Bitcoin may have lost some of its heat this winter, but one Winnipeg cryptocurrency miner found a way to stay warm during the sell-off.
Kevin Carthy is using his cryptocurrency-mining computers to heat his cryptocurrency business in the suburb of Transcona. Hot air from his six machines is piped around the building through his furnace, generating enough warmth to stay toasty during a Manitoba winter.
鈥淭hey are doing complex mathematical calculations, looking for bitcoin and other cryptocurrencies,鈥� Carthy told CTV Winnipeg of his mining operation. 鈥淒oing that, they generate a lot of heat because it is a complex process.鈥�
Cryptocurrencies are powered by blockchains, shared digital ledgers secured by a network of computers, servers, and devices around the world that record and verify each transaction in real time using complex math problems. 鈥淢iners,鈥� like Carthy, use computers to solve those problems, and receive a small amount of the currency for their efforts.
Like any laptop, mining computers generate heat when the processor is put to work. Long before the cryptocurrency boom, miners could turn a reasonable profit with a typical PC. Now, far more processor power is required. More power means more heat to get rid of.
Winnipeg has two significant advantages for miners.
鈥淲e have cold weather, and we have inexpensive hydro,鈥� Carthy said.
He estimates each of his machines costs $70 per month in electricity, and earns $100 per month in cryptocurrency. The free heat adds to his profit margin. His natural gas line is only used as a backup.
鈥淵ou mine for heat and you still make a profit,鈥� Carthy said.
He鈥檚 also using a combination of mining computers and natural gas to heat his home.
Bitcoin鈥檚 meteoric rise to an all-time high of nearly US$20,000 late last year, before plunging to its current trading range, has attracted a lot of attention from investors and miners alike.
For the latter, it鈥檚 spurred a rush to find cheap sources of energy to run increasingly powerful computers competing to solve the equations that feed the blockchain.
consistently ranked Winnipeg the cheapest city, with Montreal鈥檚 bills slightly lower in some cases.
Lower electricity rates are putting Winnipeg on the crypto map. Manitoba Hydro said more large-scale cryptocurrency mining operations have expressed interest in the region in the past six months, despite a limited supply of locations capable of supporting such projects. Larger-scale mining operations outside of those areas would require significant power upgrades.
鈥淭hey need a tremendous amount of electricity to run these, and they generate a tremendous amount of waste heat,鈥� said Manitoba Hydro spokesperson Scott Powell. 鈥淭hat鈥檚 one of the reasons that provinces like Manitoba, and places like Quebec, with our low energy costs and our colder climate really are ideally suited to that. Because they can pay less for their energy, and the colder climate also reduces the amount of energy they鈥檝e got to consume to cool those computers.鈥�
Powell said the utility is aware of a handful of small cryptocurrency operations that have set up shop in the province, but none have a major impact on the power system.
鈥淭he current demand on the Manitoba Hydro system for these operations is unnoticeable when taken in the context of overall system load,鈥� he said.
While getting paid rather than being billed for heat may sound like a tempting proposition, there are a number of things to consider.
Cryptocurrency prices are famously volatile. A sudden crash could erase profits. A number of prominent financial observers, and even central bankers, have attacked the speculative investors who recently pushed prices to dizzying intra-day highs, and raised questions about the utility of cryptocurrencies as a store of value.
Powell also warns that miners should make sure their local electricity infrastructure is equipped to handle the required load before plugging in.
鈥淚ncreasing the electrical load beyond what the local equipment is designed for could damage our system and cause a power outage,鈥� he said. 鈥淚f a customer is found responsible for overloading the equipment, they would be responsible for paying for damages.鈥�
With a report from CTV Winnipeg鈥檚 Josh Crabb
