Crypto Mining Ban Presents Hurdles, P2P Energy Trading Emerges as Solution

Nepal stands as one of the most promising nations for hydroelectric power generation globally. With its swift-flowing rivers cascading from the mountains, Nepal boasts an ideal landscape for harnessing hydropower on a massive scale. Additionally, the country has the potential to leverage other clean energy sources like wind and solar power, which offer cost-effective and environmentally friendly alternatives.

While establishing mining industries in Nepal presents lucrative opportunities, the legislative authorities have imposed a ban on cryptocurrency transactions. This move has not only discouraged blockchain developers, miners, and enthusiasts but has also introduced significant risks to any business ventures associated with crypto.

However, amidst these challenges, the concept of peer-to-peer (P2P) energy trading has emerged as a promising solution. This innovative approach allows individuals generating energy through solar or wind sources to sell any excess energy to other consumers.

By leveraging such technologies, Nepal can foster a transparent marketplace for energy trading, enabling individuals and businesses to benefit from the sale of surplus renewable energy generated at residential or commercial properties.

Nepal stands at a pivotal moment, poised to unlock its immense potential in hydropower. As a Himalayan nation, Nepal boasts one of the world’s highest capacities for hydropower, estimated at a staggering 83,000 MW.

This presents a golden opportunity not only for bolstering energy security but also for driving economic growth and transitioning towards cleaner, renewable energy sources. Bhutan, Nepal’s neighbor, serves as a shining example in this regard.

Recent developments, such as the ban on cryptocurrencies by the Nepal Rastra Bank and Kathmandu’s alarming pollution levels, underscore the urgency for Nepal to heed Bhutan’s insights. By drawing lessons from Bhutan’s achievements, Nepal can chart a course towards a more sustainable future. By prioritizing the well-being of its people and the preservation of its natural resources, Nepal can lead the charge towards lasting prosperity.

If Nepal were to legalize Bitcoin mining domestically, it could reduce its reliance on electricity trade with India. Historically, Nepal has exported electricity to India and neighboring countries at a significantly higher rate compared to what cryptocurrency miners and data centers currently pay.

By tapping into the potential of Bitcoin mining, Nepal could generate revenue domestically, thus reducing the need for electricity exports. This shift could help balance the country’s energy economy and promote self-sustainability. However, such a move would require careful consideration of regulatory frameworks, environmental impacts, and potential benefits to ensure a balanced approach that aligns with the nation’s economic and environmental goals.

How much electricity needed to mine a single Bitcoin?

The amount of electricity needed to mine 1 Bitcoin varies depending on several factors, including the type of mining hardware used, its efficiency, and the cost of electricity in the location where mining takes place.

On average, it’s estimated that it takes around 657 kWh (kilowatt-hours) of electricity to mine 1 Bitcoin using the most efficient mining hardware available. However, this figure can fluctuate significantly depending on factors such as the price of Bitcoin, the level of competition among miners, and changes in mining difficulty.

Great Lesson from Bhutan

Bhutan, a tiny himalayan nation, is embarking on a cryptocurrency mining project as it aspires to build a 21st-century economy. The country has teamed up with Nasdaq-listed Bitdeer Technologies Group, based in Singapore, to develop a 600 megawatt mining farm for Bitcoin, the leading cryptocurrency.

Bitdeer was due to establish a closed-end fund at the end of May, aimed at raising $500 million from international investors for the project. A high-level source close to the project confirmed that the fundraising drive indeed began as planned.

For crypto miners, Bhutan’s green and relatively low-cost energy supply, mainly from hydropower, makes it an attractive destination.

Mining operations accounting for the first 100 MW are expected to begin this September, before reaching 600 MW in the next three years. Power will be sold to the operator at a negotiated rate.

At 100 MW, the project would be country’s single largest energy consumer, while at 600 MW it would use more energy than the rest of the nation combined. Bhutan’s peak demand was recorded at around 488 MW in December 2021, according to records with the Bhutan Power Corporation.

Bhutan began constructing a bitcoin mine in December 2021, and customs data from the Ministry of Finance indicates that the mine imported $193 million in processing units that same time. However, Bhutan may have already started mining Bitcoin in 2017, and the project is funded by the sale of bitcoins.

Blockchain and crypto mining: Revolutionizing Digital Transactions using Nepal’s clean energy

The concept of blockchain is revolutionary, particularly in addressing the longstanding issue of double spending, which has plagued digital currencies like Bitcoin. Unlike traditional currency systems, blockchain technology ensures the integrity and security of transactions without the need for centralized oversight.

While Bitcoin pioneered the use of blockchain, Ethereum introduced the concept of smart contracts, further enhancing the capabilities of this innovative technology. Smart contracts enable self-executing agreements between parties, with terms written directly into lines of code. This allows for trusted transactions to occur seamlessly among various parties, eliminating the need for intermediaries.

Mining is another critical aspect of blockchain technology. When individuals send bitcoins over the network, miners verify these transactions and record them in a public ledger known as the blockchain. Transactions are grouped into blocks, which are then added to the existing chain of blocks.

With each new transaction, the blockchain grows, and miners play a crucial role in maintaining its integrity. They use complex hashing algorithms to convert transaction information into unique hash values. Even a small change in the transaction data results in a completely different hash value, ensuring the security of the blockchain.

However, mining operations require substantial computational power, leading to high energy consumption. On average, a single transaction consumes about 250 kilowatt-hours (KWh) of energy. Despite this, miners verify approximately 300,000 transactions per day, highlighting the significant energy demands of the process.

To put this into perspective, the monthly electricity consumption of the average American household is around 980 KWh. The energy-intensive nature of blockchain mining underscores the need for sustainable solutions to mitigate its environmental impact while continuing to harness the transformative potential of this technology.

Every time a new transaction happens, the blockchain gets longer, and miners keep it safe. They do this by using special math called hashing. This turns transaction info into unique codes called hash values. Even if there’s a small change in the transaction, the hash value will be totally different, keeping things secure.

But mining needs a lot of computer power, which uses up a ton of energy. Each transaction can use about 250 kilowatt-hours (KWh) of energy. And miners check around 300,000 transactions every day! That’s a huge amount of energy being used.

To give you an idea, the average American home uses about 980 KWh of electricity in a month. So, you can see how much energy blockchain mining takes up. It’s important to find ways to use energy more efficiently to help the environment while still using this cool technology.

Utilizing hydropower energy for Bitcoin mining in Nepal

Utilizing hydropower energy for Bitcoin mining in Nepal can be a sustainable and efficient way to harness the country’s abundant water resources. Based on the water resources availability, it Nepal’s technical potential for hydropower has been estimated to be 83 gigawatts (GW). Usually all the technically potential water resources will not be developed due to other constraints. Hence, about 42 GW is considered economically viable.

Build Hydropower Infrastructure: Construct hydropower plants in the identified locations to harness energy from flowing water. Invest in modern and efficient hydroelectric technology to maximize energy generation and minimize environmental impact.

Integrate with Bitcoin Mining Facilities: Establish Bitcoin mining facilities near the hydropower plants to directly utilize the generated electricity for mining operations. This ensures a reliable and sustainable power source for the mining operations.

Implement Energy-Efficient Mining Equipment: Deploy energy-efficient mining equipment specifically designed for Bitcoin mining. Utilize hardware with high hash rates and low power consumption to maximize mining efficiency and reduce energy costs.

Optimize Mining Operations: Implement optimization strategies to maximize the efficiency of Bitcoin mining operations. This includes adjusting mining algorithms, optimizing hardware configurations, and implementing cooling systems to maintain optimal operating conditions.

Ensure Regulatory Compliance: Ensure compliance with local regulations and environmental standards governing hydropower development and crypto mining activities. Obtain necessary permits and approvals from regulatory authorities to operate hydropower plants and mining facilities legally.

The government has yet to take any affirmative steps to create a conducive environment for legalizing crypto mining in Nepal. The Nepal Rastra Bank must actively promote regulatory measures to ensure that potential investors in crypto mining benefit from clear government policies.

Collaborate with Stakeholders: Collaborate with government agencies, local communities, and other stakeholders to garner support for hydropower development and Bitcoin mining projects. Engage in transparent communication and address concerns regarding environmental, social, and economic impacts.

What is crypto mining?

Cryptocurrency mining involves utilizing specialized computing resources to add blocks to a proof-of-work (PoW) blockchain. This process validates and records the latest transactions while creating new digital tokens. Miners engage in complex mathematical puzzles, using significant computing power to compete for block addition privileges.

The fastest solver earns the right to add the new block, collecting transaction fees and newly minted cryptocurrency. Mining efficiency is measured in hashes per second, with miners utilizing specialized hardware like ASICs and GPUs. This decentralized process is open to anyone with internet access and sufficient computing power, fostering blockchain security through decentralized participation.