For a while now ‘Bitcoin’ has been a bit of a darling of the technology pages and it’s not too difficult to see why; in a way it’s creating money out of thin air.
In case you’re not already familiar with the concept, Bitcoin is an electronic currency that differs from real world cash in that it isn’t backed by anything (like gold) and it’s not controlled by a government. Anyone can make Bitcoin currency, providing you’ve got the knowledge and the power.
The currency itself is made via complicated cryptographic computing processes, and the more computing resources you have at your disposal, the more currency you’ll be able to generate. In theory I could just get a whole bunch of computers set up in my bedroom, set them to work mining Bitcoins, sit back and get rich. In reality it’s not so easy – one of the most interesting practical considerations of complicated computing systems that Bitcoin does so well at highlighting is energy demand and, most importantly from an economic perspective, cost.
The CPU in whatever device you have switched on to read this is using electricity to power it, and probably to cool it too. A Bitcoin mining computer rig might have hundreds or more CPUs, so will use a magnitude more ‘leccy. There’s an interesting piece on Bloomberg from earlier in the year that talks about a 24 hour period where miners used about $147,000 of electricity to power their mining operations, which generated $681,000 of Bitcoins. At that time the relative value of Bitcoin against the dollar and the average cost of electricity made Bitcoin mining very profitable indeed, but those variables are far from constant.
Just this week we’ve had warnings of electricity shortages in the UK, and in a couple of years our electricity will cost twice as much as Germany’s.
Ah well, looks like I won’t be getting rich from any home-cooked plans just yet. I guess I’ll just console myself with a pint.
(image credit: Gizmodo)