Many also fear that the new mines will suck up so much of the power surplus that is currently exported that local rates will have to rise. In fact, miners’ appetite for power is growing so rapidly that the three counties have instituted surcharges for extra infrastructure, and there is talk of moratoriums on new mines. There is also talk of something that would have been inconceivable just a few years ago: buying power from outside suppliers. That could mean the end of decades of ultracheap power—all for a new, highly volatile sector that some worry may not be around long anyway. Indeed, one big fear, says Dennis Bolz, a Chelan County Public Utility commissioner, is that a prolonged price collapse will cause miners to abandon the basin—and leave ratepayers with “an infrastructure that may or may not have a use.”
Bitcoin mining is the process through which bitcoins are released to come into circulation. Basically, it involves solving a computationally difficult puzzle to discover a new block, which is added to the blockchain, and receiving a reward in the form of few bitcoins. The block reward was 50 new bitcoins in 2009; it decreases every four years. As more and more bitcoins are created, the difficulty of the mining process – that is, the amount of computing power involved – increases. The mining difficulty began at 1.0 with Bitcoin's debut back in 2009; at the end of the year, it was only 1.18. As of April 2017, the mining difficulty is over 4.24 billion. Once, an ordinary desktop computer sufficed for the mining process; now, to combat the difficulty level, miners must use faster hardware like Application-Specific Integrated Circuits (ASIC), more advanced processing units like Graphic Processing Units (GPUs), etc.
Bitmain gained an edge by supplying a superior product in large quantities, a feat that has eluded every other company in the industry. The Ordos facility is stuffed almost exclusively with Bitmain’s best performing rig, the Antminer S9. According to company specs, the S9 is capable of churning out 14 terahashes, or 14 trillion hashes, every second while consuming around 0.1 joules of energy per gigahash for a total of about 1,400 watts (about as much as a microwave oven consumes).
OpenDime is the making a name for itself as the “piggy bank” of cold storage units in the world of cryptocurrencies. It functions like other cold storage units with one key exception: one-time secure usage. That one key difference changes quite a lot in the way people use it. Other storage platforms act more like wallets to be used repeatedly with a reasonable degree of security. Whereas an OpenDime unit can be used extremely securely as an address to store Bitcoins until the owner needs to cash out, but only once. In a manner that directly parallels smashing open a piggy bank, once an OpenDime storage unit is “opened” it can no longer be used with the same degree of safety again. OpenDime is a platform that changes the intangible asset of Bitcoin into a physical thing that people can exchange between each other in the real world.
Even in the recent price crash, the miners have maintained their upbeat attitude, in part because they’ve died this death a few times before. In February, a day after bitcoin’s price dipped below $6,000, I checked in with Carlson to see how he was dealing with the huge sell-off. In a series of long texts, he expressed only optimism. The market correction, he argued, had been inevitable, given the rapid price increase. He noted that mining costs in the basin remain so low—still just a little above $2,000 per coin—that prices have a way to fall before bitcoin stops being worth mining there. Carlson is, he told me, “100 percent confident” the price will surpass the $20,000 level we saw before Christmas. “The question, as always, is how long will it take.”
No one knows. Not conclusively, at any rate. Satoshi Nakamoto is the name associated with the person or group of people who released the original Bitcoin white paper in 2008 and worked on the original Bitcoin software that was released in 2009. The Bitcoin protocol requires users to enter a birthday upon signup, and we know that an individual named Satoshi Nakamoto registered and put down April 5 as a birth date. And that's about it.
Generally speaking, every bitcoin miner has a copy of the entire block chain on her computer. If she shuts her computer down and stops mining for a while, when she starts back up, her machine will send a message to other miners requesting the blocks that were created in her absence. No one person or computer has responsibility for these block chain updates; no miner has special status. The updates, like the authentication of new blocks, are provided by the network of bitcoin miners at large.
While senders of traditional electronic payments are usually identified (for verification purposes, and to comply with anti-money laundering and other legislation), users of bitcoin in theory operate in semi-anonymity. Since there is no central "validator," users do not need to identify themselves when sending bitcoin to another user. When a transaction request is submitted, the protocol checks all previous transactions to confirm that the sender has the necessary bitcoin as well as the authority to send them. The system does not need to know his or her identity.
Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people using the name Satoshi Nakamoto and released as open-source software in 2009. Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. Research produced by the University of Cambridge estimates that in 2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.