The Bitcoin network relies on mining to keep its proof-of-work systems running. This ingenious cryptographic system secures the network and has paved the way for every other proof-of-work cryptocurrency on the planet, but it comes hand-in-hand with a serious problem: the electricity needed to pay for it costs money. Lots of money.
That wasn’t a major problem when the Bitcoin price was streaking upward and miners were making money hand over fist. But now, with BTC prices approaching year-long lows, some say Bitcoin is on the verge of a mining crisis. Bitcoin mining pool F2Pool’s co-founder Discus Fish told LongHash that he estimates between 600,000 to 800,000 mining machines have been shut down already. With Bitcoin prices dropping even as the mining difficulty has increased, miners aren’t making profits after accounting for their expenses -- chief among them the cost of electricity.
But what if that cost could be eliminated entirely? It’s not a short-term solution, but in the long term, there’s one place miners could look: space.
The electricity requirements of mining present an increasingly significant economic challenge for miners. Mining difficulty has been generally increasing (although the price crash has caused a drop over the past few months), but electricity costs haven’t gone down. In fact, electricity costs are generally on the rise and the International Energy Agency (IEA) expects that trend to continue. That’s back-breaking news for miners, many of whom are already losing money mining Bitcoin given the current market prices for BTC and electricity.
In the search of cheap electricity, Bitcoin miners have already established operations on far-away hydrogen dams. Excess natural gas from gas fields in Canada is also used to mine Bitcoin. Miners in China migrate seasonally, following the cheapest electricity prices around the country as climate factors cause electricity prices to fluctuate in predictable ways. So there is precedent for miners setting up their operations wherever the electricity generation conditions are most optimal.
Why should they move to space? Because the sun is a gigantic source of completely free energy. According to the IEA, we consume about 100,000 TWh in energy globally. The sun produces a total of 384.6 yottawatts. That’s enough to power 3.8 billion Earths at our current consumption rate. And while we can access solar power right here on earth, we’re a bit limited by the whims of the weather. In space you can get the power of the sun at full blast, 24/7.
We could put solar panels in space if there was a reliable way of getting the power back to earth, but there’s not currently a good way of doing that. We can transmit data from space to earth pretty easily, though, so putting Bitcoin mines in space and beaming the coins down seems more feasible.
Of course, putting Bitcoin mines in space presents another problem: how can you get the necessary data to and from the space miner in time? The further a Bitcoin mine is from Earth, the longer any signals will need to travel. If the mine is too far away, mined blocks theoretically might already be outdated by the time they reach the network.
Practically, though, that’s not going to be a problem. Bitcoin blocks arrive through an exponential distribution with a very long tail. On average blocks arrive every ten minutes, but roughly every third block takes more than 10 minutes to arrive, and 5% of blocks take over 30 minutes to arrive. It’s possible to transmit data to earth far more quickly than that!
Bitcoin miners in space would still want to be as close to earth as possible to minimize the risk of seeing their block orphaned because it reached earth too late. They would also want to be in earth’s shadow as little as possible to maximize sun exposure. Polar orbits seem ideal, as they allow a satellite to stay outside of the earth’s shadow while also flying relatively low. At about 2,000 km in elevation, block propagation from space would be roughly as fast as it would be through a fiber optic cable between Hong Kong and Seoul. In other words: transmission lag wouldn’t be a problem.
In such an orbit there won’t be much space for millions of satellites, though. The most efficient solution, creating a ring of solar powered miners in a polar orbit, might yield hundreds of millions of terrawatt hours of energy - enough electricity to power the entire globe repeatedly.
Of course, we’re still a long ways off from seeing such a system actually put into place. There are economic and technological problems that need to be overcome; solar panels need to get cheaper, mining chips need to stop getting so much faster with each generation (which might be tough), and space launches need to get a lot more affordable.
Another idea, put forward by Peter Todd in 2017, predicts that Bitcoin mining could actually be a way to make space-generated electricity more economical. Rather that trying to beam electricity down to earth directly, Bitcoin could be mined entirely in space and the Bitcoins beamed to earth as a way of getting the value of all that solar power without having to figure out how to beam the power itself to earth.
But even if those problems are solved, there are regulatory and practical problems to deal with, too. Who would build such a mega-mining satellite, and how could it remain decentralized? With no system of ownership in space, what would stop rival mining groups from literally stealing someone else’s sunshine?
This isn’t a purely theoretical exercise, though, even if also it isn’t a very practical one. A company called Miner One has already taken the first step, launching a mining machine called “Space Miner One” via a balloon to mine Bitcoin at an elevation of 100,000 feet. Technically speaking, this is only kind of “space”; it falls within the Mesosphere, which is really still part of Earth’s atmosphere. Outer space begins at a point well above 300,000 feet called the Kármán line.
Still, it proves that high-altitude, solar-powered Bitcoin mining is possible, even if it’s not economically or technologically practical on a large scale at the moment. This isn’t a solution that’s ready enough to save miners from the current crisis, but in the longer term, it really is possible that space-based mining could be a way for miners to escape electricity costs entirely and enjoy easier profitability even when prices are low and the mining difficulty is high.
Leo Weese is president of the Bitcoin Association of Hong Kong.