Bitcoin mining firm Core Scientific is going public via SPAC in a $4.3 billion deal

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  • Crypto mining firm Core Scientific is going public via a SPAC in a deal that values the combined entity at $4.3 billion.
  • The mining firm will merge with Power and Digital Infrastructure Acquisition Company.
  • Core Scientific operates proprietary mining facilities and hosts digital asset mining hardware for customers.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Core Scientific, one of North America’s largest crypto miners, is going public via a SPAC merger in a deal that values the combined entity at $4.3 billion, the firm said in a Wednesday announcement.

The mining firm will merge with Power and Digital Infrastructure Acquisition Company, whose anchor investor is BlackRock. Following the transaction, the combined company will operate as Core Scientific and trade on the Nasdaq exchange.

Core Scientific owns four US facilities where it operates proprietary mining facilities and hosts bitcoin and other digital asset mining hardware for customers. The company said it operates with 100% net carbon neutrality through using clean energy inputs and purchasing renewable energy credits.

The proceeds from the SPAC merger are expected to fund mining equipment purchases of and infrastructure build out.

The firm mined 755 bitcoin in the first quarter of 2021. Publicly traded competitor Marathon Digital Holding’s mining fleet produced 196 newly minted bitcoins during the same period. Core Scientific also estimates it will boast a mining capacity of 510 megawatts by the end of the year through its four facilities.

For the first half of 2021, Core Scientific has mined 1,683 bitcoins total.

The merger is expected to be completed in the fourth quarter of 2021. Shares of Power and Digital Infrastructure Acquisition Company have jumped as high as 2% since the close Tuesday before the transaction was announced.

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Bitcoin mining is getting easier after China’s crypto crackdown wiped out network capacity

Bitcoin logo mining hand person
Bitcoin shot up in the first months of 2021 before tumbling in May.

  • Bitcoin’s “network difficulty,” which measures how much computing power is needed to mint a new bitcoin, has plummeted.
  • The clear culprit is China, where the government’s anti-crypto tack has forced mining operations to shutter.
  • Network difficulty could bounce back as Chinese miners migrate elsewhere.
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A measure of how hard it is to mine bitcoin is plunging after China’s crackdown took out a chunk of the computing power underpinning the network.

Bitcoin’s “network difficulty,” which measures how much computing power is needed to mint a new bitcoin, has fallen 45% from its May highs, according to public blockchain data. The drop is smaller but still pronounced, about 26%, when using 30-day moving averages.

bitcoin network difficulty rising for a decade with a sharp drop-off at the end
Bitcoin’s network difficulty falling sharply

Bitcoin’s underlying algorithm regularly adjusts difficulty based on how many miners are on the network. Falling difficulty indicates mining power has come offline.

The clear culprit is China, where the government’s anti-crypto tack has forced mining operations to shutter from Sichuan to Xinjiang.

The country, which once accounted for 65% of the world’s mining power, has forced a “seismic shift” in bitcoin mining patterns. In the wake of China’s restrictions, nearly a quarter of active bitcoin addresses went offline, according to analytics firm Glassnode. In the end, 90% of China’s bitcoin mining capacity is set to be shut down, according to the Global Times, a newspaper run by China’s Communist Party.

Network difficulty, which automatically updates about every two weeks, could bounce back as Chinese miners migrate elsewhere, possibly to Central Asia or North America.

“It’s happening! Texas will be the crypto leader,” tweeted Gov. Greg Abbott after a local grocery chain said it would start accepting crypto at kiosks. The tweet came just days before China tightened the screws on crypto mining.

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Cryptocurrencies, stablecoins and central-bank digital currencies are all the rage. We break down what they are and what you need to know about them

Bitcoin logo mural
A bitcoin artwork by Stacey Coon, Anastasia Sultzer, and Nanu Berk at the Bitcoin 2021 convention.

  • Cryptocurrencies and stablecoins have boomed in 2021, sucking in investors.
  • The world’s central banks are increasingly looking to create their own digital currencies.
  • Insider cuts out the jargon and explains the key differences and what they’re used for.
  • See more stories on Insider’s business page.

Cryptocurrencies and stablecoins have boomed in 2021. And central banks around the world are increasingly keen on their own digital currencies. But how do they all work and what are they used for?

Cryptocurrencies

Cryptocurrencies are basically digital currencies that aren’t controlled or issued by a centralized authority, such as commercial or central banks.

These coins are sent back and forth on enormous peer-to-peer networks – essentially groups of computers that share data.

The innovation of cryptocurrencies is that the “ledger” that keeps track of transactions – known as the blockchain – is overseen and verified by network users known as “miners.” Miners collectively do the work of a central authority, checking people aren’t trying to spend coins twice, and earning newly created bitcoin in return.

“What we aim to do with the blockchain is to make this ‘trustless’ so that nobody has overall control of it,” says Ben Edgington, a software developer for the ethereum network. “It’s fully democratic [and] it’s fully accessible.”

Bitcoiners say it’s ‘digital gold’

When bitcoin was launched by the anonymous person or group Satoshi Nakamoto in 2008, many thought it could be used for payments. In reality, it’s way too volatile.

Now, many bitcoiners say its scarcity – only 21 million coins can be mined – means it will hold its value and protect investors against inflation. Others say it’s purely speculative.

Other cryptocurrencies have different uses. The ethereum network, for example, can be used to build applications like collectible “non-fungible tokens.

Cryptocurrencies are highly risky

In bitcoin and other networks that follow its model, miners verify transactions by using large amounts of computing power to solve complex math problems. Bitcoin’s mining system uses as much electricity annually as medium-sized countries. Other cryptocurrencies are less energy intensive.

Cryptocurrencies are largely unregulated and are some of the riskiest investments out there. Bitcoin has plunged around 50% since its April record high of close to $65,000.

Stablecoins

Wild volatility has been a huge deterrent for some investors as it can make crypto harder to use. That’s where stablecoins come in. Stablecoins maintain a “stable” value with a peg to other assets, like the dollar.

For example Tether, the third-biggest cryptocurrency by market cap, is designed to be pegged to the US dollar. It is backed by assets such as dollars and Treasury bills.

Traders love stablecoins

Interest in stablecoins has shot up too. They’re central to cryptocurrency trading, by allowing investors to easily move in and out of more volatile assets like bitcoin.

Stablecoins are also commonly used in the world of decentralized finance – a booming ecosystem that lets people create financial products without the need for central authorities.

Regulators are worried

But they’re facing heavy scrutiny. In May, the Federal Reserve’s Lael Brainard raised concerns stablecoins could default and destabilize the financial system. New York also banned Tether trading after an investigation found it had overstated its US dollar backing.

As with the rest of the cryptocurrency world, a lack of regulation means investors have almost no protection if their stablecoin suddenly collapses.

Central bank digital currencies

Countries are trying to find ways to make it easier to spend and send money – and keep control of payment systems that are increasingly private (think PayPal or Visa). A digital currency issued by central banks directly to consumers could be the answer.

Right now, private banks and payment companies are the most important players in the everyday use of money. But a central bank digital currency (or CBDC) would be a digital version of banknotes and coins, letting people hold and make payments in central bank money.

China is currently leading the pack out of the world’s big economies. But the European Central Bank and the Bank of England are seriously looking into it.

CBDCs could make payments safer

CBDCs could speed up transactions for individuals and big institutions, Chris Giancarlo, founder of non-profit Digital Dollar Project, told Insider. The DDP plans to test CBDCs in real-world situations.

“If you can send a photograph to Japan in a second, why can’t you send money in a second?” he said.

Central bankers also think CBDCs can make the financial system safer. Although unlikely, even a big global payment system could feasibly collapse.

Some bankers are concerned

One concern is privacy. Some governments may design CBDCs so transactions are anonymized, like cash, but others won’t. Privacy questions have arisen over China’s trial digital yuan.

“With a CBDC, the government would have direct access to all your spending patterns,” Bobby Ong, co-founder of data firm CoinGecko, says.

Some bankers are worried CBDCs could remove them from key parts of the financial system. CBDCs could reduce the demand for commercial bank accounts and cut banks out of the business of verifying transactions, although central banks are working on the details.

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Take a look inside this underground crypto mining farm in Ukraine with its 3,800 PlayStations and 5,000 computers

A man walks through shelves of CPUs in an illegal crypto mine in the Ukraine
Around 5,000 computers were used in the mine, Ukraine officials said.

  • Ukraine police last week seized around 9,000 games consoles and computers in an illegal crypto mine.
  • The mine was stealing as much as $259,300 in electricity each month, investigators said.
  • Police said it was the largest underground crypto mine to have been discovered in Ukraine.
  • See more stories on Insider’s business page.

A huge underground cryptocurrency mining operation has been busted by Ukraine police for allegedly stealing electricity from the grid.

Police said they’d seized 5,000 computers and 3,800 games consoles that were being used in the illegal mine, the largest discovered in the country.

The mine, in the city of Vinnytsia, near Kyiv, stole as much as $259,300 in electricity each month, the Security Service of Ukraine said. To conceal the theft, the operators of the mine used electricity meters that did not reflect their actual energy consumption, officials said.

“Such illegal activity could lead to power surges and left people without electricity,” the security service said.

Police said that criminal proceedings had begun over the theft of water, electricity, and thermal energy. The mine was run by residents of Kyiv and Vinnytsia, a city about three hours outside the capital, police said.

Metal racks with Sony Playstation consoles in a Ukraine crypto mine
Gaming consoles in the crypto mine in a photo released by officials.

Photos released by state investigators show a cavernous room filled wall-to-wall with metal racks of neatly lined-up computers and Sony Playstation consoles.

Along with the computers and consoles, officials said they also seized more than 500 graphic cards, 50 processors, and documentation on the site’s electricity consumption. They also took notebooks, phones, and flash drives, according to the press statement.

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China’s crackdown on crypto has led to a 23% decline in ether mining over the last month

Mining software
Mining software

  • Mining activity on the ethereum network has dropped by almost a quarter in the month since China’s crypto crackdown.
  • Analysts said the fall could also be the result of an upcoming major upgrade to ethereum.
  • Ether has tumbled by around 40% since hitting record highs in mid-May. The drop in mining has added to the pressure.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell

China’s crackdown on crypto mining has dented ethereum’s hashrate, which has fallen at its fastest pace on record in the last month, since peaking in May according to data from Y charts.

By Wednesday, the rate had fallen by 23% to 492.1 terahashes per second (TH/s) from 643.8 TH/s at the peak on May 20, data shows.

A lower hash rate means the chances miners have less chance of getting a correct hash, which is the total computational power to mine ether on the network. A drop in the hash rate reflects a fall in the number of miners active in the system.

“The global mining landscape is reconfiguring — both geographically away from China, and into capital-led rather than hardware-led approaches. It is increasingly important for the miners and validators of crypto networks to be uncensorable so that the software systems they support continue to run and perform computation,” Lex Sokolin, a developer at ConsenSys a leading ethereum development company, said.

Ethereum hashrate tumble.
Ethereum hashrate tumble.

China began clamping down on mining activity in May. One of the country’s state media publications, The Global Times, reported 90% of mining bases for rival coin bitcoin were going to be shut down, which likely discouraged ether miners.

“This kind of drop is unusual, though there were similar falls in late 2018 and early 2019. It could be due to the mining crackdown in China. But equally, hashrate tends to follow price, and price is substantially down over recent weeks as well. It is difficult to disentangle these two causes,” Ben Edgington, another developer at ConsenSys, said.

Indeed, the ether token has lost almost 40% since May 20 and is trading around $2,105. It’s tumbled by more than 50% since hitting a record high of $4,380 on May 12.

The Chinese crackdown is not the only factor responsible for the collapse in the ethereum network hashrate. The ethereum 2.0 upgrade is on the verge of winding up. Soon the system will go from proof of work to proof of stake, which means ether tokens do not need to be mined. Miners will instead become block validators that are awarded more money based on the amount of capital they are willing to work with in the first place.

Upgrades for ethereum 2.0 will take place until 2022 and the idea is that the changes will improve sustainability, security and scalability which is the hash rate the system can handle.

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Biden will reportedly rely on other countries for electric-vehicle metals, a blow to US miners

Biden
President Joe Biden

  • The White House will rely on metals from overseas for US electric-vehicle production, sources told Reuters.
  • The plans will be a blow to US miners, who had hoped Biden would rely primarily on domestic metals.
  • The sources said that Biden’s team planned to process, rather than mine, the minerals domestically.
  • See more stories on Insider’s business page.

President Joe Biden plans to rely on ally countries to supply the bulk of the metals needed to build electric vehicles and focus on processing them domestically into battery parts, part of a strategy designed to placate environmentalists, two administration officials with direct knowledge told Reuters.

The plans will be a blow to US miners who had hoped Biden would rely primarily on domestically sourced metals, as his campaign had signaled last autumn, to help fulfill his ambitions for a less carbon-intensive economy.

Rather than focus on permitting more US mines, Biden’s team is more focused on creating jobs that process minerals domestically into electric vehicle (EV) battery parts, according to the people.

Read more: Biden is promising $10 million for battery makers who can crack fast charging. Top startups are racing to cash in.

Such a plan would help cut US reliance on industry leader China for EV materials while also enticing unions with manufacturing work and, in theory, reduce pandemic-fueled unemployment.

The US Commerce Department is organizing a conference in June to attract more EV manufacturing to the country. Biden’s proposed $1.7 trillion infrastructure plan earmarks $174 billion to boost the domestic EV market with tax credits and grants for battery manufacturers, among other incentives. The department declined to comment.

“It’s not that hard to dig a hole. What’s hard is getting that stuff out and getting it to processing facilities. That’s what the US government is focused on,” one of the sources said.

The approach would see the US rely on Canada, Australia, and Brazil, among others, to produce most of the critical raw materials needed, while it competes for higher-value jobs turning those minerals into computer chips and batteries, according to the two sources.

Securing the full supply chain from metals to batteries does not require the US to be the primary producer of the raw materials, said one of the sources.

The sources said that a full strategy would be finalized after a year-long supply chain review involving national security and economic development officials.

While US projects from small and large miners alike will feel the impact, the pain from any blocked projects will fall disproportionately on smaller, US-focused companies. Many large miners also have global projects that could benefit from the administration’s plan.

“We can no longer push the production of the products we want to places we cannot see and to people we will never meet,” said Mckinsey Lyon of Perpetua Resources which is trying to develop Idaho’s Stibnite mine to produce gold and antimony used to make EV battery alloys.

The US government in April became the largest shareholder in mining investment firm TechMet, which controls a Brazilian nickel project and a Rwandan tungsten mine, and is a major investor in a Canadian battery recycler.

Washington also funds research into Canadian cobalt projects and rare earths projects in Malawi, among other international investments.

The State Department’s Energy Resource Governance Initiative (ERGI) is one of the main programs Washington plans to use to help allies discover and develop lithium, cobalt, and other EV metals.

The US Department of Energy has awarded grants to help old coal mines find ways to produce rare earths. US officials have also funded MP Materials, which owns the country’s only rare earths mine, though it relies on Chinese processors.

But the bulk of Biden’s approach is designed to sidestep battles with environmentalists and save capital for other fights, according to one administration source. During a visit to a Ford plant in Michigan on May 18, Biden called for government grants for new EV battery facilities. He mentioned Australia’s lithium reserves during the tour, but not large US supplies of the key battery mineral.

Republicans say Biden’s EV plans will be impossible to achieve without more US mines.

“These ‘not-in-my-backyard’ extremists have made clear they want to lock up our land and prevent the mining of minerals,” US Representative Lauren Boebert, a Colorado Republican, told a House Natural Resources Committee forum held the same day as Biden’s Michigan visit.

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Why Australian black opal is one of the most expensive gemstones in the world

  • High-quality black opal can cost $10,000 per carat.
  • But even for an expert, finding it isn’t easy.
  • After investing tens of thousands of dollars, a miner might not find a single gem.
  • See more stories on Insider’s business page.

Following is a transcript of the video.

Narrator: High-quality black opal can cost over $10,000 per carat, making it one of the world’s most expensive gemstones. But mining black opal isn’t easy. After investing tens of thousands of dollars, a miner might not find a single gem. So, what makes black opal so hard to find? And why is it so expensive?

Black opal is one of the most enchanting stones in the world, sought after for its seemingly infinite display of colors. Compared to common opal, which is usually one color, black opal exhibits many different colors contrasted by a dark body tone.

Frederick: It’s simply the most stunning gemstone on the planet. It’s just remarkably beautiful. You can put the thing away for a week, pick it out and look at it, and you can still see things inside it that you’ve never, ever seen before.

Narrator: Opal is found in several parts of the world, including Ethiopia, Brazil, and Mexico. But over 90% of the world’s opal comes from Australia. And a lot of the black opal is found here, at Lightning Ridge. It’s located on the edge of the Outback, with a population of just over 2,000 people. Miners have been searching for opal here for over 100 years. But even for experts, finding black opal isn’t easy.

Frederick: If you were to start mining tomorrow, and once you learn mining skills — and I’ve been mining for 40 years — we’d be an equal chance, just because there’s nothing really that can tell you, “Oh, there is opal in that piece of ground” or “There’s not opal in that piece of ground.”

Narrator: Miners start by drilling a vertical shaft in an area that they think contains opal. Then they must clear out an underground room large enough to start digging at the rock.

Frederick: The basic idea of mining is basically extract the opal clay out from the ground, put it onto a truck, I take the truck to a puddling site in town, and check if there’s opal in that.

Narrator: The equipment needed to mine and the cost to register your claim can be extremely expensive.

Frederick: Really, if you wanted to rock up here and be serious, it’d probably … need $150,000 to $100,000 in your pocket to have a go.

Narrator: But buying the equipment doesn’t guarantee that miners will find black opal.

Frederick: Some people will go, “Oh, there’s definitely money there, because next door they got $200,000 and there was a bit of color drilled up here. It’s got to have come over.” And there’s a whole epic story of why there should be opal there, and you go and dig there, and it’s not.

Narrator: Miners search for areas in the rock with trace amounts of opal. They follow these spots, called “nobbies,” hoping to find more opal deeper in the rock.

Frederick: You’ll keep going in a straight line till the trace runs out, and then come back where there was trace in the wall, go left and right, and then if that stops, then you come back and do it again. And you can come back and do it again. So you’ve always got that in the back of your head, you know, “When do I leave, how long do I stay, have I stayed too long? I’m wasting time, I’m wasting money for my next patch.”

There’s a nobby there. When you’re in a really good pocket, see how these nobbies are sitting close like that together? They can be like a cluster, like a bunch of grapes. They’re all sitting around each other, and they’ve all got color. Hear that? [scraping] See that sound? It’s like glass. So, you get that big one out, there we go. Doesn’t have any value. Common black opal.

Narrator: Opal is formed when silica-rich groundwater hardens in rock over millions of years. Large silica spheres within the stone diffract light, creating vibrant colors. That play of color makes each gem unique. But for miners like Frederick, digging for black opal is a gamble.

Frederick: The human factor is the biggest factor in finding opal. If you’ve got a piggy bank of $10,000 or $20,000 and then all of a sudden in one month or two months you’ve blown all of that budget because you’ve had breakdowns and you’ve had things occur that you didn’t think of, and then you go, “Well, I’m $20,000 down. What do I do here?”

I’ve been full-time mining for about over 45 years, and quite often I say to myself, “How did you do it? How did you survive that long making it your only job?” I’ve done … I’ve done good. Not great. I haven’t been in the millions. I haven’t been up there in the fantasy pocket, you know?

Narrator: Once rough opal is extracted and processed from the dirt, it has to be cut and polished. This is when the real value of the gem is determined.

Jo Lindsay: A black opal can vary from … starting at maybe $1,000 a carat for run of your mill and going right up to tens of thousands of dollars for that really exquisite top quality. The main stone is 241 carats. A few thousand dollars a carat wouldn’t be unreasonable. A lot of money. [laughs]

Narrator: The color, brightness, and patterns can all influence the price of black opal.

Jo: What you’re looking for in the best-quality opal is a black stone with really bright color and as much red and other colors as possible. So, the most valuable black opal of all is a really bright red stone on a very black base that just glows. And you don’t see them very often at all.

Narrator: That lack of supply is a huge driver for the price of black opal. We can barely keep up with the demand at the moment. As soon as you find a gem-quality stone, you know you’ve got a buyer for it.

Narrator: Between 2005 and 2006, approximately $30 million of opal was mined at Lightning Ridge. And for fans of black opal, there’s simply nothing else like it. It’s just a magic stone, and when I came to Lightning Ridge, just the beauty of it captivated me.

Frederick: It’s an awesome job. I would love to find two or three more good claims, like, one more good patch, get rid of the debts that we have, and set it up and offer the opportunity for my son to take over the job.

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Copper is ‘the new oil’ and could reach $15,000 by 2025 as the world transitions to clean energy, Goldman Sachs says

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A worker inspects batches of processed copper at Mutanda Mining Sarl, Democratic Republic of the Congo

Copper will be crucial in achieving decarbonization and replacing oil with renewable energy sources, and right now, the market is facing a supply crunch that could boost the price by more than 60% in four years, Goldman Sachs said in a report on Tuesday.

Increased demand and likely low supply are set to drive up the price from the current levels of around $9,000 per ton to $15,000 per ton by 2025, the bank said.

As a cost-effective metal, copper is majorly important in the process of creating, storing and distributing clean energy from the wind, sun and geothermal sources as it has the physical attributes needed to do so, Goldman’s team of analysts, led by Jeff Currie, said in a report titled “Copper is the new oil”.

“Discussions of peak oil demand overlook the fact that without a surge in the use of copper and other key metals, the substitution of renewables for oil will not happen,’ the report said.

Copper will be needed to create the new infrastructure systems required for clean energy to replace oil and gas, however there has not been enough of a focus on this so far according to the report.

Demand will therefore significantly increase, by up to 900% to 8.7 million tons by 2030, if green technologies are adopted en masse, the bank estimates. Should this process be slower, demand will still surge to 5.4 million tons, or by almost 600%.

Copper is a key part of sustainable technologies, including electric vehicle batteries and deriving clean energy. As the deadline of the Paris Agreement comes closer, political and economic pushes towards renewable energy and green technology are becoming stronger.

Just two weeks ago, US President Biden announced an infrastructure package worth $2 trillion, which specifically encourages new sustainable technologies and infrastructure projects.

In its current state however, the copper market is not prepared for the increased demand, Goldman Sachs argue. The copper price has risen by about 80% in the last 12 months, but there hasn’t been a matching rise in output.

“The market is already tight as pandemic stimulus (particularly in China) have supported a resurgence in demand, set against stagnant supply conditions,” Goldman said.

The benchmark three-month copper futures price on the London Metal Exchange was last up 1.4% at around $9,022 a ton, while NYMEX copper futures were up 1.5% at $4.09 a pound.

As the expansion of mines and creation of new copper production fields takes years, this is likely to lead to shortages of the metal. To prevent a depletion of copper supply within two years, prices must rise now to encourage investment and an expansion in output, Goldman said.

At present, Goldman Sachs “now estimate a long-term supply gap of 8.2 million tons by 2030, twice the size of the gap that triggered the bull market in copper in the early 2000s”.

Copper production declined in 2020 due to government restrictions and lockdowns during the Covid-19 pandemic. The world’s largest copper producers, Chile and Peru, were hit especially hard by the pandemic, which could impact supply until 2023, according to commodity analysts S&P Global. Last week, prices spiked following Chilean border closures related to the pandemic.

Global copper production is however predicted to increase by 5.6% in 2021 after declining by 2.6% in 2020, according to a GlobalData report published in February.

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Bitcoin miners raked in more than $1 billion in combined earnings last month. Here’s how they make money.

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Bitcoin miners earned a combined $1.1 billion in January.

  • Bitcoin mining is the process that allows new coins to enter circulation, adding to the crypto ecosystem.
  • Miners receive bitcoin as a reward for verifying “blocks” of transactions on the blockchain.
  • Last month, they earned more than $1 billion in combined earnings. Here’s how they do it. 
  • Visit the Business section of Insider for more stories.

Bitcoin is created on a decentralized network called the blockchain, where a vast network of digital “miners” work to verify transactions at any given time.

These miners earned a combined $1.1 billion in January, up 62% from December, when bitcoin’s price surged to $42,000. The road to making this amount of money is no easy feat.

What do bitcoin miners do?

Miners have the responsibility to audit transactions on the blockchain to ensure the legitimacy of the network. They also work to avoid the “double-spend” scenario, in which a bitcoin owner could sneakily spend the same coin twice through duplication or falsification.

Miners don’t necessarily work as a team. They work to compete with each other in order to add the next “block,” or a record of all bitcoin transactions, to the chain. A block contains a partial record of the most recent transactions and carries 1 MB (megabyte) worth of data.

The miner who receives a reward would be the first among a bunch to run through hordes of number combinations to solve a numeric problem, known as proof of work, to arrive at an acceptable 64-character code. The code of this winning block helps keep the blockchain secure. It would normally look something like the last line in this image: 

Screenshot 2021 02 19 at 14.43.43

By being the first to solve the equation and successfully adding the next block to the chain, the miner is rewarded a certain amount of bitcoin. Only one such block can be added at a time, and each one takes about 10 minutes to verify and attach.

Over the course of the next 20 years, a total of 21 million coins will be released.

What are the rewards worth?

In 2009, the first time bitcoin was created, miners were rewarded with 50 bitcoin per block. But according to a mandate by Satoshi Nakamoto, rewards for mining are halved every four years. The rewards were cut to 25 bitcoin by 2012 and to 12.5 bitcoin by 2016.

As of February 2021, miners gain 6.25 bitcoin for every new block mined – equal to about $330,475 based on current value. They’re also allowed to keep the transaction fees from each trade carried out on that block, which is worth $20 per trade.

An estimated 1 million bitcoin miners are in operation, at present.

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