropped off the network. The United States has fast become the new hotspot for the world’s global crypto miners. In the last six months, the country has jumped from fifth to second place and now accounts for nearly 17% of all global bitcoin miners. 42 Two technicians work at a bitcoin mining facility in Quebec. lars Hagbarg | AFP | Getty Images China’s mining exodus For years, bitcoin critics have maligned the world’s biggest cryptocurrency for polluting the planet. But new data from Cambridge University shows that the geography of mining has drastically changed over the last six months, and experts tell CNBC this will improve bitcoin’s carbon footprint. China’s big crypto crackdown this spring set off a chain reaction in the mining world. For one, it took half the world’s bitcoin miners offline practically overnight. Fewer people mining has meant less machines running and less power being consumed overall, which slashed bitcoin’s environmental impact. Beijing’s new crypto rules also permanently took a lot of older and more inefficient gear offline. And crucially, China shutting its doors to crypto mining has set off a massive migration. Miners are now heading to the cheapest sources of energy on the planet, which more often than not are renewable. “The bitcoin network is ruthless in its drive for the lowest cost,” said Mike Colyer, CEO of digital currency company Foundry. “Miners around the world are looking for stranded power that is renewable. That will always be your lowest cost. Net-net this will be a big win for bitcoin’s carbon footprint.” China has long been the mecca of the crypto mining world, accounting for nearly three- quarters of all bitcoin miners at its peak, according to the Cambridge Centre for Alternative Finance. But after Beijing decided to expel its miners in May, more than 43 50% of the hashrate – the collective computing power of miners worldwide – dropped off the network. Today, bitcoin draws roughly 70 terawatt hours of energy per year, or 0.33% of the world’s total electricity production. That is almost half of what it was in May and is roughly equivalent to the annual energy draw of countries like Bangladesh and Chile. The exodus from China also means that a lot of older mining equipment that was probably long-past due for retirement will never be turned back on. “It took off, likely forever, a large amount of the most energy inefficient rigs,” explained Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners. Colyer says the overall bitcoin network will now be mostly made up of more efficient rigs that get about double the hashpower for the same amount of electricity. “This continues to significantly improve the security-to-energy ratio of the bitcoin network,” he said. But not all of China’s miners are going dark. Many have begun to patriate elsewhere, gravitating to the world’s cheapest sources of power. “The cool thing about bitcoin that is under appreciated by a lot of the naysayers is that it’s...like a portable market; you can bring it right to the source of energy,” explained Steve Barbour, founder of Upstream Data, a company that manufactures and supplies portable mining solutions for oil and gas facilities. Because miners at scale compete in a low-margin industry, where their only variable cost is typically energy, they are incentivized to migrate to the world’s cheapest sources of power. “They need to constantly reduce their electricity costs, which is their number one expense, in order to be competitive,” said Ria Bhutoria, former director of research for Fidelity Digital Assets. 44 Read more about cryptocurrencies from CNBC Pro Clean energy on the rise in the U.S. The data shows that a whole lot of these miners are headed for cheaper pastures in the U.S. The United States has fast become the new hotspot for the world’s global crypto miners. In the last six months, the country has jumped from fifth to second place and now accounts for nearly 17% of all global bitcoin miners. Although China was still solidly in first place as of April, with 46% share, America’s share of the market is likely a lot higher now since the Chinese government booted miners in May. U.S.-based bitcoin mining operators have seen a huge uptick in business. Whit Gibbs, CEO and founder of Compass, a bitcoin mining service provider, says that retail hardware and hosting sales have increased nearly 300% since mid-June. Stocks that are inflation plays are moving closely with cryptocurrency, Trivariate Research found As Coinbase struggles, you were better off just buying bitcoin, according to one analyst Darin Feinstein, founder of Blockcap and Core Scientific, says he’s seen a rapid rise in mining operations looking to relocate in North America, mostly in the U.S., and Fred Thiel of Marathon Digital, another major player in the U.S. mining industry, tells CNBC that if the roughly 500,000 formerly Chinese miner rigs looking for homes in the U.S. are deployed, this would mean that North America would account for close to 40% of the global hashrate by the end of 2022. Long-term, this is good news for bitcoin’s carbon footprint. Energy consumption is not equivalent to carbon emissions. While it is relatively easy to determine the amount of energy that is consumed by the bitcoin network, it is much harder to determine its carbon footprint. 45 An accurate read of bitcoin’s carbon emissions would require exact knowledge of the energy mix used to generate electricity used by each bitcoin mining operation. One unit of hydropower, for example, does not have the same environmental impact as the equivalent amount of power sourced from coal. And China’s bitcoin mining operations were known for both. But on the whole, the market is pushing North American energy sources to get greener. Each year, investment bank Lazard releases a breakdown of energy costs by source. Its 2020 report shows that many of the most common renewable energy sources are either equal to or less expensive than conventional energy sources like coal and gas. And the cost of renewable power keeps going down. Thiel says that most miners new to North America will be powered by renewables, or gas offset by renewable energy credits. Gibbs estimates that bitcoin mining in the U.S. is more than 50% powered by renewables. Miners migrating to North America are also preparing for a future in which their energy usage is questioned by putative investors -- and possibly regulated. Brammer has been helping Chinese clients find new homes. He says that most are aware of the political and normative winds in North America and want to hedge themselves against regulatory risks in the future by establishing new facilities in primarily renewable-powered locations. “The largest of them are also looking at the potential of going public or are looking for investors to help them grow,” Brammer told CNBC. “They realize that public markets nowadays have no appetite for proof of work mining that is powered by non-renewable [energy sources]. I have yet to even have a discussion about a deal involving coal power, which is heartening to us.” Bitcoin mining engineer Brandon Arvanaghi tells CNBC that in the long run, the migration to the U.S., where innovation around bitcoin and renewables is already underway, will be an overwhelming positive for bitcoin’s energy mix. 46 Then, there’s Kazakhstan “Places like Texas have cheap electricity, in large part because of subsidies toward wind power,” according to Arvanaghi. Miami Mayor Francis Suarez has also popularized the idea of mining bitcoin with nuclear power in Florida. “And all this is largely voluntary — the federal and state governments haven’t even gotten involved to require any renewable mix,” continued Arvanaghi. Not all miners, however, are headed to renewable destinations. Kazakhstan is now just behind the U.S. in terms of its share of the global bitcoin mining market, with about 8% of all crypto mining. It’s home to coal mines that provide a cheap and abundant supply of energy — but also ample carbon dioxide emissions. However, several mining experts tell CNBC they think that Kazakhstan, which neighbors China, is just a temporary stopover on a longer migration west. Brammer sees large miners going there in the short-term with older-generation equipment. “But as older-generation machines reach the end of their service lives, those companies will likely deploy new machines into more stable and energy efficient and renewable jurisdictions,” he said. Also likely to put a damper on Kazakhstan’s popularity is a law newly signed by the president that will introduce extra taxes for crypto miners starting in 2022. “This will significantly change the incentives for people to deploy capital in Kazakhstan,” said Brammer. 47