Cryptocurrency Miners And Oil Miners Relate With Each Other

Cryptocurrencies have given rise to several notable companies that have built their success on the vast resource at their disposal. Websites like this Auto-bot serve the best UI and trading tools suitable for novices and professional bitcoin traders. Unfortunately, it often causes a conflict between oil and gas producers, which traditionally offer lower costs, and miners, who are more likely to be based in industrialized nations.

 There is no shortage of irony here: miners are forced by their local governments to use hydrocarbon-based electricity sources while oil producers struggle with demand outstripping supply as they rely on renewable energy sources. On the contrary, cryptocurrency miners depend on using low-cost hydrocarbon power.

When electric consumption of cryptocurrency mining operations increased, it had already reached a size comparable to some countries. As a result, it got the attention of various governments, who may be seeking to regulate this new industry through taxation and restriction of power supply for miners. 

Taxes collected from cryptocurrency miners are often only applicable to citizens within the country. This type of production tax is not generally perceived as an infringement on individual rights by the population but instead justified as long as they receive a gain in return, such as better infrastructure. Miners that work with hydroelectric power can choose their energy source. 

Hydroelectric power is cheap compared to other energy sources like coal and is clean. What’s more important is that this type of energy has the lowest level of volatility among all energy sources. When fluctuation occurs, it happens on a scale comparable to an hour or even a few hours. It dramatically reduces the risks of financial losses in operations and industrial processes relying on electricity as cryptocurrency miners do. It is interesting that miners are often large consumers of electricity within the country, but not within the local area where they are located. Let’s explore how oil and cryptocurrency miners relate to each other. 

  1. Oil and cryptocurrency miners need heavy power sources:

Cryptocurrency mining is a power-intensive process that demands an ever-increasing amount of electricity. Presently, 627,000 households in North America are run by cryptocurrency miners, consuming as much power as 280,000 average homes. In 2018, the world’s largest mining company Ant Pool processed about 5% of the world’s daily transactions on its platform. That amounts to over 27 million daily transactions with a total value of $1 billion daily.

Cryptocurrency mining operates on specialized computers which are required to solve complex mathematical equations which get more complex over time. Upon completion, the miner receives a reward in digital currency in exchange. Similarly, oil mining requires specialized machines to extract fossil fuels from the ground. Computer systems often do this task in middle-tier oil companies which rent out their services to drilling operators.

The challenge of mining cryptocurrency is complex and complicated, so only a few companies can mine for the best returns. Oil mining similarly requires specialized machinery and resources to recover valuable oil from sedimentary rock, which often requires significant capital investments. 

  1. Cryptocurrency miners and Oil miners are always at risk:

Expect cryptocurrency and oil miners to be protected from the risk of power outages or other disruptions while working with electricity. These miners are very much exposed to the risk of accidents. It is especially true with large-scale mining operations that require thousands of individual miners working together at one location.

Cryptocurrency miners are often victims of power outages because they require a lot of power to operate their computers and produce cryptocurrency. In addition, mining hardware, which generates computational power, requires a lot of electricity apart from many other aspects of production, like cooling and ventilation systems. As such, these miners are constantly exposed to the risk of power outages and disruptions. 

  1. Cryptocurrency and oil miners use massive amounts of resources:

Many cryptocurrency miners have been converted into industrial buildings that consume vast energy and resources but fail to pay taxes on them. In most cases, they don’t even pay taxes on the electricity they consume where they are located. As a result, some local governments have started to crack down on cryptocurrency mining, equating it with industrial activity and imposing heavy taxes on these operations.

Oil miners also require large amounts of resources to extract fossil fuels from the ground, which requires sophisticated machinery and resources for exploration, extraction, refining, and distribution. Mining in oil doesn’t only mean extracting crude oil but also processing crude into refined products like gasoline or diesel fuel.

The process of fracking involves multiple steps which need a lot of energy and workforce. In addition, the high-level technology to drill down a mile below the earth’s surface is complex and resource-intensive.

  1. Oil miners and cryptocurrency miners are looking for cheaper energy sources:”

The attraction of hydroelectric power is its ability to provide a stable, predictable, and uninterrupted supply of energy. In addition, the high level of reliability it provides compared to other energy sources makes hydroelectric power one option worth considering when contemplating new investment opportunities.

Cryptocurrency miners may need to become more familiar with the risks of oil extraction because they are not exposed to the industry daily. However, many people recognize the danger resources-intensive industries like cryptocurrencies pose to fossil fuel production. It is estimated that the cryptocurrency industry accounts for 4% of global digital currency production but accounts for 84% of energy consumption worldwide.